Thailand's top beach destination is missing its Russian tourists — but not that badly

• Phuket, Thailand's biggest island, runs off tourism dollars.
• But businesses on the island say the disappearance of Russian tourists isn't hitting them too badly.

Efe, who is originally from Turkey, has lived in Thailand for 12 years. He's the owner of the eponymously named Efe Turkish, which has three branches across Thailand. The newest location is in Phuket Town, and he launched it during the pandemic.

His menu is full of middle-eastern staples like tzatziki and gozleme, and his two-floor restaurant is dripping in homey decor that borders on the kitschy: faded armchairs, traditional fabrics, red and orange lanterns, a large plastic giraffe in a courtyard.

His restaurant is set up to seat 70 people, but when I went for lunch (twice, because the food was so good), I found plenty of empty seating. Covid is to blame, he told me in a conversation over the cash register in the back of his shop, but so is the war in Ukraine.

"It's already affecting us," he said of the war. "There are many Russians usually; now they're not coming."

In search of Russian tourism dollars

Phuket, Thailand's biggest island, runs on tourism dollars. Pre-pandemic, travel accounted for 80% of Phuket's economy and more than 300,000 jobs.

The island is separated from the west coast of mainland Thailand by a bridge, and with more than 30 beaches and an international airport, it's become one of the country's most-visited tourist destinations. It's only 13 miles wide at its widest point, but packed into the island are areas that range from a historic old town and a party town not unlike what you'd find on the Jersey shore, to an upscale beach area full of boutiques, resorts, and villas.

A significant portion of travelers to the island come from Russia. At least, they did, until the pandemic put a temporary stop to international travel.

In January, Russia accounted for 17% of the international arrivals in Phuket — more than any other country, preliminary data from Thailand's ministry of tourism and sports shows. Some 24,000 of the 133,000 international tourist arrivals in Phuket came from Russia. (The second-highest was Germany, with roughly 12,000 arrivals.)

Russian dominance in the arrivals market continued in February, albeit at a lower level, with close to 18,000 Russian arrivals in the country.

But then Russia invaded Ukraine. Countries closed their airspace to Russia. Airlines canceled flights to the country. Russian banks were disconnected from the global banking system. Unlike countries including the US, Singapore, and EU countries, Thailand has not imposed sanctions on Russia, but multiple media outlets reported in early March that thousands of Russians were stuck in Thailand, and on Phuket specifically, unable to access funds or get on flights because of sanctions.

When I visited Phuket in the last week of March, I expected to find an island on the brink of its second tourism crisis — first the coronavirus, and then a dearth of Russian travelers — or at least in flux.

Instead, what I found was an atmosphere of tepid optimism across the tourism industry. While Phuket's tourism scene has been negatively impacted by the war in Ukraine, it's also seeing an unrelated boost, thanks to Thailand's decision to further relax border restrictions. After close to two years at a total tourism standstill, it seems Phuket's tourism scene may have a simple saving grace: timing.

One market drops out, but others open up

For multiple business owners I spoke to, Thailand's loosening travel restrictions came as a welcome respite from months of barely any business. They also came at the perfect time to counteract a drop in Russian arrivals.

Bryan and his wife Pimnaree are the second-generation owners of a spa chain called Kim's Massage & Spa. The chain has 10 family-run locations across Phuket. I met them at the spa's biggest Phuket outlet, an enormous space full of dark wood accents, natural light, and plants.

"The majority of tourists here are Russian," Bryan said, "or at least, they are Russian-speaking." He added that friends in the hotel industry on the island said they'd seen tourism numbers decline by 20% since the start of the war.

Bryan said that before the pandemic, this spa location often had more than 60 customers at a time. Since the pandemic started, he said, they had been operating at around 30% capacity. But he didn't express much concern over the disappearance of the Russian market.

"After the war started, the government opened up to more places, so there wasn't a total quantity drop," he said.

Tourist arrival numbers in Thailand were flat for the majority of 2021: No month from January to October recorded more than 3,000 monthly arrivals. Before the pandemic, international arrival numbers had been trending steadily up since 2014, and in no month since early 2014 did they dip below 200,000.

November 2021 saw a sudden spike in arrivals to nearly 10,000 people, corresponding to Thailand's announcement that vaccinated tourists from five countries would not need to isolate upon entering the country. Tourist visits in December were just south of 25,000. January and February, in reaction to the omicron wave, were lower, though steady, around the 15,000 mark.

While loosened travel restrictions brought in international tourists, Efe described seeing a negative effect on his business in the domestic market.

"Before they opened the country, we had lots of expats coming from Chiang Mai, Bangkok," Efe said, referring to expats who were living in Thai cities and traveling domestically. "But now they opened the country, and already we're seeing fewer customers," he added, as locals and expats have since opted to travel abroad.

Snowbirders who are not the biggest spenders

There's another reason the disappearing Russian tourist segment might not be hitting Phuket too badly, and it, too, has to do with timing. By the time countries started hitting Russia with sanctions over the war, high season for Russian tourists in Phuket was tapering off.

"Russia is a snowbird market," Bill Barnett, the founder of Phuket-based hospitality consultancy C9 Hotelworks, told me. "It's November to March, and there's still 900,000 Russians living here," he said, referencing the large Russian community that lives full-time on the island.

Efe, too, mentioned the cyclical nature of tourism on the island: He likened a Phuket without Russian tourists not to a crisis, but to a non-stop low season.

The importance of Phuket's geography can't be overlooked when it comes to the island's ability to stay afloat, even in the face of this particular disappearing tourism segment, Barnett said.

"Phuket is geographically blessed," he said. "We're within six to eight hours of a third of the world's population. It's got a good airport." Forty-two airports across 20 countries have direct flights into Phuket.

Barnett also said that while Phuket does draw in the Russian market, China is the real driver on the island.

Chinese tourists are by the far biggest spenders in Phuket, 2019 tourism receipts by international arrivals compiled by the ministry of sports and tourism show. Tourists from China spent $531 million baht ($15.8 million) on the island that year. Tourists from Russia were the third-highest spenders, but clocking in at $103 million baht ($3.1 million), they're separated from China by a big margin.

"Phuket tourism is highly leveraged in the China market," Barnett said.

"We still have China," Barnett went on. "China's out there. In the good days, you'd have nearly 40 cities in China with door-to-door travel to Phuket."

But, he acknowledged, with China's city-wide lockdowns progressing even in 2022, it's hard to say where the tourism market will go next: "Nobody can know; nobody can say. It's the great unknown."

'It will never be like before'

That's not to say Phuket hasn't suffered in the pandemic: It has. Signs of the tourism industry's struggles were everywhere, from the boarded-up tourist info shops in town to the Phuket International Airport Burger King that was closed at 6 p.m. on a weekend.

The damage was especially evident in mom and pop shops. After lunch at Efe's restaurant, I stepped into a small, dark shop selling souvenirs. A woman sitting behind a booth full of tourism brochures drew up a chair for me and told me her name was Siriat. She had closed her business, she said, when the pandemic started, and had only just reopened it in December.

"It's not like before," she said. "It will never be like before. I had two employees; now I must support alone."

Like the other business owners, she could feel the impact of the war: "Before, I met some Ukrainian and Russian tourists. After the war started, almost zero," she said. "Finished." However, she said Covid was the real problem, as was the internet, which has made her business redundant.

It's possible that the loss of Russian tourism dollars doesn't seem like a crisis because it's coming on the back of the astronomical health and tourism crisis that Covid has been. It's also possible that the effects of the loss of the Russian tourism market just are not visible yet in Phuket; after all, the Russian tourism market is seasonal, and the beginning of the war coincided with the beginning of end of Russian high season in Phuket.

"There's still liquidity in the market," Barnett said. "There's still liquidity keeping hotels open. And there's still domestic consumption."

"Hotel owners now aren't making money, but they're losing less," he added.

As for the spa business, Chinese tourists are a more important sector than Russian tourists, Bryan from Kim's Massage & Spa said: "Five Russians might spend less than one Chinese in a spa."