Phuket, Thailand - Now is the time for a cheap holiday in Phuket, Thailand's leading beach resort.

Tourism is the number one industry on Phuket, swelling the island's 350,000 official population to more than 5 million each year. More than 48 per cent of these tourists come from Europe.

There was apprehension on the island in November that numbers would drop as a result of the world economic crisis, but future bookings looked good until anti-government protestors in Bangkok closed the two international airports from November 26 to December 3.

After that, bookings took a steep dive as travellers either cancelled or were stuck en route and unable to get to their final destination.

Phuket hotels emptied out during the weeklong standoff in Bangkok, but now they are fighting back.

Some hotels are offering a "buy one night, get the next night free" deal as an inducement to attract tourists back and keep them on the island longer.

Others are throwing in a free breakfast for good measure while some are now offering "low season" rather than "high season" rates.

That means European travellers can get a room for around 1,000 to 1,400 baht (29 to 41 dollars) a night, rather than the "high season" Christmas rates of 4,000 to 5,000 baht (118 to 147 dollars).

Berliner Guenter von Grotthus wrote to the Phuket Gazette this week to say he is staying in the same room that he rented in Patong a year ago, but instead of paying 2,400 baht (70.50 dollars) a night, he is now paying 1,200 baht (35.25) a night and getting a free breakfast as well.

"Life here is great," he wrote.

At least two major hotels on the island are laying off staff as their occupancy rates settle at 40 per cent, when they would normally be at least 90 per cent at this time of the year.

But all is not doom and gloom. Pamuke Achariyachai, head of the influential Kata Group, said that while some of the big hotels that cater primarily to the Asian bulk-tour trade have been hurt, those who deal with a large number of independent return travellers are doing OK.

Given the exchange rates, and the prices on offer in Phuket, Pamuke said it was cheaper for many Europeans to holiday in Phuket than stay at home in Europe.

"I've had 30 years in tourism, and I am confident the industry is OK," said Pamuke, who also served as head of the Phuket Tourist Association.

At the time he talked, the Kata Beach Resort was running from 80- and 89-per-cent occupancy. Other operators were also reporting strong occupancy rates.

Nello Benussi, director of sales and marketing for the upmarket Phi Phi Island Village Beach Resort and Spa said bookings were running at 90 per cent this month.

They were sitting at around 95 to 96 per cent in November but dropped when the airports in Bangkok were closed. He said he expected 85 per cent occupancy for January.

The 112-room resort did not need to discount although it does offer incentives if bookings were made via the internet, he said.

Bigger hotels with 300 to 400 rooms are having problems, however.

Richard Valentine from the Dragon Art Media group said many of the bigger hotels on Phuket island were running at around 70 per cent occupancy rather than the normal 90 to 95 per cent.

One major hotel was at 60 per cent and a three-star hotel at 40 per cent. He said the real discounting of room rates would begin around January 10, just after the Christmas rush.

Some of the taxi drivers in old Phuket Town will now drive you at any price. Some even get on to buses before they have arrived at the terminal, just to arrange pick-ups and deliveries ahead of their competitors.

Some of the taxis around the major hotels on the west coast beaches, however, are still demanding fixed premium prices.

A quick check of the Phuket beaches reveal plenty of Europeans sunning themselves, splashing in the lukewarm sea of the Andaman, or lying under umbrellas for a fabled Thai massage.

The winter of Europe and its astronomical prices seem a long, long way away.

As one long-time European resident of Phuket said, "Where else in the world can you live comfortably for between 500 and 1,000 baht a day, walk to the beach at any time of the year for a swim, have one of the best massages in the world, eat the healthiest food and be safe? Where else?"