When Thai security forces in April and May this year were battling Red Shirt protestors in Bangkok, the impact of the political upheaval rippled quickly to Phuket, some 840 kms to the south.
Hotel occupancy on the resort island dropped below 40%, about a third less than normal, and hoteliers resigned themselves to another blighted year as travel companies made Thailand a no-go area for their customers.
In August 2008, it was a similar story when political extremists blockaded Phuket Airport, along with Bangkok's two international airports, stranding tens of thousands of passengers.
Hoteliers were horrified. Investors were nervous. Tourism to Thailand went into a tailspin.
Fast-forward to September 2010 and international passenger arrivals to Bangkok Airports increased by 9% and international arrivals to Phuket more than doubled compared to September 2009.
International arrivals at Phuket's airport were 113,876 in September this year compared to 71,544 in the same month last year, giving rise to hopes that Thailand was back on track as Asia's most popular tourists destination.
It is against this background that Dusit Thani PCL this week prepared to launch the Dusit Thani Freehold and Leasehold Property Fund (DTCPF), a total fund size of a THB4bn (US$135m), which will make it the largest amongst hotel property funds when it lists on the Thai bourse by year-end.
The fund will acquire the freehold interest of three upmarket resorts, Dusit Thani Laguna Phuket and dusitD2 Chiang Mai, along with the 30-year leasehold interest of Dusit Thani Hua Hin.
For those still nervous about investing in Thailand given recent, and perhaps unresolved, political turmoil, DTCPF is offering a four-year rental guarantee for investment in its three premium properties.
Dusit Management Company, a subsidiary of Dusit Thani PCL (DTC), will hold 99.99% shares and will lease the three hotels from the fund at fixed and variable rental rates in order to gain confidence from and provide security in terms of returns to the investors.
While the fund's incorporation is pending approval of the Securities and Exchange Commission (SEC), Dusit is taking pre-market soundings with the perspective investors. This should be completed around the end of November with the IPO to follow soon after.
And in a nod to the recent political upheaval in Bangkok, a financial advisor to the fund, Sittichai Mahaguna, head of corporate finance & equity capital market, CIMB Securities (Thailand), pointed out that along with Dusit expertise in hotel management, the diverse locations of the three hotels included in the offer were a "distinct advantage in terms of risk diversification".
Speaking at a media briefing in Bangkok this week, Sittichai said the fund's strengths, Dusit's professionalism and the potential growth of tourism industry in Thailand would together make CIMB and Kim Eng, as the financial advisors, and KTAM as the fund manager, fully prepared to launch an IPO.
David Simister, chairman, CB Richard Ellis Thailand, said the resort markets in Thailand were more independent and continue to perform irrespective of what happens in Bangkok.
Dusit Thani Laguna Phuket is the standout property among the three hotels. It is the oldest of the Laguna Phuket properties, created in 1987 on the site of a disused tin mine. It's reported to be the best performing of the seven brands in the Laguna sanctuary.
HA Perspective: US Secretary of State Hillary Clinton sang Dusit's praises after she stayed in one of the villas during an Asean Foreign Ministers summit at Laguna Phuket last year but that's unlikely to hold much sway with investors. They will assess the risks of investing in the Thai leisure sector at a time when political uncertainties remain.
What has become evident, however, is that the disasters that have struck Asian countries in recent years – tsunamis, SARS, bombings in Bali etc – have little or no lasting impact on international visitor numbers.