Phuket airport at breaking point

Phuket’s international airport faces the prospect that it will handle a staggering 9 million passengers this year, according to a C9 Hotelworks forecast released Tuesday.

The leading hospitality consultancy C9 Hotelworks reported Tuesday an extraordinary growth in travel to Phuket , “way beyond expectations and there are increasing fears of overcrowding and disruption to services.”

Theoretically, the airport can handle 6.5 million passengers per year, but that capacity ceiling was exceeded by 30% last year when the airport handled 8.4 million passengers.

The Thai government recently re-introduced a US$180 million expansion plan including a new international terminal. The anticipated completion date is not until 2015.

A forecast of 9 million tourists this year is achievable as new airline services are planned including Air Berlin serving the destination daily year-round from Abu Dhabi in a code-share tie up with Etihad Airways. It will boost tourist arrivals from the Middle East and other points served by Etihad.

Phuket is facing substantial challenges including a massive growth in tourist arrivals, rising crime rates, mafia style scams and real estate development that is destroying the island’s environment.

Mr Barnett alluded to some of the issues in his report, calling on the government to take action. Ambassadors from some European nations have met with the Minister of Tourism and Sports to address mafia-style scams in tourism and real estate sectors as well as crime targeting tourists.

C9 Hotelworks’ Hotel Market Update 2011 also reported that island-wide accommodation occupancy was 75% for the year, a 6% increase from 2010 with Patong properties and west coast luxury resorts propelling the trend.

C9 Hotelworks managing director, Bill Barnett commented: “In a year underscored by global media attention on Bangkok’s political crisis, Phuket  continued to swim upstream with a remarkable sense of demand driven agility.”

But despite the new historical highs, there is a paradoxical progression of mass tourism, with the surge in demand creating issues for the destination’s famed infrastructure, he added.

“Clearly planning is behind the 8 ball with a 2015 date now firmly on the horizon. But with the upgrade only set to accommodate 12.5 million passengers, the new airport may be redundant by the time it hits the market,” said Mr Barnett.

One of Phuket’s major regional competitors Bali is seeing a fast track expansion of a new terminal for overseas passengers now set to open in time for APEC 2013. According to the airport authority at Ngurah Rai International Airport Denpasar, once completed the facility will be able to accommodate 25 million travellers.

C9 Hotelworks’ Hotel Market Update 2011 shows that more direct airline access from abroad is reflected in Australia, China and Eastern Europe now commanding a 32% share of the international marketplace. Key hotel metrics has pushed up performance to a five year high, with a US$135 average room rate and Revenue per Available Room (RevPAR) of US$101.

Australia remained the island’s top international source with 15% market share and 24% growth comparing with 2010.

The emerging markets of eastern Europe showed the strongest five-year Compound Annual Growth Rate of 19%, followed by Australia and China at 11% and 10% respectively.

As of December 2011, there were 43,759 rooms in Phuket’s registered accommodation establishments.The west coast dominated existing supply on the island with 33,319 rooms accounting for 76% of inventory.

Incoming supply pipeline of 6,272 rooms represent a 14% increase to existing inventory. Midscale hotels dominate new developments with over 50% being in this tier. The majority of these properties will be located in the prime west coast area of Patong. And by 2015, it is forecasted that the hotel rooms on the island would reach 50,031 in 2015.

Analyzing the precarious growth model that Phuket is following Barnett added: “Effective destination management rather than marketing is at the heart of the matter and what is required for the island to achieve long-term sustainable growth.

A national government agenda is urgently needed to address growing transportation, rising crime and regulatory issues.”

Source - ttrweekly