Phuket boom now fuelled by more than just the beach

A dynamic shift in Phuket's tourism market is seeing demand move away from the beach.

Last year, Russian and Chinese visitors accounted for 38 per cent of international airport arrivals to the island, according to consulting firm C9 Hotelworks. This trend is consistent with Thailand's continued surge in the mass market where last year more than 3 million visitors from China and Russia came to the country.

Bill Barnett, managing director of C9, said yesterday that hot on the heels of a rising Asian middle class and the resurgence of a prolific group-travel segment, Thailand's resort markets were becoming urbanised playgrounds. It's not just about the beach any more, as shopping and attractions are gaining momentum as strong demand catalysts.

The firm's "2012 Hotel Market Update" reveals that tourist spending is heavily weighted towards major shopping malls, which command 73 per cent of the market share of island attractions followed by 16 per cent for entertainment shows such as Fantasea and Siam Niramit.

Phuket visitors spend 30 per cent on accommodation, with retail shopping trailing closely at 24 per cent.

Foreign tourists are pushing up traffic at the large malls such as Central Festival and Jungceylon, where the top three nationality mix of customers are Chinese, Russians and Australians. Last month retail giant Central Retail Corporation said it would embark on a US$332-million (Bt9.9-billion) expansion project in Phuket with a mega entertainment centre, luxury fashion shops and a convention centre.

Visitor numbers are pushing traffic through Phuket International Airport to the wall, though, with more than 9.5 million passengers processed last year.

Barnett said 2012 saw a "staggering" volume of traffic that exceeded the airport's stated capacity by 47 per cent. Compounding this was a 13-per-cent surge in overall traffic.

Asia's other iconic resort destination, Bali, saw international arrivals grow by just 4.15 per cent last year, down from 22-per-cent growth in 2011, while Phuket retained its foreign-arrival momentum with a 16-per-cent surge in 2012. The sheer number of charter flights from the emerging Chinese and Eastern European markets is the key differentiator.

Air arrivals continue to drive Phuket's hotels, where full-year 2012 market-wide occupancy hit 76 per cent and the average room rate hit $142. While Patong experienced the strongest demand, surprisingly growth in the luxury tier pushed up occupancy by 9 per cent.

However, there is still some concern about the new supply of more than 4,000 hotel rooms from 2013-16.

Analysing the shifting sands of Phuket's tourism market, Barnett said the sector to watch was the expansion of "off-beach" demand generators.

"Tourism behaviour is evolving and it's clear that a new rulebook applies in the numbers-based game."