Investors boost Phuket with new hotels as tourism steadies

 The total number of air passengers reached 4.46 million, reflecting strong demand for the resort island, despite growth slowing after a rapid rebound in 2024.

According to Knight Frank Chartered (Thailand), Russia, China and India remain Phuket’s key foreign markets, followed by the United Kingdom and Germany. While Chinese travellers continue to play a vital role, their overall visits to Thailand remain below pre-pandemic levels.

By contrast, destinations such as Vietnam and Japan have attracted more Chinese tourists, with 2.7 million and 4.7 million arrivals respectively in the first half of 2025, highlighting shifting preferences towards destinations seen as safer, better value and offering fresh experiences.

Rising competition in the region

Competition from beach destinations such as Da Nang and Phu Quoc in Vietnam has intensified. Large-scale Chinese tour groups have yet to fully return, with many travellers opting for independent or small-group trips. This trend has affected demand for mid-range hotels and large tour operators in Phuket.

Domestic tourism to the island grew only modestly due to high travel costs and competition from other Thai destinations. Nevertheless, domestic travellers remain important in supporting occupancy rates during the low season.

Hotel performance remains strong

Phuket’s hotel sector delivered solid results in the first half of 2025. The average occupancy rate rose to 79.5%, compared with 79.1% a year earlier. 

High season between January and April was particularly strong, peaking at 91.8% in January, with all four months recording rates above 81%. In contrast, June recorded the lowest occupancy at 66.9%, in line with seasonal trends.

Average daily rates (ADR) increased 7.8% to 5,652 baht, supported by strong performance in the luxury and upper-upscale segments, particularly beachfront resorts and international brands. 

However, after two years of sharp growth, room rates are now stabilising, signalling a more balanced pricing environment.

Expanding hotel supply

New hotel supply rose moderately in the first half, with two properties adding 376 rooms: Veranda Resort Phuket (Autograph Collection) and Radisson Phuket Mai Khao. A further nine hotels with 1,758 rooms are expected to open in the second half, bringing total new supply for 2025 to 2,134 rooms—more than double the 884 rooms added in 2024.

Most new hotels fall within upscale, upper-midscale and lifestyle categories, led by international chains such as Marriott, Wyndham, Radisson and Accor, alongside regional and local players. 

This marks a shift from Phuket’s traditional luxury-driven market to a more diversified destination focused on varied experiences.

Outlook for the second half

Phuket enters the second half of 2025 with stable momentum, backed by resilient international demand and strong hotel performance. Visa exemptions for key markets such as Russia, India and China remain in effect, while regional air connectivity continues to improve.

Occupancy for the year is expected to average 78–80%, with rates likely to exceed 85% in the fourth-quarter peak season. ADR is projected to hold steady after recent increases, with revenue per available room (RevPAR) growth driven mainly by higher occupancy, particularly in the low season.

While new hotel openings signal long-term investor confidence, they also increase short-term competitive pressures. Operators will need to maintain pricing discipline, strengthen distribution channels and diversify their market base to protect profitability in an increasingly segmented environment.