Phuket Luxury and Upscale Hotel Market in H1 2022 – Knight Frank


Mr. Carlos Martinez, Director of Research and Consulting, Knight Frank Thailand, said the number of international arrivals stood at around 512,000 in the first half of 2022 thanks to the easing of travel restrictions. It represents a modest 19% of the pre-pandemic level in 1H 2019, but a rebound of less than 1,000 foreign arrivals in 1H 2021.

Phuket’s hospitality industry has been hardest hit by the pandemic in Thailand due to its heavy reliance on foreign visitors. The Thai government has prioritized the recovery of the Phuket market with the country’s first pilot reopening program in July 2021, which followed several changes in travel rules based on the evolution of the number of Covid infections. -19. Amid the devastating market situation, hotel operators in Phuket have struggled to stay afloat. With inbound tourism at an all-time low, many hotel operators have had to readjust their business models and focus on domestic tourism.

In the first half of 2022, 39% of total international visitors came from East Asia, led by visitors from Malaysia and Singapore. European visitors made up 30%, mainly from the UK, Germany, France and Russia. Indian visitors accounted for 11%. Visitors from China, the main market feeder before the pandemic, remained absent as travel to and from China is strictly limited due to its zero-Covid strategy.


In the first half of 2022, Phuket’s hospitality industry improved after being severely impacted by the pandemic with foreign arrivals largely non-existent due to strict travel restrictions coming into effect across Thailand and major market feeders.

The average daily rate (ADR) of luxury and high-end hotels rebounded from its 1H 2021 low of 21% year-on-year to THB 2,825 due to growth in foreign arrivals in the first half of the year. Yet room rates remained 30% lower than before the pandemic.

The average occupancy rate is still modest at 29%, nevertheless, it represents a significant recovery from 8% in 1H 2021, or 21 percentage points higher due to a growing number of national and international visitors.

The total stock of luxury and upscale hotels reached 24,263 at the end of June 2022, with 698 new rooms in H1 2022. New hotel openings in higher segments include Melia Phuket Karon Residences (73 rooms), Wyndham Garden Platinum Bay Phuket (420 rooms) and Wyndham Chalong Phuket (80 rooms), Dhawa Phuket Residences (33 rooms) and Utopia Mai Khao (92 rooms). The hotels in project include more than 12,200 keys by 2024, some of them could be postponed or canceled depending on their stage of development.

The largest supply of hotel rooms in Phuket is located in Patong Beach (26%), followed by Karon (18%), Bang Tao (12%), Kata (11%) and Kamala (10%).


While foreign arrivals accounted for 59% of arrivals at Phuket airport before the pandemic, this figure was only 35% in the first half of the year, indicating the still high dependence of hoteliers on domestic tourism as it was during the pandemic. With the full reopening of Thai borders in July 2022, we expect the market’s recovery to continue to some extent, as it is unlikely to reach significant levels of foreign arrivals this year, without Chinese and Russian visitors. .

China’s borders will likely remain closed for the rest of the year as the country continues to pursue a zero-tolerance approach to Covid-19 which in most countries is taking steps to declare it an endemic disease. Moreover, the Russian-Ukrainian war not only has effects on the loss of the Russian tourist market, but as a whole, as oil prices could affect flight prices, lengthening the recovery period. Overall, the outlook for Phuket’s hospitality industry remains uncertain in the near term.

Average hotel RevPar is likely to continue to grow at a slow pace, mainly driven by ADR due to continued growth in foreign arrivals for the rest of the year, but will still be far from reach pre-pandemic levels which are not expected to be seen until 2024 as the first in the most optimistic scenario. Thus, new hotel projects are likely to be revised or postponed. Existing hotels will continue to struggle in the short term, which may force some hoteliers to put their properties up for sale.

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