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Hotel glut looms large in Phuket

September 12, 2011

Property developers and hoteliers in Phuket are warning of a looming oversupply of hotel rooms.

Absolute Nakalay Beach Resort & Spa

Dubbed the “Pearl of the Andaman”, the island province has been the only tourism destination to show a consistently positive trend in the wake of the political unrest from late 2008 to mid-2010.

Driven by bright prospects and spurred by growing international tourist numbers, hoteliers and developers have been racing during this period to expand capacity, rapidly increasing room supply.

“I believe that Phuket is now entering a state of oversupply in terms of number of rooms. If the situation continues, a price war is highly likely soon like in Bangkok,” said Glenn de Souza, the vice-president for international operations in Asia for the US-based hotel chain Best Western International.

“Local and national authorities should work together with the private sector to plan long-term tourism strategy, rules and regulations while applying the concept of sustainable development.”

He said this would result in better management of Phuket’s existing resources while maintaining its attractiveness as a beach destination.

Bill Barnett, managing director of the Phuket-based international consulting firm C9 Hotelworks, said that with Asian economies booming in the wake of the 2008 global financial crisis, Thai investors have flocked to open hotels.

Tourism numbers in Phuket just keep growing, and even Bangkok developers have assumed Phuket is a guaranteed safe haven for recurring hotel revenue with limited political risk. “Phuket now has 43,571 rooms operating and another 6,068 in the pipeline, so the supply keeps ramping up,” said Mr Barnett.

European tourists normally take longer holidays once or twice a year for anywhere from a week to a month at a time, while the average length of stay by Asean tourists is only a few days.

“By the end of 2011, there will be an estimated 4 million passenger arrivals in Phuket or a 22% increase over 2010,” said Mr Barnett.

“But the overall average length of stay for guests in hotels will likely be short.”

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