Phuket Property Watch: Samui staying strong

PHUKET: One of my favorite movies in recent memory has to be Up in the Air. Given a hectic travel schedule, it’s certainly a subject I can identify with. One of the classic scenes has to be George Clooney, jumping into line behind some people of Asian descent at the foreboding metal detector and commenting how they “travel light”. Profiling, yes, but in my experience, the less I get repeatedly slapped in the face by over-sized backpacks being lugged by Europeans down airplane aisles, the better.

Lately, I have often been asked how Thailand’s resort markets are holding up in light of the country’s political issues in Bangkok. Looking over at nearby Samui, the answer appears to be – quite well, apparently. Last year, a record high of 1.3 million passengers arrived at the island’s airport.

Perhaps it’s time to recall the key catch phrase that best applies to tourism destinations “you can’t stay there, if you can’t get there”. Historically, air travel into Samui has taken a decidedly different path to that in Phuket. The latter’s facility is operated by the Airport of Thailand (AoT) authority and has embraced the game-changing surge of low-cost carriers (LCC’s) head-on.

While Samui’s prospects have been defined by the existence of a private airport, controlled by Bangkok Airways, there is a limitation of 36 daily flights imposed by a decade’s old environmental restriction. The destination cannot tap into either the LCC traffic or charter flights that operate into Phuket in the overnight time period, with the latter being a key driver of mass tourism.

In 2013, the Samui airport hit 86 per cent capacity, and looking at the rise in hotel numbers, it was hard for us to reconcile where the island’s growth was coming from. Hotel occupancy market-wide rose to 73 per cent and average room rates achieved seven per cent growth comparing year-on-year data.

Part of the answer came in viewing nearby Surat Thani’s airport arrivals, which in 2012, pushed up 38 per cent, and in 2013, another 32 per cent. Looking into the numbers, you find AirAsia and China Eastern Airlines, with their direct flights from mainland China and nearby Malaysia. Additionally, there was a lift in charter flights, with almost 60,000 passengers through the airport last year.

Effectively, Surat Thani has become Samui’s “Plan B” in creating new airlift to the island, and these rising numbers are driving new levels of business. While the logistics are complicated, with passengers required to be transported to Don Sak for ferry transport, the reality on the ground is the Samui airlift conundrum has found a partner in nearby Surat Thani.

That said, the island’s tourism market for the full year 2013 was still dominated by international visitors, which constituted 88 per cent of the market. Western Europeans still account for over half of this amount, but China and Russia are knocking at the door, with each showing triple digit growth compared to the previous year.

What is decidedly different between Samui and Phuket are the incoming hotel pipelines. Presently Phuket has just over 46,000 registered hotel units, and Samui comes in just shy of 18,000. The number of new hotels under development on the former stands at 26 properties, while the latter has five, hence supply and demand in Samui remains on solid footing. Simply put, there is not a broad danger of oversupply in the short to medium term.

Wrapping up our visit to Samui, the sunny island in the gulf of Thailand, the tourism prospects remain strong. What has the island currently buzzing is the opening of the Central Festival mall in Chaweng on March 29. Like it or not, the push higher in the development cycle changes every island’s dynamics the world over. For now, though, Samui’s hotel trading outlook appears set to go from strength to strength.

— Bill Barnett