November usually heralds the beginning of the tourism high season for Thailand, but for Phuket any prospect of welcoming foreign tourist to the island is quickly fading away.
The Thai government has retracted from its earlier plans to reopen the country's tourism sector based on the so-called Phuket Model, and has instead made Bangkok as the sole entry point for a limited number of travellers from overseas under the Alternative State Quarantine (ASQ) programme.
In Phuket, many hotels had pinned high-season hope on the now-aborted Phuket Model to allow Special Tourist Visas aimed at long-staying visitors, which is logical given the island’s legacy winter ‘snowbird’ market from Northern Europe and Russia.
As a result of the government’s about-face policy of centralising all overseas arrivals into Bangkok, properties in Phuket which have undertaken both the expense and time in qualifying for the Alternative Local State Quarantine programme status have now been shut out.
Using smaller contained resort-focused islands would appear a logical risk mitigation strategy for the hyped 'Phuket Model', says Hospitality consulting group C9 Hotelworks, but the policy flip-flop has negated the island's essential tourism lifeline.
Phuket's dismal situation is already reflected in its airlift. According to Airports of Thailand data, only 121,530 passengers arrived in the month of September at Phuket International Airport, the gateway for 70-80% of visitors to the destination. This equates to just over 4,000 arrivals a day, a sharp contrast if compared with year-on-year data where daily arrivals in 2019—including international travellers—was five times higher.
Commenting on the current situation, C9 Hotelworks' managing director Bill Barnett says, “There is a dramatic change in the market mix where the current domestic-led average length of stay for hotels is approximately 1.8 days, while for foreign travellers it’s more than double this amount. What this means for hotels is severely reduced overall demand across the island’s entire accommodation sector.”
Data from data intelligence provider STR shows that Phuket's daily occupancy is averaging only 10% with upward spikes on weekends at international standard hotels, largely driven by domestic travellers cashing in on cheap deals at upscale and luxury hotels.
Given limited visitor arrivals, the far larger mid and economy tiers—where most of the hotel inventory sits—are experiencing even lower occupancy. This domino effect is expected to prevail unabated throughout a sustained downturn and effectively crushes the smaller properties and local tourism businesses, according to C9.
“Taking a 360-degree view on the restricted domestic-only demand, you have to take into account that Phuket’s current registered accommodation supply has continued to surge to its present size of 90,267 rooms in 1,773 hotels/tourism establishments” adds Barnett. “Of this supply upper midscale, upscale, and luxury properties of international standards are approximately 25% of the total rooms.”
Furthermore, nearly two months into the shoulder months of the high season, it is increasingly clear the high season will be foregone and hotel owners in 2021 will be forced to contend with historically the lowest trading months of the year by May.
Given these grim prospects, C9 is predicting large-scale job losses and business closures given there is no light at the end of the pandemic-induced tunnel.
Barnett says, “Losing this high season will further intensify the catastrophic impact on the island’s business owners and the livelihoods of the vast majority of residents. Given the sheer size of the hotel inventory, it cannot survive only on domestic visitors, cheaper airfares, or by adding more public holidays. For Phuket, this high season, faced with the prevailing arithmetic the island can only wait and wonder what comes next.”