The dynamics of tourism in Phuket: how to account for foreign arrivals?

Images of AkhenatenOne of the challenges investors face in Thailand is finding detailed economic information by region. Official agencies publish key data in English at the national level, but information about specific markets often has to be sought in regional reports in Thai. The tourism sector plays a crucial role for investors considering real estate acquisition in Thailand. Let's take a look at the dynamics of international tourism in Phuket, one of the main tourist centers in Southeast Asia. About 80% of the province's economy directly or indirectly depends on tourism. Tourists often act as end clients in the real estate market: buyers, residents, and tenants.

Estimation of tourist flow

To determine the actual volume of foreign visits to Phuket, it is necessary to analyze data from various sources: statistics from the Ministry of Tourism regarding visits to the country, monthly reports from the Phuket Immigration Bureau, and data from the "Airports of Thailand" corporation on passenger traffic at the airport. It is estimated that the actual number of foreign visits to Phuket in 2023 will be around 4.9 million people, while the Immigration Bureau will only record 3.8 million. Visitors arriving through Bangkok are included in the national statistics but are not recorded in Phuket.

Analysis of visits in 2023

The absolute number of visits to Phuket will be around 70% of the pre-crisis level of 2019, as there are no group tourists from China due to limited economic activity. In 2023, the average tourist is spending more compared to previous years. Since the absolute figures have not yet reached their peak, Phuket has the potential for further growth in quality tourist flow, which is one of the main goals of the Tourism Authority of Thailand (TAT).

The potential for the development of the real estate market

Despite a significant number of tourists from Russia and almost full occupancy of available hotels in the high season, we have not yet reached the previous peak of visits in absolute numbers. This opens up prospects for the future and allows us to forecast the occupancy of new properties. Demand for quality accommodation in popular locations will continue to grow, which will create favorable conditions for the development of the real estate market in Phuket.

The situation in the real estate market in Phuket

Currently, there is a significant shortage of quality real estate offerings in the Phuket market, which is leading to an increase in rental prices. The construction of new properties in this segment is also in demand. Executive Director Mikhail Bulanov notes that the main channel for the arrival of foreign tourists to the island is Phuket Airport.

There is a problem with the Phuket statistics.

The main problem with Phuket's statistics is related to indirect arrival routes. A significant portion of tourists heading to the island is actually registered as having arrived in Bangkok, without accounting for their subsequent movements after passing through passport control. For example, in 2022, one out of ten million tourists received gifts from the Thai government in the capital and then headed to Phuket.

Minimum volume of foreign tourist traffic

The minimum volume of foreign tourist flow to Phuket can be tracked quite accurately - it consists of direct flights from abroad to the island. From March to October, the Phuket immigration office published monthly data on the passport control of passengers on international flights.

Direct arrivals of foreign tourists

Direct arrivals account for foreigners who arrived in Phuket on international flights and went through passport control on the island. This figure does not include people who arrived in Bangkok and went through immigration procedures in the capital before heading to the island on domestic flights. Therefore, this number is underestimated, but it is the most accurate - it specifically represents tourists.

Arrival data for Phuket in 2023

• All countries:6 months - 1,838,314 people, 11 months - 3,356,233 people, 12 month forecast - 3,800,000 people.
• Russia:6 months - 409,374 people, 11 months - 694,400 people, 12-month forecast - 810,000 people.

Source of data: Phuket Immigration Bureau.

The total volume of foreign arrivals in Thailand

The total volume of foreign arrivals in Thailand (including all cities, islands, and provinces) can be tracked quite easily.

Every month, the Ministry of Tourism publishes summary data on the number of incoming foreign tourists to Thailand. This data is based on information from the immigration bureau and includes tourists from various countries such as Russia, China, and Malaysia.

In 2023, Phuket Airport will continue to show steady growth in both domestic and international routes.

According to the airport operator, Airports of Thailand, more than 7 million passengers are expected to be served, which is 70% of the number of arriving tourists in 2019. It is forecasted that by the end of the year, the number of passengers will reach 7,030,000, including 3,890,000 international and 3,140,000 domestic passengers.

Dynamics of the recovery of tourist flow:

However, there are different dynamics of tourist flow recovery in different markets, including the Russian market. Among tourist arrivals, the highest ability to pay is shown by 70% of guests, compared to the average tourist in 2019.

Registration at the place of residence in 2023:

An important aspect for all foreign visitors is the registration at their place of stay. Every foreigner arriving in Phuket is required to register, regardless of the type of accommodation. In this process, the Phuket immigration office actively monitors the registration of all foreign guests, paying attention to property owners and hotel managers. The data on the number of registrations serves as an important indicator of the actual tourist flow.

Statistics on registrations and their features:

It should be noted that the registration statistics are not perfect due to several factors, such as homeowners not registering all guests and the responsibility for registration being extended to expatriates living on the island. However, this does not hinder the monitoring of registrations and the use of this data for comparison with official statistics.

It is interesting to note that the resumption of tourist flow due to the return of a significant portion of tourists from China. It is forecast to reach 70% of the 2019 level by June 2023. However, there are different dynamics of the recovery of tourist flow in other markets.

Conclusion:

In summary, it becomes clear that the current state of the tourism situation in Phuket represents a balance between a relative recovery from the crisis and the potential for further improvement. Although official statistics may be incomplete due to unaccounted indirect arrivals, direct data shows an overall increase in visitor numbers. The successful development of the tourism sector in Phuket is linked to the enhancement of quality accommodation in key locations and the active efforts of the Tourism Authority of Thailand.

It is necessary to acknowledge that tourists' preferences are gradually changing, and the dynamics and nature of the flow of guests remain a focal point for investors. Positive results and indicators this season herald opportunities for effective development not only in Phuket's tourism sector but also in the entire region as a whole.

Today, I am proud to share this unique data and analysis that will help both investors and stakeholders understand the current situation and prospects of tourist flow in Phuket. I hope that my material will serve as an impetus for further research and successful investment decisions in this dynamic sector of Thailand's economy.