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Vicious cycle: Up go prices, down go tourists

Phuket Suffers: Tourists Down, Inflation Up

Tuesday, July 8, 2008
ECONOMY Watch
PHUKET resorts are suffering this green season, says Krisada Tonsakul, head of the Patong Hotels Association. Other retail indicators offer a bleak picture for the island's whole economy.

Inflation on Phuket is running at 7.9 percent compared to the first six months of 2007, figures from the Phuket office of the Ministry of Commerce reveal.

The ministry bases its research on regular checks of 250 items, including fuel, basic foodstuffs and accommodation.

The inflation figure year on year for food and beverage was up 10.2 percent. Clothes, footwear and other non f&b products rose by six percent.

Rising costs come as large numbers of newcomer Thais flock to Phuket, looking for work.

Phuketwan understands that almost all rental accommodation in Phuket City is taken, pushing up the cost of housing for many.

In contrast, the occupancy rate among resorts in Patong is said to average about 40 percent, down from 60 percent at the same time last year.

Forecasts for next season have become difficult with the TAT cutting its estimate of the number of overseas tourists likely to arrive in Thailand next year from 17 million to 16 million.

It's also likely that visitors to Phuket will number much less than the five million who came in 2007.

Rising oil prices meant that Europeans were not travelling as far, Khun Krisada said. Mostly, Australian tourists were helping to keep visitor numbers from falling even lower.

Some Middle East tourists had also come during the green season, he said.

Patong resorts generally do better in the green season than resorts on other parts of the island, especially at four-star and five-star levels.

So if Patong is having a lower green season, the effects are usually more pronounced elsewhere in Kata and Karon.

At the Duangjitt Resort, one of the largest in Patong with 580 rooms, the manager of human resources, Supat Janon, said occupancy was about 60 percent.

This was about the same as last year. Guests had mostly come from Europe, Dubai, Israel and India.

Asia seminar groups would be targetted as the resort expands by another 120 rooms, approaching the same scale as the Hilton Arcadia Phuket, the largest resort on the island.

The expansion will cost 300 million baht. Forward bookings for next high season were looking strong, Khun Supat said.

The Marisa Resort in Kata reports an occupancy rate of 50 percent, mostly consisting of Korean honeymooners.

Most of the resort's high season guests are from Europe and Australia and occupancy rises to 85 percent.

Related Articles:

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Andaman Resorts Predict Good Times: Survey

Look for more of the latest about resorts and the economy in the region at Phuketwan

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