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A boy in a Banyan Tree shirt hurdles a fence to play at Laguna Phuket

Laguna Chiefs Take Pay Cuts, But Bookings Hopeful

Saturday, February 28, 2009
Phuketwan Economic Report

HOPEFUL signs of life are flashing in the chasm of Phuket's low season, with early bookings for April and onwards at some resorts now rivalling those at the same time last year.

The encouraging beacon flashes in the dark come amid continuing pain.

At the big end of town, the management at Laguna Phuket is taking a pay cut . . . and the Banyan Tree group has announced a substantial drop in profit for Q4 2008.

Laguna Phuket, as Phuketwan reported in detail on October 30 last year, is also putting on hold the Angsana resort and other major projects, including Laguna Vietnam.

Other media are now reporting these delays, four months after Phuketwan.

Let Phuketwan be the first to tell you today that signs are, at the very least, not completely discouraging.

For all its critics, Laguna Phuket is prepared to have a go and the resort group does have a recovery plan, something that could not be said by many other resorts on the island.

Let's get one thing straight: there is no suggestion that Phuket is capable of maintaining normal business in a worldwide economic whirlwind.

But, as one astute Phuketwan correspondent has noted, putting the downturn in context is important.

The most significant event of the past 24 months for the tourism business in Thailand is not the political unrest, or the global downturn, but the trend to online searches by people looking for holiday destinations, and with it, late bookings.

The effects of the political unrest will eventually pass, and so will the economic downturn, although forecasts of precisely how long that passage will take are mostly guestwork for now.

On the other hand, the trend in tourism to late bookings, and to the internet, is here to stay.

Laguna Phuket has been mentioned often already this year because of a blockade by staff unionists, a successful gathering of Asean financial chiefs ( Plus Three), and this week the launch of an extra free night promotion entitled '100,000 Smiles in Laguna Phuket.'

Laguna Phuket seems to be always out there, taking calculated risks and trying to improve the fortunes of its resorts and the island through challenging times.

Despite the global economic downturn and a three-day blockade by union supporters over pay and bonus rates, the figures for the six resorts are being interpreted as encouraging.

In January, Laguna Phuket averaged an occupancy rate of 65 percent, compared to 85 percent in 2008.

In February, the resorts expect to average a rate of 53 percent, down on the 88 percent for the same month last year.

Looking ahead, though, March is so far at 36 percent, compared to 46 percent at the same time last year.

March 2008 ultimately produced a 66 percent rate for the month.

While figures beyond March are concentrating the attention of just about everyone in the Andaman tourism industry, Phuket is doing better than some, especially compared to Bangkok and most other destinations in Thailand.

Commercially, Laguna Phuket and the Banyan Tree brand are inextricably linked, with the Banyan Tree brand continuing a global expansion of its resort business.

Announcing the Q4 Banyan Tree Holdings Ltd setback, Executive Chairman Ho Kwon Ping said: ''The political turmoil in Thailand which led to a week long closure of Bangkok's Suvarnabhumi International Airport and left more than 300,000 tourists stranded in November has significantly affected our hotel operation and property sales in Thailand in the fourth quarter.

''We are bracing for a tough year in 2009 given the continuing political crisis in Thailand and the world economic slowdown and deterioration of the global financial situation.

''The group, however, has embarked on various cost cutting measures for all its operations and will defer where necessary projects that have yet to commence and minimise capital expenditure.''

Banyan Tree Holdings Ltd fourth quarter result shows a 79 percent decrease, with operating profit for the full year 23 percent below last year at S$93.8 million.

Under the heading Outlook, the report adds: ''Barring unforeseen circumstances, we expect the results in 2009 to be lower than 2008, which had the benefit of a good first half.

''Against this backdrop, the group will be vigilant in managing costs and has undertaken several cost cutting measures at the operations level and has also deferred major capital investment to preserve cash.''

Property sales reported lower revenue by S$28.9 million, or 86 percent, to S$4.8 million in 4Q 2008.

''This was largely due to lower sales and revenue recognition for new projects such as Laguna Village Townhomes phase 3 and 4, and Bungalows phase 5 and 6.

''Earlier projects such as Laguna Village Townhomes phase 1 and 2 and Bungalows phase 1, 2 and 3 have been fully sold out and recognised in previous quarters due to construction completion.

''The segment registered a loss before interest, tax and depreciation of S$2.9 million in 4Q 2008 due to lower revenue.''

Expansion is continuing, though, with six new Banyan Tree resorts scheduled to open in the next 12 months: one in China, one in Indonesia, two in Mexico, and two in the United Arab Emirates.

Phuketwan, First For News

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The Union Dispute

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The Phuket Economy

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The Asean Conference

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Friday February 23, 2024
Horizon Karon Beach Resort & Spa

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