Phuketwan Economic Report
DISCOUNTS ON beach loungers are one sign of the Phuket fightback against an economic tailspin that threatens Andaman businesses and jobs.
The scale of the downturn is still being calculated, but diving companies are hurting badly already. Some have dropped 80 percent of their business.
Latest figures from Phuket International Airport give an accurate indication of the island's current parlous economic state.
Flights in January were down 16.49 percent on January 2008, with the international segment holding up much better than the domestic market.
Flights in January 2008 were up 17.67 percent on the same month in 2007. So effectively, Phuket is suffering a two-year setback.
In terms of incoming and outgoing tourists, the island is about where it was in January, 2007. Visitors these days, though, probably have less to spend.
And even worse times almost certainly are coming, which is why the focus should be on positive ways of surviving.
A closer look at last month's airport figures shows international flights down by 9.59 percent to 1697 while the number of international passengers slumped by 10.67 percent to 251,862.
The domestic figures were more alarming, with flights nosediving by 22.17 percent to 1773 and passenger numbers at 310,667, a drop of 12.02 percent.
The total number of passengers declined by 11.42 percent to 562,529. Again, this was a trip back in time two years to January 2007, when 567,931 passengers arrived and departed.
Most Phuket businesspeople will be relieved if all that has been lost is two years of growth. More will be at stake in the coming months.
Airport officials are unwilling to speculate about traffic for the weeks ahead.
We WILL fight them on the beachchairs . . . Downside
Most alarming are reports from the diving industry. One spokesperson at a two-boat Patong dive company said that business was down by 70 to 80 percent this season.
Where there were once 30 or 40 customers per day, now that is usually 10 or less, with just one or two on the worst days.
Promotions, not discounts, would help, the spokesperson said.
It was time for resorts and hotels to cease the differentiation between walk-in and tour-booked guests and offer all guests the same lowest possible price.
On the beaches themselves, an experienced contact at Nai Harn told Phuketwan that 25 percent discounts were being offered now on beach loungers in parts of Patong and Kamala.
At Nui beach, a pair of loungers and an umbrella come with a free drink.
While there was still normal pricing of 200 baht for a pair of loungers at Nai Harn, the business on the beach was down by 20 percent this season.
Only two lines of loungers would be operating from the end of February.
Valentine's Day this month is already becoming a test of nerve for many resorts looking to boost revenue, but not necessarily confident about what kind of special offer will be certain to win customers.
We WILL fight them on the beachchairs . . . Upside
Property Report magazine says that with Phuket's residential market now firmly in the grip of economic downturn, developers must drop their prices to attract buyers and ensure a timely recovery, according to some local agents.
''We need a visible display of reality,'' the magazine's online site quotes Andrew Hunter, managing director of Hunter Sotheby's International Realty, as saying.
''Prices have to adjust to invite people back in.There is only one way to encourage buying support and clear the market - price.
''Whilst price adjustments might not have an immediate impact at this time of severe economic uncertainty, it would be catastrophic if, when the macro economic environment finally stabilizes and turns, Phuket was not in a position to exploit this.''
He adds: ''If some developers do not grasp this nettle quickly, then they will not be around to cross the finish line.''
He says developers are ''having to be very creative and flexible on pricing.''
Interest in long-stay apartments on Phuket seems to operate in reverse logic.
One owner told Phuketwan: ''Two of the busiest days we've ever had fielding calls and emails about renting the place were in the days after the 2006 coup and also in the midst of the Phuket airport blockade in August 2008.''
The spokesperson has one 12-unit building and has just opened a second building of 25 units in Chalong, priced from 8500 baht a month upwards.
''Looking ahead for 2009, we will be very happy if we have 50 percent occupancy in the new building, but know it may take several months to reach this target,'' the spokesperson said.
''With our experience in the first apartment, it takes about a year or so to build awareness of the property.
''We have never, and don't expect to, use an agent to market the property since in our experience they have never been successful in getting a booking due to lack of understanding about what we have to offer.
''Nearly all guests are foreign residents of Phuket who work here or are retired. Most guests at the moment are from Finland, who return each year for the high season to work in the dive industry.
The response to our new building, open since February 1, has been stronger than expected.
''We believe that we should hold up fairly well in the economic crunch. If people are wanting to live here on a tighter budget, they may choose to move into our place from, say, a 20,000 baht a month house or resort-style apartment.''
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