Is Phuket demand moving away from beach?

A dynamic shift in Phuket, Thailand’s tourism market shows demand moving away from the beach, according to a new report issued by Phuket-based consulting firm C9 Hotelworks.

A C9 report states that Russian and Chinese visitors accounted for 38% of international airport arrivals to the island last year, which is a trend consistent with Thailand’s continued surge in the mass market where last year over three million visitors from China and Russia came to the country.

“Hot on the heels of a rising Asian middle class and the resurgence of a prolific group travel segment is that Thailand’s resort markets are becoming urbanized playgrounds,” C9’s Managing Director Bill Barnett said. “It’s not just about the beach anymore as shopping and attractions are gaining momentum as strong demand catalysts.”

C9 research in 2012 revealed that tourist spending is heavily weighted toward major shopping malls, which command 73% of the market share of island attractions. Entertainment accounts for 16% of the spend.

Research further showed that Phuket visitors spend 30% on accommodation, with retail shopping closely tailing at 24%. Overseas tourists are pushing up numbers at the large malls where the top three-nationality mix of customers are Chinese, Russians and Australians. Not surprisingly, in January retail giant Central Retail Corp. announced a US$332 million expansion project in Phuket with a mega entertainment center, luxury fashion shops and a convention center.

Visitor numbers are pushing traffic through Phuket International Airport with over 9.5 million passengers processed last year, exceeding the airports stated capacity by 47%, according to Barnett.

Asia’s other iconic resort destination, Bali, saw 2012 international arrivals shrink from 22% in 2011 down to 4.15% last year, while Phuket retained its overseas momentum with a 16% surge in 2012. C9’s research indicated that the sheer size of the charter flights from the emerging Chinese and Eastern European markets is the key differentiator.

Airlift continues to drive Phuket’s hotels where full year 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, Barnett said there is still some concern about the incoming supply pipeline of over 4,000 new hotel rooms between 2013-2016.

To download the full report, please click here.