Phuket Sandbox: Hit or Miss?
Phuket Sandbox has officially started on July 1st, 2021 as a prototype model for the country’s reopening. Yet, it comes with various thresholds as determined by the government that, if exceeded, the model will be cancelled. CBRE, a leading international real estate consultant, commented that complex requirements for inbound tourists such as Certificate of Entry (COE), the Vaccine Validation process, and requirement of receipts for several PCR tests might have decelerated incoming demand.
Mr. Rathawat Kuvijitrsuwan, Head of Research and Consulting at CBRE Thailand reported that Phuket alone had more than 10 million international tourists in 2019 which generated around THB 393 billion for the island, accounting for 89% of its tourism revenue. In 2020, total number of tourist arrivals to Phuket was about 4 million while in the first half of 2021, Phuket would have less than 400,000 tourists. Since January, the number of tourists in Phuket was only 358,891 as of May 2021, which is almost an 86% change compared to the same period in 2020. With this reason, the Thai government launched the Sandbox initiative to revive the tourism industry.
“Areas in Patong, Karon, and Kata with predominantly tourism-dependent businesses are currently deserted. Hotels, restaurants and community malls are temporarily closed. Also, nightlife in Phuket is limited to until 11 pm, nevertheless, only few tables were occupied. Retail spaces are empty as many tenants have moved out and the retailers are struggling in finding new tenants. Even in the airport, only branded restaurants have survived,” said Ms. Prakaipeth Meechoosarn, Head of Resort Land and Investment, CBRE Thailand, who is based in Phuket.
The hardest hit is the hotel sector where occupancy and Revenue Per Available Room (RevPAR) are currently as low as figures during the first wave of COVID-19.
Ms. Prakaipeth added that the Sandbox initiative has brought some hope to business operators, hotels, restaurants and other hospitality-related businesses in Phuket, and other islands are closely monitoring its development. CBRE Research reported that more than 300 businesses participated in the SHA Plus Program, where ‘SHA’ certifies that the businesses have public health measures and ‘Plus’ represents that more than 70% of total employees are fully vaccinated.
However, as quarantine period has been extended from 7 days to 14 days, local business operators see less potential in the program. They are worried that a longer stay period will lessen tourists’ demand and some hotels will delay their re-opening until August.
Despite recent news reporting that there were almost 8,000 applications for the COE, unfortunately, just before the program started, many foreign tourists had cancelled their flights and hotel bookings due to the delayed COE and other processes. Previously, the Tourism Authority of Thailand (TAT) expected more than 100,000 tourists coming to Phuket in the first three months of the sandbox.
CBRE believes that the balance between safety measures and practicality as well as the effective management of the welcoming process is key for a successful program. In addition, it will depend on the overall COVID-19 situation in Thailand as we are still currently in the ‘cautious list’ for some countries. If the situation is improved and under control, more tourists will come. Phuket Sandbox could be a good pilot model and lesson-learning opportunity for upcoming destinations as it seems that we all have to live with the COVID-19 pandemic situation for a certain period of time. We all do hope to see a lively Phuket again even with this new normal way of tourism.