“Despite tourism arrivals bouncing back the Phuket hotel industry has suffered a blow to key metrics, revenue per available room (RevPAR) and average room rates (ADR). Wide scale discounting of 20% led to
losses last year of approximately US$300 million in room revenue.

The 2 P’s ‘pricing and pool villas’ represented key dynamic drivers of business. Operating profits were hit as hoteliers scrambled to induce demand and meet increasing consumer and industry pressure for
lower rates. Virtually every chain scale tier was affected with the exception found in the budget and economy level which experienced growth.

Our research points to a positive upward trend in 2010, pairing a growing critical mass of hotels and
demand drivers to capitalize on the global upswing. More Asian airlift and increased spending power in feeder markets remains up-tempo. Hotel oversupply could undermine long term fundamentals if not addressed.

As Thailand continues to recover from the political driven events of late 2008 and early 2009, market confidence remains cautiously optimistic.”

Bill Barnett, Managing Director C9 Hotelworks