Shopping beats a sun tan

PHUKET, 21 February 2013: A dynamic shift in Phuket’s tourism market is seeing demand move away from relaxing on a beach to retail therapy in shopping malls, according to the latest hotel market update released by C9 Hotelworks.

The shift from beaches to malls is credited to the boom in Russian and Chinese visitors who accounted for 38% of international airport arrivals to Phuket  in  2012, according to a new report issued by the consulting firm.

This trend is consistent with Thailand’s continued surge in the mass market where last year over 3 million visitors from China and Russia came to the country.

C9’s managing director Bill Barnett said: “Hot on the heels of a rising Asian middle class and the resurgence of a prolific group travel segment, Thailand’s resorts are becoming urban playgrounds. It’s not just about the beach anymore as shopping and attractions are gaining momentum as strong demand catalysts.”

Extensive research by C9 in its 2012 Hotel Market Update revealed that tourist spending is heavily weighted towards major shopping malls, which command 73% of the market share of the island attractions followed by 16% for entertainment shows such as Fantasea and Siam Niramit. Consumer research showed Phuket visitors spend 30% on accommodation, followed closely by retail shopping at 24%.

Overseas tourists are pushing up numbers at the large malls such as Central Festival and Jungceylon, where the top three nationalities are Chinese, Russians and Australians.

Last month, retail giant Central Retail Corporation (CRC) announced a US$332 million expansion project in Phuket with a mega entertainment centre, luxury fashion shops and a convention centre.

Visitor traffic through Phuket International Airport is reaching crisis proportions, with over 9.5 million passenger movements  last year. Airport officials say even planned expansion will not satisfy demand. It is already forcing some airlines to consider Krabi Airport, 150 km southeast of Phuket, as an alternative place to land charter flights.

Mr Barnett said 2012 saw a ‘staggering’ volume of traffic, which exceeded the airport’s stated capacity by 47%. Compounding this was a 13% surge in year on year growth.

Asia’s other iconic resort destination, Bali, saw the growth rate  in international arrivals, during 2012, shrink from 22% in 2011  to 4.15% last year, while Phuket retained its overseas momentum with a 16% surge in 2012. C9’s research indicates that the substantial volume in charter flights from emerging Chinese and Eastern European markets was the key factor

Airlift continues to drive Phuket’s hotels where the 2012 market-wide occupancy hit 76% and an average rate of US$142. While Patong experienced the strongest occupancy demand, surprisingly growth in the luxury tier pushed up occupancy by 9%.

However, there is still some concern about the incoming supply pipeline of over 4,000 new hotel rooms due to open by 2016.

Analysing the shifting sands of Phuket’s tourism market, Mr Barnett added that the sector to watch was the expansion of “off-beach” demand generators. “Tourism behaviour is evolving and it’s clear that a new rule book applies in the numbers-based game.”

The study did not address the island’s failing security image and the growth in crime targeting tourists. It is the one factor that could put a damper on growth and ultimately cause the island’s hotel performance to implode.