C9 Hotelworks reports only a quarter of Phuket hotels are legal

Marriott's Phuket Beach Club
Marriott's Phuket Beach Club

According to the Phuket Gazette, travelers to Phuket each year could be staying in unlicensed—and illegal—hotels. Data in hospitality consulting group C9 Hotelworks’ latest report showed that fewer than a quarter of the hotels in the province—429 out of 1,724—are currently licensed. 

Former Phuket Governor Chokchai Dejamornthan announced plans last year to crackdown on unlicensed hotels on the island. Meanwhile, Governor Chokchai urged the travelers to the island not to stay in unregistered hotels. Although there was a deadline on January 31, 2017 for illegal hotels to become legally registered, C9 Hotelworks highlighted that the challenging situation continues.     

A report from Phuket’s Provincial Administration Office showed that only six of the the 1,295 unlicensed hotels identified in Phuket have their licenses. 1,001 other hotels are still pending approval while 288 haven’t applied yet. “Phuket’s provincial government has undertaken an admirable large-scale initiative to tackle the proliferation of unlicensed hotels,” C9 Hotelworks’ Managing Director Bill Barnett said in a statement. “The main challenges for the process are the strict regulations associated with the Building Control and Hotel Act. As a result of these mandates, the province is considering reviewing the requirements to support the conversion process.”

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Local authorities are rushing to control the issue as increased demand from emerging economies continues to lead a sharp increase in travel to Phuket. For example, Russian passenger numbers at Phuket International Airport increased by 17 percent in H1 2017. Meanwhile, arrivals from mainland China increased by 8 percent. Mainland China accounts for two-thirds of Asian traffic at Phuket’s airport now that 17 Chinese airlines are flying into the island. 

JW Marriott has planned to continue developing its Phuket portfolio alongside its existing resort and spa. 

Hotel development in Phuket is also on the rise. C9 Hotelworks’ pipeline analysis found 33 hotels being developed across the island, which will increase Phuket’s inventory by 5,738 rooms. Major global brand developing new Phuket locations include Sheraton, JW Marriott, Best Western, InterContinental, Park Hyatt, Kempinski, Ramada and Rosewood. 

With this massive construction pipeline entering the market in the coming months and years, Phuket’s authorities must enforce effective and strict regulatory processes. However, these processes have not been overly complex or bureaucratic. Meanwhile, hotel industry private sector investment is far ahead of the public sector. 

The island lacks much-needed revenue to reinvest into infrastructure because it is unable to apply hotel tax to unlicensed properties. Therefore, if Phuket can't swiftly and effectively enforce the registration process on the 1,295 illegal hotels operating in Phuket, the issue may damage the island’s international reputation. 

Barnett also mentioned that many of Southeast Asia’s surging tourism resort markets are tackling a similar issue. For example, in Bali, there are 317 official registered hotels and 33,599 rooms, according to the Indonesian government’s Badan Pusat Statistik. However, the actual inventory is higher than that of Phuket.