PHUKET — Tourism booms in the first half of 2024, driving hotel room prices up in Phuket, said a Thai real estate analyst.
Carlos Martinez, Director of Research and Advisory at Knight Frank Chartered (Thailand) Co, Ltd, a Thai real estate advisory firm, commented on the overall tourism industry in Phuket for the first half of 2024, stating that the industry has recovered strongly with a total of 4.3 million tourists, which is only 7 percent below pre-COVID-19 levels.
The number of foreign tourists increased by over 42 percent year-on-year to 2.6 million, close to pre-COVID figures. The improvement in air transportation capacity is expected to support further growth in international tourist numbers in the second half of the year.
The number of domestic tourists also increased and, at 1.7 million, was 6 percent higher than the previous year, but still 13 percent below the pre-pandemic level. The number of international flights increased by 34 percent compared to last year, but is still 14 percent below pre-pandemic levels.
In the first quarter of 2024, Russia was the largest foreign tourist group, followed by China, despite China’s sluggish economy. There was also significant growth in tourists from India and Australia, as well as traditional short-haul markets such as Malaysia and Singapore.
The increase in international tourists has noticeably improved hotel performance, with an average occupancy rate of 84 percent, 3 percent more than last year and 2 percent more than before the pandemic. During the peak tourist season from January to February, the occupancy rate was over 90 percent, only to drop to 74-75 percent in May and June.
The average room rate (ARR) has continued to rise, reaching a new high of 6,837 baht ($200), 32 percent more than last year and 64 percent more than before the pandemic. This increase was driven by the growth of luxury and high-end hotels.
In terms of new hotel openings, one hotel was opened in Phuket in the first half of 2024, bringing the total number of rooms to 44,838. Five more hotels with 1,117 rooms are expected to open by the end of this year, an increase of 3.5 percent compared to last year, exceeding the average growth rate of 2.5 percent per year.
Carlos noted that the ongoing recovery in domestic demand, fueled by the weakened Thai baht which has made foreign travel more expensive for Thais, coupled with a strong upswing in foreign tourists, is expected to continue in the second half of the year.
The peak tourist season in the fourth quarter should benefit from favorable exchange rates, an almost fully restored air traffic capacity and a visa waiver policy that promotes growth.
However, geopolitical tensions, particularly the conflict between Russia and Ukraine, have led to an increase in Russian tourists seeking safer destinations, which has further boosted tourist numbers to Phuket.
Phuket hopes to welcome 2.5 to 2.7 million foreign tourists in the second half of the year. This influx is expected to have a positive impact on hotel occupancy rates, especially during the peak tourist season.
Nevertheless, prices are expected to gradually stabilize after the significant increase in average room rates in the second half of the year, supported by the weaker baht and favorable exchange rates.
At the same time, new hotel projects in Phuket may reach their limits due to rising land and financing costs caused by high interest rates and inflation. This could limit new supply and lead to higher occupancy rates in existing hotels.
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