Anthony Lark, President, Phuket Hotels Association — Photo by Phuket Hotels Association

Phuket's hotel industry is reaching breaking point and drastic economic support from the government is needed for it to survive the high season, urge industry leaders.

In the wake of the controversial "Phuket Model" international travel reopening scheme, reality is biting back as hotels in Thailand's leading resort island are unable to sustain operating viability based on domestic tourism.

According to the Airports of Thailand (AOT), passenger arrivals at the aviation gateway have plunged 65% year-on-year from January through July of this year.

What is clear is that the 86,000 rooms in Phuket's registered accommodation establishments cannot realistically break-even or even be cash-flow positive with only domestic demand. This realistically could set the scene for 50,000 job losses in the hotel sector this year if there's no support forth coming or international visitors are not allowed in.

One of the green shoots is the Alternative Local State Quarantine (ALSQ) program, with over 60 island properties applying. While this program is meant to emulate the ASQ program in Bangkok, given there are no direct flights to Phuket, the government needs wider support of a return of international travelers at a local level and implement inter-ministerial coordination before it could materialize. But this may take months.

Anthony Lark, President of the Phuket Hotels Association that represents 78 hotels in Phuket said: "The math simply doesn't work with single-digit occupancies being reported. No amount of induced local demand can prevent the dramatic continued loss of jobs and rapidly eroding financial crisis for owners and operators. We strongly advocate a safe, pragmatic, and strategic reopening for foreign travelers."

With tourism being the lead economic indicator in Phuket data newly released by hospitality consulting group C9 Hotelworks reveals the Covid-19 impact on the hotel development pipeline with 69% of hotels now being delayed or put on hold. Looking at the economic consequences, at the end of 2019, there were 1,758 licensed accommodation establishments on the island and today incoming projects stand at 58 hotels, representing a 19% rise in supply with 16,476 additional rooms planned.

C9 Hotelworks Managing Director Bill Barnett said: "Thailand's failure to relaunch overseas tourism creates a dangerously perilous scenario for Phuket's hospitality industry. The domino financial impact is not only on hotels and the expanded tourism sector, but it suffocates the development pipeline. This will negatively trigger the erosion of jobs in construction, real estate, retail and ultimately be manifested in consumer credit defaults. The situation is bad, and likely to get worse, as operating hotels remain incur losses day in and day out."

In terms of updating the Phuket hotel situation on the ground, there continues to be much controversy and a lack of national and local consensus over the proposed "Safe and Sealed' sandbox long-stay program. While a stark warning was issued last week by the Bank of Thailand (BoT) over the potential disruption to the heavily tourism-dependent country, the fate of Phuket's coming high season remains very challenged.

Citing a way forward C9's Bill Barnett commented: "Any reopening plan must not only be well planned but has to win the hearts and minds of the Thai people to see any chance of success. While the island may hold the keys to the Kingdom in leading a restoration of tourism, but the more critical issue is how hotels can fight for their lives in the current state of limbo."

Speaking about Phuket's current situation Anthony Lark added: "Firstly, greater proactive dialogue between the public and private sector has to be undertaken. We can't simply say we are now in unknown territory forever. Steps must be taken and a single voice formed.

"Secondly, the Bank of Thailand (BoT) has to look at interim measures to assist hotels with short-term operating bridge loans to weather the storm and retain jobs. Tourism is a human endeavor and without protecting and nurturing our Thai workforce there will be no recovery."

— Source: Phuket Hotels Association— Source: Phuket Hotels Association
— Source: Phuket Hotels Association

About Phuket Hotels Association

The Phuket Hotels Association is a nonprofit organization comprising a broad spectrum of hotels. Our goal is to promote a well-rounded, dynamic picture of Phuket to travelers from around the world by celebrating the diversity of Phuket's natural resources and vibrant culture, while at the same time providing educational scholarships, environmental initiatives and other community-based activities to help nuture and develop Phuket's standing as one of the world's most sought-after destinations.

Phuket Hotels Association members are as follows: Absolute Twin Sands Resort & Spa, AMANPURI, Amari Phuket, Amora Beach Resort, Anantara Layan Phuket Resort, Anantara Mai Khao Phuket Villas, Anantara Vacation Club Mai Khao Phuket, Andara Resort, Angsana Phuket, Angsana Phuket, Avista Grand Phuket Karon – Mgallery, Avista Hotels & Resorts, Baan Laimai, Baan Yin Dee Boutique Resort, Banyan Tree Phuket, Best Western Patong, Burasari Phuket, Cape Sienna Phuket Gourmet Hotel & Villas, Cassia Phuket, Centara Grand Beach Resort Phuket, COMO Point Yamu, Courtyard Marriott Phuket Town, Dewa Phuket Resort, DoubleTree by Hilton Phuket Banthai Resort, Dusit Thani Laguna Phuket, Fisherman Way Beach Villa, Four Points by Sheraton Phuket Patong Beach Resort, Hilton Garden Inn Phuket Bangtao, Holiday Inn Resort Phuket, HOMA Phuket, Homm Bliss Southbeach Patong, Hyatt Regency Phuket Resort, InterContinental Phuket Resort, Island Escape by Burasari, JW Marriott Phuket Resort & Spa, Kata Rocks Resort & Residences, Keemala, Koyao Island Resort, Kudo Hotel and Beach Club, Le Meridien Phuket Beach Resort, Maikhao Dream Villa Resort & Spa, Centara Boutique Collection, Mangosteen Ayurveda & Wellness Resort, Marina Gallery Resort-KACHA-Kalim Bay, Melia Phuket, Karon Residences, Melia Phuket Mai Khao, Metadee Concept Hotel, Mövenpick Myth Hotel Patong Phuket, Mövenpick Resort Bangtao Beach Phuket, My Beach Resort Phuket, Narai Mai Khao Resort, NH Boat Lagoon Phuket Resort, Nonnee Kata Beach Phuket, Novotel Phuket Kamala Beach, Outrigger Surin Beach Resort, Paresa, Phuket Graceland, Phuket Marriott Resort & Spa, Merlin Beach, Phuket Marriott Resort and Spa, Nai Yang Beach, Pullman Panwa Phuket, Pullman Phuket Arcadia Karon Beach Resort, Pullman Phuket Arcadia Naithon Beach, Radisson Resort and Suites Phuket, Radisson Resort Phuket Mai Khao Beach, Rayaburi Hotel Patong, Renaissance Phuket Resort & Spa, Rosewood Phuket, SAii Laguna Phuket, Santhiya Koh Yao Yai Resorts & Spa, Selina Serenity Rawai Phuket, Six Senses Yao Noi, Stay Wellbeing & Lifestyle Resort, Thanyapura Sports & Health Resort, Thavorn Beach Village Resort & Spa Phuket, The AIM Patong, The Bell Pool Villa, The Boathouse Phuket, The Nai Harn Phuket, The Naka Island, a Luxury Collection Resort & Spa, Phuket, The Pavilions Phuket, The Shore at Katathani, The Slate, Phuket, The Surin, The Village Coconut Island, The Westin Siray Bay, Tree House Villas Koh Yao, Trisara, Twinpalms Montazure, Twinpalms Phuket, V Villas Phuket, Villa Phukhao, Wyndham Grand Phuket Kalim Bay, Wyndham Grand Phuket Naiharn.