Mixed growth for hotels on biggest islands

Economy September 11, 2015 01:00

By THE NATION

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THE HOTEL business on the country's two largest islands has developed in different ways over the first half of 2015, according to C9 Hotelworks, an asset-management and hospitality consulting firm.



Bill Barnett, the company’s managing director, said Phuket enjoyed a huge increase in arrival numbers but it did not experience a corresponding increase in revenue, while Koh Samui earned much more revenue with less growth.

“Phuket and Koh Samui have seen their markets develop in very different ways. It’s a yin and yang situation. The airport situation at both has been the defining driver of the trend,” Barnett said yesterday.

Phuket has seen a rise in the number of direct flights and traffic from low-cost carriers and charter flights, he said.

Much of the traffic was from China through direct flights. This has resulted in a leveraging towards mass-market tourist, with the combination of China and Russia accounting for more than half of international passenger arrivals.

C9’s latest study found that passenger arrivals at Phuket International Airport rose by 11 per cent from 2.8 million in the first half of 2014 to 3.1 million in the first six months of this year.

Despite the rising numbers, the volume has not translated into higher room rates.

 A decided overweighing in the wholesale segment is broadly attributed to the trend.

As China and the rest of the world experience economic uncertainties, Phuket has returned to more defined seasonal trading patterns.

 The upcoming winter high season will be the first without a significant Eastern European contingent and will be the start of a new business cycle, Barnett said.

During the first half of this year, all hotel tiers experienced downward performance as annualised revenue per available room (RevPAR) slumped by 10 per cent, resonating in a 1-per-cent decline in occupancy rate and 9-per-cent decline in average room rate.

Among Phuket’s top five geographic source markets of China, Russia, Australia, South Korea and Britain, China was the leader with double-digit growth of 37 per cent, while the other four moved backwards.

With the continued impact of the Russian rouble’s depreciation and safety concerns, the hotel trade is forecast to remain volatile in the second half of the year.

Phuket will have 27 new hotel projects coming on stream between 2015 and 2018. A large proportion of those are scheduled to open in the second half of 2017. Patong has the highest concentration of the incoming 1,613 keys, Barnett said.

Koh Samui is considered a weak point with limited air service and no low-cost carriers, which has resulted in a drive towards sustained quality and high performance of upscale and luxury travellers.

In the aftermath of Thailand’s political events that affected markets nationwide, the resort island of Koh Samui has continued its success story of arrival growth, which spurred hotel performance in the first half of the year.

Upscale hotels stand out as the best performer during the first half with an increase in occupancy by 4 per cent and RevPAR by 27 per cent compared with the same time last year, with the latter being driven by a 25-per-cent growth in the average room rate.

Air travel was the instigator pushing numbers in the first half of the year, as international passengers arriving at Koh Samui and Surat Thani airports rose year on year by 4 and 6 per cent respectively.

An emerging sign of market maturation is charter flights coming to Surat Thani and passengers

 transited to the island via ferry. Tourists from Western Europe, especially Germany and Britain, remained the broad leading markets of the resort.

Both Samui and Surat Thani airports posted significant elevations in the numbers of international non-scheduled flights. The majority of these flights originated from China.

RevPAR improved in luxury and upscale tiers, while mid-scale, budget and economy marginally retracted.

Market-wide performance demonstrated a positive trend with an increase in occupancy and RevPAR as average room rates shifted upwards.

Expansion plans for Koh Samui Airport have been confirmed, but the details have not been made public.

The undertaking is expected to be a strong driving fundamental for increased air service and capacity.

The Chinese market slump is forecast to have an impact on international charter flights arriving at Koh Samui and Surat Thani airports, which originate mostly in China.

By 2018, registered accommodation establishments on Samui will account for 18,749 keys, increasing by 4 per cent from 2015.

Hotel supply during the second half of this year will stay the same, with no new hotels entering the market.