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Market Watch - Page 31:

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Phuket For Sale

 

 

 

High season has come and after the Songkran and Easter holidays its going, going, gone. Talk to any hotelier about the outlook post April and there is a far away, glazing of the eyes, not unlike a poached salmon on one of those 5 star brunch buffets. More often then not after a bit of introspective soul searching minutes, cough and sputters like warming up the car on a winter’s morning and the word most often are "its pretty grim or we are looking at a lot of empty beds for the next 6 months."

So what indeed is to be done about the calamity as we enter the perils and pitfalls of ‘no season.’ In this instance Phuket is not unlike anywhere in a global recession and virtually every market in the world is
scrambling for what crumbs are left in tourism and travel dollars for the remaining part of 2009. Over the past 2 ½ years since I started writing ‘Property Watch’ the need for a destination marketing initiative has come to print more times then I can even recall and at no such time as before is it more relevant.

Let’s do the math. Phuket has over 40,000 registered tourism establishment rooms for sale. Taking 6 months of 'no season' and this equates to 7,200,000 available room nights. Say we assume there is normally an average of 50% occupancy during this time and that 3,600,000 room nights needed to achieve this figure. Taking a more pragmatic approach and say another approach is of the 40,000 rooms, 10,000 are of international standard hotels, record and branded products. This means at 50% occupancy 900,000 room’s night are needed. Many hoteliers are saying low season forecasts are instead of 50% occupancy, many properties are imagining a scenario where half that occupancy or 25% is achieved across the board. Remember these are averages some hotels are higher and others are low so take that into consideration. At risk currently in the market are 450,000 room nights.

How are we doing to fill these rooms? Going back to our previous columns, it’s understood that TAT has a national agenda and even Phuket is lumped into Southern Thailand so there is no direct focus on this market alone. The Thai Hotel Association is a national forum. Phuket continues to have a revolving door at the Governor’s office and tourism while important is just part of a current agenda that has a few people in red shirts perhaps that cause a distraction from our islands on situation. Airport fees here go to AOT which is again a national organization. The Or Bor Jor in the past has focused on creating projects such as the Phuket Gateway and also has its own issue in collecting the controversial room taxes from a good part of hotels in Phuket.

It’s safe to say tourism for the most part is on autopilot here and it’s up to private

 

 

industry to sort out the issues. So we know the problems, its how to address these?

ACCOR the French hotel chain with brands such as Novotel, Mercure, Pullman, and IBIS earlier this year created a 1,000,000 room “Super Sale” event on its online global distribution system. They sold rooms for a period of time (April to July), prepaid, no transferable and only on the internet for a period of a few days. We work closely with a ACCOR hotel in Hong Kong and that property was able to gain over 6,000 room nights alone or close to 20% of its occupancy with the promotion. Best of all the revenue was prepaid so cash flow was there to support important things like staff salaries and operations. That given room rates were deeply discounted which made the offer compelling, but in the end Asia is coming into a critical time and you can’t take profit % to the bank, you gotta show up with money.

While there are lots of ideas for image campaigns or promotions what Phuket needs is a tactical coordinated great sale of hotel rooms in the market. With so many international brands run by hotel management companies, many hotels having marketing alliances with marketing groups such as Leading, Preferred, World or Small Luxury at the same time these companies have their own agenda in addressing all their markets and clients. This island needs an overlay solution that rises above all of these and can get to international distribution with an offer no one can refuse.

Look at who has this and it’s mainly companies such as Phuket.com, Hotels.com, Expedia, AsiaRooms etc..who already have a set up to take booking and international distribution to do so. Going into ‘no season’ there are certain markets that can deliver - North Asia (Korea and Japan), Australia/New Zealand, Middle
East and regional (HK/Singapore) so perhaps the low cost airlines like AirAsia, and Tiger who work with online hotel distribution. What we need now is not rhetoric but organizations to take the lead like Laguna, Marriott, the Thai Hotel Association and even groups like SKAL to set up and coordinate with these internetplayers to get this thing going.

At the end of the day 450,000 rooms means many businesses will stay open instead of folding, jobs retained, education continues for sons and daughters of hotel staff or service industry staff who rely on this and recognition of the industry that drives this islands economy. Looking at ‘no season’ its safe to say the house is on fire and we can hold out hope that action will be taken, new ideas come forward but those which create short term tactics for survival. As often it’s the first step that’s the hardest...

 

 

 

 

   

Bill Bamett is Managing Director of C9 Hotelworks a Phuket hotel and residential consulting firm With more 20 years experience in the region, he has played an active role in some of the island biggest develovments.

       
Articles: 2009
 

Phuket Luxury Villa Market Update Feb 2009

 

Phuket Luxury Villa Market Update Part 1

 

Koh Samui's Luxury Market Emerges

 

The Next Big Thing In Ocean Front Real Estate

 

Predicting The Year Ahead - 2009

 

Is Phuket Ready For Fractional Ownership?

 

Is Phuket Property Too Expensive

 

The Winds Of Change

 

Koh Samui's Emerging Luxury Market Part 2

 

 

       
 

Archived Articles: 2007 - 2008

 

Krabi - On The Edge Of A Boom

 

Khao Lak, Back To The Future

 

Rental Income - Investment Rent And Raves

 

US Financial Crisis - Living The Sub-Prime Life

 

Hotel Branded Realestate, Battle Of The Brands

 

Aesthetics - Out With The New, In With The Old

 

Rental Property - Plus & Minus, Buying A Hotel Unit

 

Local Communities - Cables Gone Wild

 

Agent Commission, The Low Down About Paying Up

 

Aesthetics - Bold Designs Keep Boredom At Bay

 

Phuket - The Next Big Property Trend 2007

 

US Financial Crisis - Clouds The Property Horizon

 

Pre-plan your purchase, and prevent future pain

 

Vietnam, Too Fast Too Soon

 

Timeshare, High End Fractional Ownership Matures

 

How we should protect the property cash cow

 

Re-Inventing Patong

 

Budget Hotel Brands Shake Up The Scene

 

Property Developers - Number Crunching Pays Off

 

Bali, (property) Supply Surges Ahead

 

Aesthetics - Designing For Success

 

Phuket, Battle to preserve the beaches

 

Low Season - Cyclical Cynics

   
 

 

   
 
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