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Phuket tourism boosted by Russian rebound

Russian arrivals to Phuket have now rebounded, but the crackdown on so-called “zero-baht” tourism from China has hindered growth.

According to a new report from C9 Hotelworks, total airport arrivals to Phuket exceeded 7.5 million passengers in 2016, marking a year-on-year increase 18%. This can be partially attributed to the resurgence of the Russian market, which increased 51% last year. The rebound was prompted by the strengthening of the Russian rouble against the Thai baht and instability in the Middle East, which caused a shift in Russian tourist activity.

Another of Phuket’s biggest source markets, mainland China, has been impacted by the Thai government’s crackdown on zero-baht tourism, which started in September 2016. This caused the full-year growth for Chinese arrivals to decline from 35% in 2015 to 11% last year.

A tourist looks out over Phuket's Kata Beach
A tourist looks out over Phuket’s Kata Beach

The report predicted however, that the impact of this crackdown is expected to soften in early 2017 with more Chinese travellers expected to have arrived during the Lunar New Year holiday.

Another key market issue is the influx of Airbnb and residential products now competing in the hotel space. C9 Hotelworks’ managing director, Bill Barnett, noted that the inclusion of “unregistered tourist accommodations” into the island’s tourism supply increased the island’s total inventory to 81,727 keys in 1,744 properties.

“This shift demonstrates the Thai government’s focus on addressing the widespread proliferation of unlicensed accommodation and the provincial administration has issued an ultimatum for illegal hotels to either register or face legal action,” the report stated.

Overall, revenue per available room (revPAR) in Phuket increased 4% in 2016, as a 6.2% rise in occupancy offset a slight decline in average daily rate (ADR). Overall, Phuket hotels achieved occupancy in excess of 75% for the year.

Currently, Phuket’s hotel pipeline comprises a total of 5,495 keys in 32 new hotels, all of which are expected to launch by 2020.

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