What does the future look like for Phuket’s hotel sector?

The removal of the 80-meter height restriction is expected to positively impact the market.

Phuket’s tourism sector is on a solid recovery path, with international flights increasing by 33% year-on-year, though still 12% below pre-pandemic levels. According to a Knight Frank report, this rebound is expected to accelerate in 2025, fuelled by expanded airlift capacity, visa-free entry for key markets such as China, Russia, and India, and the introduction of new international flight routes.

These factors are poised to boost foreign arrivals and further reinforce Phuket’s position as a leading global destination.

Here’s more from Knight Frank:

The island’s positioning is evolving from a traditional luxury destination into a more diversified premium lifestyle market. Areas such as Bang Tao and Kamala are driving this transformation, with high-end developments reshaping Phuket’s appeal for affluent travellers and long-term investors.

Despite the positive outlook, challenges remain. Negative media coverage and travel advisories, such as Taiwan’s high-risk designation, are affecting Thailand’s image in some Asian markets. This could slow arrivals from China and neighbouring countries in early 2025. Nevertheless, overall demand remains strong, and occupancy rates are expected to be particularly robust during peak seasons.

Following two years of sharp growth, increases in the Average Room Rate (ARR) are projected to moderate as inflation stabilizes. In 2025, revenue per available room (RevPAR) is likely to be driven primarily by rising occupancy rates rather than significant rate hikes, reflecting a broader global trend toward revenue stabilization after post-pandemic surges.

A pivotal shift for Phuket’s hotel market is the removal of the 80-meter height restriction, unlocking opportunities for luxury hotel and residential developments in elevated locations. Over the next two years, more than 4,100 new keys are expected to enter the market across the luxury and upper-upscale segments, demonstrating strong investor confidence in Phuket’s long-term growth prospects.

Leading global hotel brands, including JW Marriott, Ritz-Carlton, Wyndham Grand, and Riu Palace, are set to enhance the island’s high-end hospitality offerings. Simultaneously, major international hotel chains such as Marriott, Accor, Radisson, and Wyndham are expanding their presence, while local operators like Chatrium and Centara strengthen their foothold in the upscale segment.

Phuket’s hotel landscape is being reshaped by evolving submarket dynamics. Southeast Phuket, particularly Chalong Bay and Makham Bay, is emerging as a luxury enclave with high-end resorts and residential developments targeting affluent travellers. Mai Khao and Bang Tao are attracting large-scale integrated resorts due to their proximity to the airport and pristine beaches. Patong and Rawai are experiencing a surge in lifestyle-driven developments, with trend-conscious brands like Tribe and W Hotels catering to younger, design-focused travellers.

Demand for affordable yet high-quality accommodations is also on the rise, prompting the expansion of midscale brands such as ibis Styles, Tribe, and Courtyard by Marriott. European operators like Riu, Meliá, Mövenpick, and ibis Styles are strengthening their presence, reflecting sustained confidence in Phuket’s long-term potential.

Looking ahead, Phuket’s hotel market is well-positioned for sustained growth, supported by rising international demand from diversified markets, expansion of premium lifestyle and luxury segments, and government support through visa-free entry policies and improved infrastructure. However, the full recovery of visitor numbers from China remains uncertain, contingent on geopolitical developments and regional economic conditions. If positive trends continue, occupancy rates are expected to stabilize around 80%, with peak seasons potentially exceeding 85%.

In summary, Phuket’s hospitality sector is poised for steady expansion in 2025, driven by a dynamic mix of high-end developments, increasing international airlift, and evolving traveller preferences. These factors signal strong long-term potential, with the island’s reputation as a premium global destination continuing to grow.