Phuket hotels see steady service charges and rising room rates

Phuket’s hotel industry will see stable service charge income and rising room rates during the upcoming peak season, according to the Phuket Hotels Association (PHA).

PHA President Bjorn Courage noted that employment levels in Phuket’s 95-member hotels have fully rebounded post-pandemic. Typically, service charges account for 10% of paid room nights and are distributed monthly among all staff members.

With the increase in the workforce to meet the strong tourism demand, individual staff members might see lower service charge payouts compared to last year’s high season, when some hotels recorded unprecedented monthly service charges. The occupancy rate is expected to remain high, similar to the 70 to 80% range in 2023.

Room rates are projected to continue their upward trend, driven by strong demand and factors such as inflation and rising operating costs, including utilities and payroll. Despite these increases, Courage indicated that service charge income in Phuket would remain robust compared to destinations with slower recovery rates, such as Hua Hin or Chiang Mai, though it may trail behind Bangkok and Samui.

Bangkok benefits from a strong mix of business travellers, whereas luxury properties in Samui elevate the service charge rates. Courage also mentioned that hotels are cautious with hiring, focusing on increasing productivity among fewer staff members and partnering with schools to bring in student trainees.

STR data shows that Phuket hotels have secured 30% more business on the books (BOB) year-on-year for the next six months. The country’s visa-free scheme has been particularly effective in attracting tourists from China and India, while extended-stay eligibility has drawn in European and Russian visitors.

“Phuket’s tourism market has diversified beyond its pre-pandemic reliance on Chinese and Russian tourists.”

Additionally, Saudia, Saudi Arabia’s flag carrier, announced last week the launch of direct flights from Riyadh and Jeddah to Phuket starting in December. This development is expected to further boost tourist arrivals, reported Bangkok Post.