The resort island of Koh Samui is experiencing growing pains as hotel supply hits 16,069 rooms according to the Samui Hotel Market Update.

C9 Hotelworks Managing Director, Bill Barnett (right), said the prevailing challenge for the destination was a distinct lack of direct international flights, with domestic flight traffic representing 91% of all air traffic to the island during 2009.

"The resonating lack of international airlift is stalling the island's move to become a mainstream tourism destination," Mr Barnett said. "However, 541 internationally branded rooms opening in the next 15 months is poised to have a positive impact and could move the industry up the value chain."

The report highlights performance metrics due to price discounting, which impacted rates through a 19% decrease in 2009 compared to 2008. A domino effect saw occupancy decline by 5% and RevPAR down 20%.

During the first six months of 2009, overall arrivals to Koh Samui slumped 23%, attributed mainly to political concerns. A strong second half upswing in occupancy fell short of clawing back the shortfall. Emerging growth markets were Eastern Europe, Malaysia, Indonesia, India and the Middle East.

"Discounting on the heels of a dynamic shift to a greater reliance on short-haul Asian based visitors is creating volatile trading market conditions. The short-term outlook for market absorption of new hotels could see supply outpace demand," added Mr Barnett.

"Despite challenges during the current infrastructure catch up period, an imposed transformation led by significant resorts such as the new W Retreat provide an upbeat longer term outlook."

Download the full report here:

www.mailprosx.com/mp/link.php?M=414474&N=1267&L=4795&F=H