Phuket’s tourism industry has been on a road to recovery, following a year of pandemic-induced disruptions. A newly released Phuket Hotel Market Update by C9 Hotelworks reveals that the island’s tourism industry has experienced a significant uptick in activity, with the recovery starting in Q4 of last year.

Russian and regional visitors drive growth

The data shows that the post-pandemic tourism recovery has been led by a surge in Russian travellers in the high season. However, it was regional visitors from India, Malaysia, and Singapore that set the stage for the recovery in Q4 of last year. The lifting of travel restrictions by Thailand at the beginning of October 2022 led to a surge of tourists that propelled the market-wide occupancy for the year to 48%, up year-on-year from the pandemic impacted low of 8% in 2021.

The surge of tourists resulted in a year-end market-wide occupancy rate of 48%, which was a significant improvement from the pandemic-affected low of 8% in 2021. Photo Credit: C9 Hotelworks

The Phuket tourism industry has seen a significant influx of Russian visitors in recent months, despite limited direct airlift due to economic sanctions by the EU and airfares that have in many cases risen by 200-300%.

While the number of visitors was sharply down compared to the nearly one million count in 2019, stays increased from a normal average of 11 days and rose by over 50%. The arrival of tourists from Russia not only created a spark in economic recovery for hotel and tourism businesses but radiated into retail, transportation, and real estate.

Phuket's property market goes boom

The segment is now the most active direct foreign investment (FDI) leader in Phuket’s booming property market. A knock-on effect has also been seen on land prices across the island, which are growing at their highest rates in over two decades.

C9’s research points to a broader overall movement of hotel owners converting from management agreements to franchises and also changes in brands. The conversion is a sign of maturity for Thai hotel owners who are experienced enough to operate but look for distribution and brand value in a franchise scenario.

C9's Bill Barnett said the arrival of Russian tourists not only stimulated economic recovery in the hotel and tourism sectors but also had a positive impact on retail, transportation, and real estate industries. Photo Credit: C9 Hotelworks

Bill Barnett, C9 Hotelworks managing director, commented, “We expect to see more changes in brands for the remainder of 2023 and beyond, given many hotel agreements signed in the early millennium tourism boom years are set to expire.”

Looking beyond the traffic

Despite positive economic indicators, the reality on the ground is evident everywhere in the stress placed on Phuket’s transportation infrastructure. Population growth, development spread to inland areas, and skyrocketing tourism demand have created a massive traffic problem.

The clearest example was when a landslide closed an important thoroughfare between the popular Patong tourist area and its central island feeder road. Delays in repairs caused a domino effect in access to west coast hotels in peak season and demonstrated how fragile the island’s transportation network is.

Reflecting on the potential return of mass tourism to Phuket, Barnett said, “The lack of a dedicated tourism master plan for the island is a key long-term issue that much is resolved. With airport flights and passenger flow mounting, we can clearly see how important the new Phang Nga airport is, though the site remains inactive.

"This goes for the expressway and Patong tunnel projects that are in essence a lifeline for the island’s future growth. We punched the card of urbanisation already, and with nearly 100,000 registered hotel rooms on the island, we’ve gone too far to go back.”