Phuket Hotel Market 1H 2024

Phuket Tourism Sees Robust Recovery in Early 2024

Market Overview

Phuket’s tourism sector has shown a strong rebound in the first half of 2024, with total arrivals reaching 4.3 million—just 7% below pre-pandemic levels. International arrivals surged to 2.6 million, reflecting a remarkable 42% year-on-year increase, nearing pre-pandemic figures. Carlos Martinez, Director of Research and Consultancy at Knight Frank, emphasized that "the improvement in airlift capacity is expected to drive further growth in the latter half of the year."

Domestic arrivals also saw a rise, reaching 1.7 million—a 6% increase from the previous year—though still 13% below pre-pandemic levels. International flight numbers grew by 34% year-on-year, though they remain 14% below pre-pandemic figures.

In the first quarter of 2024, Russian tourists emerged as the largest group of international visitors, closely followed by Chinese tourists, despite the ongoing sluggishness of the Chinese economy. Phuket also experienced significant increases in visitors from India and Australia, along with traditional short-haul markets such as Malaysia and Singapore.

The rise in foreign arrivals has notably enhanced hotel performance metrics. Occupancy rates averaged 84%, marking a 3 percentage point increase from the previous year and surpassing pre-pandemic levels by 2 percentage points. During the high season, occupancy rates exceeded 90% in January and February, although they moderated to 74-75% in May and June.

Average Room Rates (ARR) have continued to climb, reaching a new peak of 6,837 baht—a 32% year-on-year increase and a striking 64% above pre-pandemic levels. Carlos noted that this surge was "driven predominantly by growth in the luxury and upscale segments."

The first half of 2024 saw the opening of one new hotel, bringing the total to 44,838 rooms. By year-end, five additional hotels are anticipated to open, adding 1,117 rooms—a 3.5% increase from the previous year, surpassing the 2.5% average annual growth observed over the past decade.

Looking ahead, Carlos highlighted that "the continued recovery of domestic demand, bolstered by a weak Thai baht that has made international travel more costly for Thai nationals, combined with a strong resurgence in international arrivals, is expected to persist through the second half of the year." The high season in the fourth quarter is anticipated to benefit from this ongoing momentum, with favorable exchange rates, a near-complete recovery in airlift capacity, and visa-free policies supporting this growth.

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