Almost Half Of Phuket’s Hotel Projects Delayed

[george]

Almost half of Phuket’s hotel projects delayed

PHUKET: -- Up to 48 percent of all new hotel developments in Phuket are experiencing major construction delays due to the global economic downturn and concerns over Thailand’s political stability, an authoritative report has found.

However, according to the Phuket Hotel Market Update Mid-Year Report (Click here to download the full report) released by respected hospitality consulting firm C9 Hotelworks, the slowdown on hotel construction sites has not dented developers’ enthusiasm for entering the accommodation market on the island.

C9’s Managing Director Bill Barnett said that despite the delays, new developments continue to enter the stream, with 38 properties offering 6,231 rooms at various stages of advancement in the construction cycle.

“Non-traditional products, such as hotel-managed villas and condos now represent 34% of the upcoming inventory,” Mr Barnett said.

According to the research, first-half trading for 2009 indicated that tourist arrivals declined by 14% but a combined luxury/upscale/mid-scale occupancy rate of 60.4% produced an average room rate of USD141.

The report also noted that rate wise, branded hotels outperformed non-branded properties by 33.7%, although the non-brand sector outperformed the brands on occupancy by 12.4%.

“Looking forward, short-term trading will focus on occupancy at the expense of long-term rate strategies,” said Mr Barnett.

“Cash flow is a key underlying consideration in this market. Most hospitality assets are carrying low debt ratios. Defying the trends are the luxury high-end tier properties, which operate in a favorable supply and demand segment, and budget-tier hotels who have captured changing demographics, are experiencing business from price-conscious travelers."

The report concluded that Phuket’s long-term outlook remained positive due to brand concentration, growing airlift and infrastructure improvements. However, recovery in 2009 has effectively been written off, with prospects pushed into 2010.

-- Phuket Gazette 2009-08-04

[catmac]

Reads more like a desperate attempt to cheer themselves up! Perhaps they should just accept that Phuket will never be the destination of choice for "the well-off, discerning traveler", as I once saw a poster on some thread here claim. Just too many dodgy aspects of Thailand today to appeal to them.

[ianrodders]

Reads more like a desperate attempt to cheer themselves up! Perhaps they should just accept that Phuket will never be the destination of choice for "the well-off, discerning traveler", as I once saw a poster on some thread here claim. Just too many dodgy aspects of Thailand today to appeal to them.

agreed too many cheaper places to stay in los prices pumped up far too much with the sunami excuse playing that all too familiar tune...

[ianrodders]

Reads more like a desperate attempt to cheer themselves up! Perhaps they should just accept that Phuket will never be the destination of choice for "the well-off, discerning traveler", as I once saw a poster on some thread here claim. Just too many dodgy aspects of Thailand today to appeal to them.

[jackdanielsesq]

The report underscores the normal 'flight-to-quality' in bad times.

I believe that, if handled correctly, the 2nd tier will start to improve as the global economy begins to pick up.

Snow is coming soon to the Great North.

BR>Jack

[stumonster]

easy to get a full card in " buzzword bingo " with this press release

[Chunkton]

Well if the latest rumors of the latest planned military coup are correct that will certainly solve the political instability problem, all investors and tourists love a government in khaki. Boom times a coming.

[johnboy72]

More accomodation, more areas cleared for construction and a little bit more of the beauty and charm is taken from this once half decent looking Island.

We have good old Mr.Barnett and his fellow property development chums to thank. Only interested in the $ signs rather than preserving beauty.

So many projects have been started and then put on hold. If the money isn't in the coffers to continue then what?? The longer they are left the more the natural elements will have their fun on the concrete. Then. Is it possible to continue or do you just knock them down and start again? + who will pay for that??

[simon43]

As an example, look at the Hyatt on Nai Yang Beach. Construction on that started before the Tsunami (as Phuket Pavilions). Still waiting for it to be finished....

Simon

[zzaa09]

Well if the latest rumors of the latest planned military coup are correct that will certainly solve the political instability problem, all investors and tourists love a government in khaki. Boom times a coming.

All Thai elite investors, that is!!

[LeungKen]

As an example, look at the Hyatt on Nai Yang Beach. Construction on that started before the Tsunami (as Phuket Pavilions). Still waiting for it to be finished....

Simon

Built on what many locals believed to be National Park...

Now referred to as Cobra Villas due to the rapid encroachment of the "jungle".....

[dale8]

Hello, it is difficult to understand if the developers are cutting their losses before they finish the projects or they lost their financing. It is a bit of a gamble in this recent economic downturn to open so many hotels, but travel will not stay low much longer as there are many signs this recession is waning. It might be in the best interests for the investors to be ready for a strong recovery in the next year, and the properties are not gaining in value left unfinished.

[catmac]

Hello, it is difficult to understand if the developers are cutting their losses before they finish the projects or they lost their financing. It is a bit of a gamble in this recent economic downturn to open so many hotels, but travel will not stay low much longer as there are many signs this recession is waning. It might be in the best interests for the investors to be ready for a strong recovery in the next year, and the properties are not gaining in value left unfinished.

A bit of both, I would say. At least the developers and their financiers have seen the light - Phuket just ain't going to be the golden goose for the moneyed elite! Pity though, with a bit of foresight and a little less gullibility they needn't have despoiled so much of the island. The sight of all these half-finished, decaying relics will hardly do wonders for what's left of the tourist trade.