PHUKET — Phuket’s tourism sector saw a significant recovery in the first half of 2024, driving hotel room prices to unprecedented levels, according to a leading real estate expert.
Carlos Martinez, Director of Research and Advisory at Knight Frank Chartered (Thailand) Co., Ltd, a real estate advisory firm, stated that Phuket’s tourism industry had experienced a robust rebound, welcoming 4.3 million tourists from January to June 2024. This figure is just 7 percent lower than pre-pandemic levels, indicating a near-complete recovery after the challenges posed by COVID-19.
International tourist arrivals saw a sharp 42 percent year-on-year rise, with 2.6 million foreign visitors recorded in the first half of the year, approaching pre-COVID figures. The restoration of air travel capacity played a pivotal role in this resurgence, and experts predict further growth in international tourist numbers during the second half of 2024.
Domestic tourism also saw gains, with 1.7 million Thai tourists visiting the island, marking a 6 percent increase from the previous year. However, the number of domestic visitors remained 13 percent below pre-pandemic figures. The number of international flights to Phuket grew by 34 percent compared to the same period last year, though it still lags 14 percent behind pre-COVID levels.
In the first quarter of 2024, Russians made up the largest share of foreign visitors, followed by tourists from China, despite the latter’s economic slowdown. Additionally, Phuket saw significant growth in tourist numbers from India, Australia, and neighboring countries such as Malaysia and Singapore.
This influx of international visitors bolstered hotel performance, with average occupancy rates reaching 84 percent, an increase of 3 percent over last year and 2 percent higher than pre-pandemic levels. During the peak tourist season, from January to February, occupancy surged above 90 percent, though it later dipped to 74-75 percent in May and June.
Hotel prices also soared, with the average room rate (ARR) reaching a record 6,837 baht (approximately $200), a 32 percent increase from the previous year and a 64 percent rise compared to pre-pandemic rates. This sharp increase was attributed to the growing number of high-end and luxury hotels catering to the island’s influx of tourists.
Phuket saw only one new hotel open in the first half of 2024, bringing the total number of rooms to 44,838. However, five additional hotels, with a combined 1,117 rooms, are slated to open by the end of the year, marking a 3.5 percent growth in room supply compared to last year. This outpaces the island’s historical average growth rate of 2.5 percent annually.
Martinez noted that the recovery in domestic demand, driven by the depreciation of the Thai baht, which has made foreign travel more expensive for Thai citizens, is likely to persist in the second half of the year. Coupled with strong international arrivals, Phuket’s tourism industry is poised for continued growth.
Looking ahead, Phuket is expected to attract 2.5 to 2.7 million foreign tourists in the second half of 2024, which should further bolster hotel occupancy rates during the peak tourist season in the final quarter. Favorable exchange rates, the near-complete restoration of air traffic, and a new visa waiver policy are all seen as contributing factors to this anticipated surge.
Despite the booming market, prices are expected to stabilize in the second half of the year after the sharp rise in room rates. The weaker baht and continued favorable exchange rates are likely to play a role in maintaining this balance.
However, Martinez cautioned that new hotel developments could face limitations due to rising land and financing costs. High interest rates and inflation have increased the cost of borrowing, which may slow the rate of new hotel construction on the island. This, in turn, could lead to higher occupancy rates in existing hotels as new supply becomes limited.
As geopolitical tensions, such as the ongoing conflict between Russia and Ukraine, continue to influence travel patterns, Phuket has become a safer alternative for Russian tourists, further driving demand. However, the long-term impact of these tensions on global travel remains uncertain.
