THAILAND: TWO YEARS AFTER TSUNAMI DEVASTATION,

UNCLAS SECTION 01 OF 02 BANGKOK 007126

SIPDIS

SIPDIS

STATE PASS TO USAID

E.O. 12958: N/A
TAGS: ECON TH
SUBJECT: THAILAND: TWO YEARS AFTER TSUNAMI DEVASTATION,
PHUKET TOURISM STAGES NEAR-TOTAL ERCOVERY



1. Summary: Less than two years after the devastating
December 26, 2004 tsunami struck southern Thailand, the
annual US$2.5 billion tourist industry of Phuket has staged
an almost complete recovery. Arrivals from some Asian
countries remain soft, but the shortfall has been compensated
by a big increase from other countries, especially Korea.
Local tourism officials credit this faster than expected
recovery to effective Thai Government and international
assistance; the apparent belief among tourists that the
tsunami was a one-off natural event unlikely to be repeated

SIPDIS
anytime soon; and the enormous attractiveness of the Phuket
area among international visitors. While a number of
challenges remain (such as a housing shortage for workers),
and rival destinations beckon, tourism officials are
confident that Phuket's mixture of sun, surf, tropical
waters, and Thai hospitality will ensure that Phuket will
remain a popular destination. End Summary.


2. Less than two years after the devastating December 26,
2004 tsunami struck southern Thailand, the annual US$2.5
billion tourist industry of Phuket has staged an almost total
(better than 90 percent) recovery. This was the consensus
among a wide range of tourism-related Thai government and
private sector leaders surveyed by U.S. Embassy officials
during a visit to the area in mid-November.

Tourist Arrivals Approach Pre-Tsunami Levels


3. In most sub-regions of the Phuket tourism area, arrivals
look set to match or even exceed the levels of (pre-tsunami)

2004. In the popular Krabi sub-region, arrivals for 2006
through June are down about 27 percent compared to the same
period in 2004, but arrivals in recent months have been
accelerating, and with the forecast Asian New Year business
added, are projected to about equal those of 2004. In Phuket
proper, arrivals are down only five percent compared to the
pre-tsunami peak, and for all of 2006 are projected to be
about the same as calendar year 2004. The only laggard is
the Phang Nga area; this sub-region contains the hard-hit
Khao Lak beaches, the scene of perhaps the highest foreign
tourist casualties of the tsunami. But even here, experts
are predicting a near full recovery in 2007. The Khao Lak
area is being reconstructed rapidly, and currently there are
3000 guest rooms available (about half of what existed prior
to the tsunami),with a current occupancy rate of 50 percent.
By next year this will jump to 7000 rooms, and advance
bookings suggest that the occupancy rate will be 70-80
percent in 2007.

Arrivals Mix Has Changed


4. While total arrivals are approaching pre-tsunami levels,
the mix of nationalities has changed. Prior to the tsunami,
in Phuket proper visitors from Australia topped the list of
arrivals, followed by Korea, the UK, Germany, Sweden, and the
U.S. In 2006, Korea has assumed the top position, followed
by Sweden, the UK, Germany, Australia, and Malaysia.
Officials still see softness in the arrivals numbers from
Scandinavia, Germany, Taiwan, and China. For Scandinavia and
Germany, this is explained by the high tsunami death toll
among tourists from these countries. For China and Taiwan,
Thai tourism experts cite a widespread belief -- and fear of
-- malevolent ghosts in these cultures, and a reluctance to
visit a place where so many died so violently so recently.
(This same phenomenon also can be seen in somewhat lower Thai
citizen arrivals.) On the other hand, higher arrivals from
Korea, Australia, and Japan are partially attributed to
reluctance among these nationalities to visit Bali owing to
recent terrorist bombings on that island.

Recovery: Why So Fast?


5. More or less full recovery in less than two years is much
faster than anyone predicted back in January 2005. Why so
fast? Local tourism officials cite several factors. First,
the Thais readily admit (and are thankful for) the role
played by the international help they have received. Second,
the Bank of Thailand stepped in to restructure loans, giving
tourist industries time to recover. Third, many tourists
apparently view the tsunami as an infrequent natural disaster
that is not likely to be repeated anytime soon; the unabated
demand from tourists has created its own supply in the form
of rebuilt hotels. This attitude has no doubt been
reinforced by Thailand's prompt installation of world class
tsunami early warning devices (such as the U.S.-donated DART

SIPDIS
buoy, to be deployed in December 2006 in the Andaman Sea).
Finally, there is the overriding X factor, best summed up by
one official: "People really like to visit Phuket."

BANGKOK 00007126 002 OF 002




6. Local officials cite a number of lingering problems. The
construction boom and the tsunami death toll have created a
labor shortage, which has driven up wages. Housing remains
in short supply, with some workers forced to sleep on boats.
Something will have to be done about the perception that
malevolent ghosts are stalking Chinese and Thai tourists.
And Thai tourism officials fret about the possibility of far
southern Thailand's Islamic separatist insurgency spreading
northward into the Phuket tourist areas. (For now at least,
this seems an unlikely possibility; the potent historical,
ethnic, and religious mix fueling insurgency in Thailand's
far south are absent from in the Phuket area.)


7. But these problems are seen as relatively minor and of
limited duration. For now, optimism prevails within the
Phuket sector. Local tourism officials are preparing for
what they see as the next stage in the development of Phuket
tourism, which they believe will emphasize sailing (more
marinas are planned); "green" tourism; and world class sports
activities such as international regattas, golf tournaments,
marathons/triathlons, and beech volleyball. While Phuket's
leaders are aware of the threat posed by competitive
newcomers like Vietnam, they are confident that Phuket's
mixture of sun, surf, tropical waters, and Thai hospitality
will ensure that Phuket will remain a popular destination.

ARVIZU