Phuket tourism rising above global worries

Constantly rising oil prices have been taking their toll on the travel and tourism industry, especially with airlines raising prices or cutting flights and routes - or both. As a result, the Tourism Authority of Thailand (TAT) recently announced a downward revision of its predictions of tourist figures for 2009.

This is not to say that the TAT expects the number of tourists visiting the ‘Land of Smiles' to fall compared with 2007. No, what it means is that the number will not go up by quite as much as originally expected.

In fact, even the revised "low" figure of 3.3% growth would be the envy of most other established tourist destinations, and for 2009 the TAT is still targeting a 5% growth in revenue from tourism.

This optimism in the face of general pessimism in the industry worldwide is due to a number of factors, with two being particularly pertinent: a general move to "higher quality" tourists and the appearance of new international markets.

Phuket, Thailand's No 1 island destination, is a good example of how this has worked. The island has recovered completely from the Asian Tsunami disaster of 2004, which naturally put a huge dent in tourist arrivals, especially as it happened at the very peak of the annual "high season" for tourism.

But in the past three years the growth in the number of tourists coming to the island has outstripped the national average. Partly this is due to confidence returning after the tsunami but already, by last year, the number of visitors had exceeded the 2004 pre-tsunami figure – 4.8 million in 2004 and just over 5 million in 2007. Although figures for 2008 are not yet available, local TAT staff say that they are running ahead of those at this time last year.

Also steadily rising has been the amount the average visitor spend per day in Phuket. From 3,295 baht a day in 2004, the amount rose to 4,120 last year – in increase over three years of 28 percent. Over the same period, the amount of time foreign visitors spend on the island has also increased, from 5.20 days to 5.57.

As a result, Phuket's income from tourism has expanded from 86 billion baht in 2004 to 94 billion last year.

So tourists clearly like Phuket. Why? One reason is the drive to make the island more attractive to "higher quality" visitors. The TAT has for years aimed at such visitors, though its aims have always seemed rather modest, targeting a small annual increase in the average daily spend.

The island's authorities have worked hard at improving the infrastructure. A second terminal has been added to the international airport and runway expansion is talked about. Roads are being widened, internet connections, which were slow and expensive five years ago, are now approaching respectable speeds, and many hotels, restaurants, bars and cafés offer free WiFi connections.

The private sector, too, has not been slow in raising the bar. The variety of cuisines available is now huge, allowing just about anyone to find the comfort of food they enjoy at home. Shopping centres, hospitals and cinemas have improved out of all recognition.

There has also been a significant swing to villa resorts to cater for truly high-end tourists. The average daily spend may be 4,120 baht (equivalent to about US$125, €77 or ₤61) but this simply reflects the large numbers of mainland Chinese, Taiwanese and Korean tourists on package tours.

At the top end, tourists are prepared to spend 15 times as much per night, or more, on accommodation alone. Much of this accommodation is in large villas with swimming pools, maid service and drop-dead gorgeous views of the sea.

Five years ago, very little such accommodation existed, and demand far outstripped supply. Property developers, swiftly realizing the potential, turned from a more traditional "you buy it and we'll try to rent it out when you're not here" model to a more sophisticated one involving villas being built around a central resort area, sometimes with a boutique hotel as well.

A good example of this model is The Village – Coconut Island on Koh Maphrao (Coconut Island) just off the east coast of Phuket.

The location was carefully chosen to appeal to families. Sheltered from the May-October southwest monsoon, it suffers little of the strong winds and heavy seas experienced on Phuket's west coast and is therefore capable of attracting guests year-round.

The front row of villas – which range in size from two bedrooms to five – sits right next to the beach, facing out across the uniquely fascinating panorama of Phang Nga Bay. For those who would rather not swim in the sea, each villa has its own large pool in the garden.

Central facilities will include restaurants, a delicatessen, a large resort swimming pool, tennis courts, a gym and fitness centre, and access to a variety of boats, from canoes to Hobie Cats. Guests can, in fact, spend the whole of their holiday there without lacking for anything. But if they do get an urge to see the sights of Phuket or shop for items not available at The Village, transport to and from the big island takes a matter of five minutes (any time of night or day) on the resort's fleet of speedboats.

The Village is not alone in offering this kind of holiday (although it is one of only a handful planned with this end in mind). Major five-star hotels are adding on villas, and villa developments are adding restaurants and other central facilities. The attraction of such a place to wealthy visitors is not hard to see.

Another factor adding to Phuket's inexorably rising arrivals and revenue figures is the rapid emergence of new tourist markets.

In 2003 the then-President of Russia, Vladimir Putin, came to Thailand for an Asia-Pacific Economic Cooperation summit. While in Thailand, he and many of his entourage headed for Phuket for a little R&R. They lazed by the pool, swam, took in the sights and went game fishing.

They were enchanted and, after they returned to Moscow, word of Phuket's attractions spread in ever-widening ripples through Russia's elite. In the TAT's figures for 2005, Russian visitors still came in such small numbers that they were lumped among "Others" in the stats. But by last year Russian arrivals had risen to 122,000 and Russians formed the seventh-largest national group among the island's visitors.

The TAT, too, can take some credit for boosting arrivals from countries outside Phuket's traditional markets – northern Europe and Asia. Thanks to roadshows and promotions it has staged in "new" markets, a much greater variety of people visit Phuket these days.

Eastern European countries apart from Russia are not yet listed individually, but together they brought 63,000 people to Phuket last year – more than Italy did. India (41,000), Saudi Arabia (5,000) and the United Arab Emirates (4,000) have all emerged from the "Others" listing to merit their own national entries.

The tourism industry in the world's most popular destinations will probably take a huge knock this year from rising oil prices and global economic uncertainty, but it seems that, for Phuket at least, there is still plenty of upside.