Airport Capacity Hits Samui Hotel Businesses

[Boater]

"Hotels have been added to the island over the past four years, but the boom has undermined supply-demand fundamentals and strongly impacted last year's operating performance," managing director Bill Barnett said last week.

According to its latest report, "2010 Samui Hotel Market Update", warning signs clearly point out that the lack of clarity over airport expansion or relocation plans remains the critical unanswered question.

Private sector development has surged ahead of needed transportation infrastructure improvements, which has propelled the market into a tailspin.

A compelling situation has emerged where the island sits within an international flight corridor that requires low-level landings. Environmental controls in turn have resulted in a restrictive ceiling of 36 flights a day.

Compounding the problem is a limited runway length, which inhibits larger aircraft from using the airport.

"Private operators and hotels say the biggest problem in Samui is airport capacity, which is controlled by a private company," he said.

Many Hong Kong tourists |want to come to Samui but they cannot get flights, while the cost |of air transport to the southern island is too expensive even for Thais.

more here - http://www.nationmultimedia.com/home/Airport-capacity-hits-Samui-hotel-businesses-30148062.html

[smokie36]

Build a new airport!

No hang on that's too complicated.

Build a new tropical island!

[steelerian]

and if you build a new airport, dont let Bangkok Airways owna dn operate it, then maybe more people WILL come to Samui

[Boater]

follow on report today

Koh Samui's four-year hotel building boom is threatening to undermine the long-term success of the destination as supply outstrips an arrivals demand hamstrung by severely limited airlift, according to Samui Hotel Market Update 2010, released today by C9 Hotelworks.

The report (download the full report here) reveals that oversupply heavily impacted last year's operating performance and if there was no airport expansion or relocation plans that would improve access to the island, the long-term potential of Koh Samui would be effectively capped.

Koh Samui, Thailand's second-largest island, 700 kilometres south of Bangkok, is located in an international flight corridor requiring low landing levels. Coupled with environmental restrictions allowing only 36 flights a day at the existing airport and a runway length unable to handle larger aircraft, it has created a situation that is strangling the popular southern Thailand destination.

The simple problem is that you can't stay there if you can't get there, this is the key restricting growth in Koh Samui. Private sector development in the hospitality sector has surged well ahead of transportation infrastructure improvements which has caused the market to go into a tailspin.

According to report data, gains during 2010 in international arrivals were neutralised by diminishing European tourists and a drop in the volume of historically strong repeat guests. Marked declines were registered in occupancy by 7%, average room rates by 15% and RevPAR by 26% compared to 2009.

However, forward trading prospects were greatly bolstered by the high quality of much of the new supply with a number of stylish branded products entering the market in the luxury and upscale tiers.

Short-term there is an inherent risk of being lost in transition over the next few years. This uncertainty is highlighted by the ability of the market to absorb 801 new rooms scheduled to enter the supply side by 2012, presenting a growth of 5% over the existing 14,401 rooms at the end of 2010.

Speaking to resort owners and hotel managers during the market research process comments to C9 centered on the airlift conundrum topic. Comparing the emerging destination to the more developed markets of Phuket and Bali, what was clearly missing in Koh Samui was regional low cost carrier and charter flights.

more here -

http://www.thephuketinsider.com/hotels/koh-samui-airlift-hits-hotel-performance.php

[bkkjames]

and amazingly all these people keep building hotels knowing the the airport situation: due diligence? The nice figures quoted probably have nothing to do with flight access and more to do with strong baht vs european currencies.

what was the load factor of those 36 flights a day?

I agree and would like to see some low-cost options into Samui but it's a bit rich to say the hotels aren't full because people can reach them.

[Boater]

the government really need to start to listen, a second GOVERNMENT airport is NEEDED on Koh samui, which not only will allow the correct supply of aircraft to enter samui but charter flights and low cost airlines.

[Gulfsailor]

and amazingly all these people keep building hotels knowing the the airport situation: due diligence? The nice figures quoted probably have nothing to do with flight access and more to do with strong baht vs european currencies.

what was the load factor of those 36 flights a day?

I agree and would like to see some low-cost options into Samui but it's a bit rich to say the hotels aren't full because people can reach them.

Well, currently flights are pretty full and during past peakseason it was very difficult to find a seat. But a quick calculation;

36 flights allowed means flight movements, so thats 18 arriving and departing per day.

Let these all be large planes holding around 80 passengers per flight maximum.

Then assuming only toursists are flying, Samui Airport can welcome a maximum of 1440 tourists per day.

No lets assume that the average tourist stays 5 days, then you can fill 7200 beds per day

Assuming 70% of tourists come as couple and 30% is sinlge, then you can fill 4680 rooms.

So the other 10.000 rooms will have to be filled with people not coming in via Samui Airport, and then I don't even consider all private houses and villas that are rented out, nor the fact that Koh Phangan also gets a large portion of its tourists coming in via Samui Airport.

So yes, there definately is a shortage of flights. The fact that planes are not always full as it is now, is just beacuse they are sooo expensive. But from a PG standpoint, I can understand that it is better to fill planes 80% and charging 5000 Baht per ticket, than having them full all the time if charging 2000 Baht. Only when more flight movements are allowed to arrive, will it make sense to lower prices, as you can just fill more planes and still make a profit. It's a matter of supply and demand and funny enough PG is not the one responsible for capping the supply, they just very conveniently use it.

So a second airport makes no sense as the environmental rules wouldn't change. Unless they raise the number of flights allowed, but then we wouldn't need a 2nd airport...

[BusyBee123]

maybe an airport than has a runway fit for large planes and international flights would reduce the number of flights, increase numbers op people, help the environment and hopefully shut down bangkok air leaving only one government airport

[Boater]

maybe an airport than has a runway fit for large planes and international flights would reduce the number of flights, increase numbers op people, help the environment and hopefully shut down bangkok air leaving only one government airport

that would have my vote !

[notime]

Hmm .. anybody has an idea how did THEY arrive at 36 flights per day "environmental limit"? Because as to me, I'm rather convinced that if only Bangkok Air needed to have 50 flights per day that "environmental limit" would be set at 50 flight per day. So, we're talking about number of devils on the pinhead here.

As to the issue of the second airport it is in fact the same issue. Who is going to dare to ruin Bangkok Air business? The discussion whether the second airport is needed at Samui is purely academic without answering the first question. I long ago proposed that maybe a government airport around Khanom or Don Sak would be a solution acceptable to all "stakeholders"and hence possible in the Thai way. Such airport would be very useful to KPG, Samui, would boost tourism at Khanom area and could be connected to the islands by fast passenger ferries (no cars). It MAY also be acceptable to Bangkok Air as that would allow them to hold the privilege of the most convenient entry to Samui.

[khunPer]

and amazingly all these people keep building hotels knowing the the airport situation: due diligence? The nice figures quoted probably have nothing to do with flight access and more to do with strong baht vs european currencies.

what was the load factor of those 36 flights a day?

I agree and would like to see some low-cost options into Samui but it's a bit rich to say the hotels aren't full because people can reach them.

Well, currently flights are pretty full and during past peakseason it was very difficult to find a seat. But a quick calculation;

36 flights allowed means flight movements, so thats 18 arriving and departing per day.

Let these all be large planes holding around 80 passengers per flight maximum.

Then assuming only toursists are flying, Samui Airport can welcome a maximum of 1440 tourists per day.

No lets assume that the average tourist stays 5 days, then you can fill 7200 beds per day

Assuming 70% of tourists come as couple and 30% is sinlge, then you can fill 4680 rooms.

So the other 10.000 rooms will have to be filled with people not coming in via Samui Airport, and then I don't even consider all private houses and villas that are rented out, nor the fact that Koh Phangan also gets a large portion of its tourists coming in via Samui Airport.

So yes, there definately is a shortage of flights. The fact that planes are not always full as it is now, is just beacuse they are sooo expensive. But from a PG standpoint, I can understand that it is better to fill planes 80% and charging 5000 Baht per ticket, than having them full all the time if charging 2000 Baht. Only when more flight movements are allowed to arrive, will it make sense to lower prices, as you can just fill more planes and still make a profit. It's a matter of supply and demand and funny enough PG is not the one responsible for capping the supply, they just very conveniently use it.

So a second airport makes no sense as the environmental rules wouldn't change. Unless they raise the number of flights allowed, but then we wouldn't need a 2nd airport...

36 flight a day means, 36 incomming and 36 departures - there are aprox 25 daily roundtrips to BKK. In average 4,000 perople arriving and 4,000 departing, assuming each aircraft can carry 130 in average (some more, some are the small ATR-72, 70-seat planes). The new terminal should be able to handle up to 2 mio. passengers a year, today the number of passengers are quoted to around 1,2 mio.

Average stay 5-7 days gives some 25,000 guests, however not all passengers are tourists looking for a hotel and the like, some are residents and expats. Some passengers continue to Koh Phangan (maybe also Koh Tao).

It is difficult to quote excact number of beds available at Samui - some bungalow renters may not be registered - but officially it should be somewhere between 15,000 and 25,000.

Accoring to Bangkok Air and Tourist Organizations - from what has been written in the local papers - the number of passengers and visitors increase with some 2-6% annually, even during the recession. Some of the visitors comes with bus or train via ferry or catameran, even budget airfare via Surat Thani. However the number of new hotel beds increase with some 10-15%. Building more hotels and resorts than the demand, means means more empty beds.

It is correct, that in the fairly short peak season it may be difficult to just walk in and buy an air ticket - so it is everywhere in peak season - but it is also difficult to find a free bed at Samui. However the capacity of the 36 dayly flights can still be improved some, by replacing the ATR-72 operations with bigger planes. But what about other periods? Normally it is not a problem to buy air tickets.

Airport capacity and building one more airport has for long time been a discussion at Samui. It seems like hotel owners believe, that their overcapacity will be sold, just the Island get one more airport. However, will there come more tourist, just because of one more airport? Open up for Low Price carriers seems to be the answer, we hear.

But will the budget tourist at all "invade" Samui?

The new hotels at the Island seems not really to be budget class - at Samui that is considered to be a room around 3-4,000 baht a day - it seems like Samui more heads for the up-price market, with more exclusive accomodation. With the high land prices and locations directly to the beaches, budget class accomodation can hardly be a business at all. During the recession Samui has not been hit as hard as other Thai destinations, perhabs the up-price guests do not need to cut that much in their travel expences, even the strong bath indirectly increase the prices with some 20-25%. At many other beach destinations you can find hotel accomodation for under 1,000 baht. In general everything at Samui seems to be a bit up-priced, not to forget the taxis and Song Thaews (especially at night). Mainly the taxi fares seems to irritate many tourist and make them "not want to come back!" Furthermore the infrastructure - power supply, water supply, garbage deposit, roads etc. - need heavy improvements, before the "invasion". And should budget air-tickets - lets say half or less (fx. around 2,000 baht) of the Bankok Air fare - be available from Bangkok, then Samui will still compete with fx. the 120 baht luxury coah from Suvarnabhumi to Pattaya, their 20 baht song taew fare and cheaper accomodation. Saving a few thousant baht on the airfare, may not make the big difference, when you you still have to spend 20,000+ for one week accomodation. Charter tour operators may face the same problem, finding enough affordable accomodation.

Quoting Boater:

"A compelling situation has emerged where the island sits within an international flight corridor that requires low-level landings. Environmental controls in turn have resulted in a restrictive ceiling of 36 flights a day."

Will there at all be free airspace capacity for a second airport on the Island?

[limbos]

Environmental controls, first I heard about like that in Thailand, it must suit somebody very well to use this.

It wouldn't surprise me at all if with a 2nd airport the environmental control is all of a sudden very flexible.

[Oliver Reed]

I'm sure the environmental control restrictions were a gimic imposed in part by Bkk Airways...makes good business sense to have 36 flights with high demand..the demand will inflate the price and their profits (as weve seen)...rather than run 50 flights with a watered down demand (more empty seats = lower profit)..i grudgingly fly here and back from Bkk 10 times a year, yet in 2 years have been unable to redeem my frequent flyer free flight, as all flights (even 6 weeks in advance) show as full..Just cant get my head around why the flight Bkk to phuket is longer than Bkk-USM yet 4 times cheaper...Bkk Airways staff should wear stripey jumpers and batman eye masks

[Jangot]

One famous travel writer - can't remember who, said one should arrive at an island by boat; to get a sense of 'island' instead of just another place on the mainland. Having visited many islands by boat, air and bridge, I have to agree with him.

Instead of expanding the airport facilities, how about developing the ferries?

J.

[khunPer]

I'm sure the environmental control restrictions were a gimic imposed in part by Bkk Airways...makes good business sense to have 36 flights with high demand..the demand will inflate the price and their profits (as weve seen)...rather than run 50 flights with a watered down demand (more empty seats = lower profit)..i grudgingly fly here and back from Bkk 10 times a year, yet in 2 years have been unable to redeem my frequent flyer free flight, as all flights (even 6 weeks in advance) show as full..Just cant get my head around why the flight Bkk to phuket is longer than Bkk-USM yet 4 times cheaper...Bkk Airways staff should wear stripey jumpers and batman eye masks

My family and I use Bangkok Air quite a bit and have redeemed a number of Frequent Flyer free tickets, even two this New Year season, only one week in advance.

[ParadiseLost]

There has been much talk about a high speed rail link to the South; if this runs through Surat, possibly continuing down Nakhon way the ideal would be a station at Don Sak.

In fact if there is to be a high speed link then Chumpon will be really convenient from BKK. All that is needed then are high speed ferries such as the Hong Kong - Macau Boeing Jetfoils. The distance is almost identical 70 km which only takes 1 hour - exciting, comfortable and safe!

http://en.wikipedia.org/wiki/TurboJET

:jap:

[sevenhills]

There has been much talk about a high speed rail link to the South; if this runs through Surat, possibly continuing down Nakhon way the ideal would be a station at Don Sak.

In fact if there is to be a high speed link then Chumpon will be really convenient from BKK. All that is needed then are high speed ferries such as the Hong Kong - Macau Boeing Jetfoils. The distance is almost identical 70 km which only takes 1 hour - exciting, comfortable and safe!

http://en.wikipedia.org/wiki/TurboJET

:jap:

I had the same dream one night not long back...and then I woke up.

[Rooo]

Sometimes you shake your head in wonder. All these hotels , etc... know the capacity of the airport & BKK Air.

Isn't there a saying, definition of madness, keep on doing the same thing, hoping for a different result?

Just add more rooms.

[robsamui]

and amazingly all these people keep building hotels knowing the the airport situation: due diligence? The nice figures quoted probably have nothing to do with flight access and more to do with strong baht vs european currencies.

what was the load factor of those 36 flights a day?

I agree and would like to see some low-cost options into Samui but it's a bit rich to say the hotels aren't full because people can reach them.

Well, currently flights are pretty full and during past peakseason it was very difficult to find a seat. But a quick calculation;

36 flights allowed means flight movements, so thats 18 arriving and departing per day.

Let these all be large planes holding around 80 passengers per flight maximum.

Then assuming only toursists are flying, Samui Airport can welcome a maximum of 1440 tourists per day.

No lets assume that the average tourist stays 5 days, then you can fill 7200 beds per day

Assuming 70% of tourists come as couple and 30% is sinlge, then you can fill 4680 rooms.

So the other 10.000 rooms will have to be filled with people not coming in via Samui Airport, and then I don't even consider all private houses and villas that are rented out, nor the fact that Koh Phangan also gets a large portion of its tourists coming in via Samui Airport.

So yes, there definately is a shortage of flights. The fact that planes are not always full as it is now, is just beacuse they are sooo expensive. But from a PG standpoint, I can understand that it is better to fill planes 80% and charging 5000 Baht per ticket, than having them full all the time if charging 2000 Baht. Only when more flight movements are allowed to arrive, will it make sense to lower prices, as you can just fill more planes and still make a profit. It's a matter of supply and demand and funny enough PG is not the one responsible for capping the supply, they just very conveniently use it.

So a second airport makes no sense as the environmental rules wouldn't change. Unless they raise the number of flights allowed, but then we wouldn't need a 2nd airport...

OOPS - misread and mis-quoted - please remove my reply.

R

Edited February 15, 2011 by robsamui

[NALAK]

if the airport were extended to take bigger planes BKK air do not have a fleet to cater for a bigger runway as in going to 757-767 or 330 - 340 types. so no point in extending the runway, and they are not going to let anybody else in. Samui managed in its hay day after the tsunami, its passed its peak now, the price is the most off putting factor and doing more damage to the hotels than anything else.

[SamuiDude]

.. so no point in extending the runway, and they are not going to let anybody else in. Samui managed in its hay day after the tsunami, its passed its peak now, the price is the most off putting factor and doing more damage to the hotels than anything else.

There`s ONLY so much traffic that island can handle before it turns in to melee - regular chaos that pisses off locals and tourists alike trying to go around. However the over crowding seems to be such a short period of the year that why bother building that other airport. Should anyone calculate on that you could easily add 3-4 years from the point where serious mapping starts. Just look at the first golf course that was built around. Surely airport is more demanding task. As Thai government owns people of Samui and tourists after all the fuzz created, they should be levying the air prices with Bangkok Air - from the part of oversees visitors as a token of f**ked upped business` and to give back something for the locals.

[joe84330]

Sometimes you shake your head in wonder. All these hotels , etc... know the capacity of the airport & BKK Air.

Isn't there a saying, definition of madness, keep on doing the same thing, hoping for a different result?

Just add more rooms.

well if you have a niche, a well developed brand etc. then your customers will come regardless. the people suffering from this issue are those who built a brandless property or a hotel with a very low brand value. conrad will still bring in customers in spite (or perhaps even because of) their location. same for W, Banyan Tree, Four Seasons etc.

try opening a 1,2 or 3 star anywhere off of the beach though and you are certainly going to feel the pinch. villa builders are a different breed entirely. not sure what possesses these guys to keep trying to push the sale angle at a time like this. TV should have an emoticon with a guy banging his head against the wall.