Phuket out; Hi Hainan?

FOXTROTS

Fox – sly. Trots – left-leaning (Trotsky) plus its more insalubrious meaning.
Foxtrots – leading the industry in a dance.

2006 July 10
Phuket out; Hi Hainan?

Sadly but understandably, business in Phuket has been bad since the December 2004 Indian Ocean tsunami. But perhaps one reason was not immediately foreseen – bad vibrations in a location where thousands died.

Also touched badly is Bali. Hit by murderous terrorist attacks aimed directly at tourists in 2002 and in 2005, the destination may not recover properly for the next two years – for fear of another attack.

These realities in particular, plus growth in demand, indicate that Asia will get another international resort soon. Which will it be?

Current ones are only Bali and Phuket. Others, such as Langkawi, Lombok, and Koh Samui, have not made it, and neither have Pattaya and Penang (which, in another era, was arguably Asia’s first).

Goa and the Maldives are in a region that attracts a different geographical market, but Sri Lanka, post-tsunami, may change. Longtime pretenders have been Hainan island (around Sanya) in southern China, and Boracay island in the Philippines.

I go for Hainan. Mainly because it seems likely to get a better image soon – instead of the current one of a tawdry sex cheap resort destination.

The clincher is announcements this year that two upmarket resorts are due – Mandarin Oriental and Ritz Carlton. They follow a few other upmarket brands, all in Sanya (except Sofitel, 90″ from Haikou), viz:

- Hilton, 500 rooms, opening this year

- Kempinski, 400 rooms, opening this year

- Mandarin Oriental, 292 rooms, opening this year

- Marriott, 455 rooms, opened

- Ritz-Carlton, 451 rooms , opening 2008

- Shangri-La (two, but may have been cancelled), opening 2008

- Sofitel, 436 rooms, opened

Airlines have long been an important element in making resort destinations successful. But it is now low-fare airlines that can now make a resort work, and not regular airlines. Hainan does not have LFA support, but may have when LFAs get properly into China – which surely will be before year-end?

In the meantime, Hainan Airlines – which has majority non-Chinese ownership – is more commercially aware than some other airlines in China.

The final factor is visas. China makes it easier than some destinations, but it is still a hassle. As Hainan is still legally a Special Economic Zone in China, it does have some flexibility. This could extend to lifting visa requirements, or providing visa-on-arrival, but this power is to be tested.

end