Tourist hotspot Phuket's reopening delayed by new virus case

[BANGKOK] Thailand's plan to reopen its tropical island of Phuket to foreign visitors next month has hit a speed bump with the nation ending a 100-day streak of no local community coronavirus transmission last week.

"The government is ready, but there are still concerns from some groups that the reopening will lead to infections," Deputy Premier and Health Minister Anutin Charnvirakul said Tuesday.

"It's been nine months now. We have to learn to fight and live with the pandemic. We can't be afraid of it."

The reopening plan faced more scrutiny after authorities confirmed the first local case since May 26 in a 37-year-old male inmate of a Bangkok prison with no recent history of travelling abroad.

Re-opening to tourists has led to the resurgence of infection in some places like the Caribbean island of Aruba, and governments are fearful of striking the wrong balance between public health and economic help.

Thailand's hospitality and tourism sectors are counting on the return of international visitors, who contributed to two-thirds of tourism income before the pandemic, to reverse a slump in business and save millions of jobs.

A NEWSLETTER FOR YOU

Friday, 8.30 am

Asean Business

Business insights centering on South-east Asia's fast-growing economies.

Sign Up

The government and businesses are weighing the cost between curbing infection risks and limiting damage to the economy, which is on track for a record contraction of 8.5 per cent this year.

"Thailand's failure to relaunch overseas tourism creates a dangerously perilous scenario for Phuket's hospitality industry," said Bill Barnett, managing director at consulting firm C9 Hotelworks.

"The situation is bad, and likely to get worse, as operating hotels incur losses day in and day out." Almost 70 per cent of hotels in the development pipeline are now being delayed or put on hold, according to C9 Hotelworks data.

Mr Barnett said the financial impact on the hotel development pipeline can lead to the erosion of jobs in construction, real estate, retail and consumer credit defaults.

The Thai government has been trying to promote domestic tourism with a campaign to foot 40 per cent of travellers' hotel bills, but local spending alone can't compensate for a loss of foreigners. In Phuket, foreign visitors accounted for two-thirds of overall tourists but contributed to 90 per cent of its tourism receipts.

ROOM OCCUPANCY

About 86,000 rooms in Phuket can't break-even or be cash-flow positive with only domestic demand, and 50,000 jobs may be lost this year if there's no support or international visitors, according to the Phuket Hotels Association, which represents 78 hotels on the island. Room occupancy rate at most Phuket hotels is in single digit, the group estimates.

"No amount of induced local demand can prevent the dramatic continued loss of jobs and rapidly eroding financial crisis for owners and operators," said Anthony Lark, president of the association.

"We strongly advocate a safe, pragmatic, and strategic reopening for foreign travellers."

While some groups are opposing the reopening of Phuket, a clear and timely communication strategy to ensure safety of visitors and locals should help assuage concerns, according to Kongsak Khoopongsakorn, president of the Thai Hotels Association's Southern Chapter.

"The delay resulted from mixed messaging about the details of the plan for safe reopening and led to some groups opposing the plan," said Mr Khoopongsakorn, who also works with 12 local business groups. "Businesses in Phuket are ready for foreign visitors to come back as soon as possible."

BLOOMBERG