Slowing tourism growth, rise of Indian market on Phuket’s horizons: C9

19 Mar 2019  2199 | World Travel News

C9 Hotelworks is forecasting a slowdown in the double-digit growth rates Phuket has witnessed in recent years, and India’s rising importance against China as a “mass travel machine”.

While airport arrivals grew 8% year-on-year, the gains posted were at their lowest level since 2015, according to consulting group C9 Hotelworks’ newly released Phuket Hotel Market Update.

The first half of 2018 saw arrivals soar by 17% versus the same period in 2017, but the second half of the year was marred by the Chinese boat accident, which decelerated momentum. By the end of the year, annualised hotel demand had declined by 4%.

Commenting on the rise and fall, C9’s managing director Bill Barnett commented: “The period of August through October eradicated the early gains in the year. At that juncture, despite negative industry sentiment of a continued drop, a soft landing ensued in the final two months of the year driven mostly on rates, and by year-end the new normal kicked in.”

Moving into 2019, Jesper Palmqvist of hospitality intelligence group STR noted: “When looking at the long-term historic trend, the pipeline of new supply but conversely also the increased competition in the region for Chinese demand, it is plausible that this recent pressure on Phuket performance will continue into the second half of the year, with an increased spread in performance among the hotels – basically a tightening of the market compared to the past couple of years.”

Further reflecting on the prevailing trade winds at the end of 2018, he said: “This trend continued throughout peak season into 2019 where January was similar to that of 2015, with overall demand shifting by -6% compared to the same month last year. Indications in daily data for the important month of February echoes the sentiment hitting numbers close to 2017, leading to peak season ending with a noticeable step back. In addition, it is likely that March may also see a year-over-year decline from last year, but as we approach low season again we do not expect negative growth to continue to the same extent.”

Among key trends expected to shape the island’s tourism road ahead, Barnett expects intensified competition for Chinese travellers from other destinations in the region.

And as hotels fight for market share, there will be increased rate volatility.
“Phuket over the past few years has successfully managed to cash in when the going was good, and drive higher rates during periods of high demand. With a China slowdown, appreciation of the Thai baht and growing competition, rates are likely to be under attack in the foreseeable future,” Barnett explained.

With surging land prices in Bangkok and other key Asian CBD areas, developers are adjusting their return outlook and continue to either transact properties in Phuket or undertake greenfield developments. A second factor is property development groups looking to mitigate risk in a challenged real estate sector and look at recurring cash flow investment models.

Read more...

Recommended Cambodia Tours

Cambodia Day Tours

Cambodia Day Tours

Angkor Temple Tours

Angkor Temple Tours

Cambodia Classic Tours

Cambodia Classic Tours

Promotion Tours

Promotion Tours

Adventure Tours

Adventure Tours

Cycling Tours

Cycling Tours