The local economy in the town is based on the tourist hotels
local shops and restaurants, and the diving trade. Most of the foreign tourists are European, many from Scandinavia, Germany and the United Kingdom. The wider area produces some rubber and palm oil; there is also a small amount of subsistence agriculture.
Following the tsunami of December 2004 (see below) the local economy was ruined as it was in nearly all coastal towns hit by the devastating wave. It is estimated that 60 percent of the resorts were mid-construction, with nearly 4,000 rooms already available. Most coastal resorts were either heavily damaged or completely demolished, resulting in a great loss of life and major blow to the local tourist economy. At the time of the tsunami, Khao Lak was Thailand's fastest growing tourist destination.
December 2007 has marked the third anniversary of the tsunami and Khao Lak's economy has nearly bounced back. Most of the coastal resorts have completed their reconstruction or repairs and the tourism has flourished. In some respects its better than pre-tsunami days. Nearly all volunteers have moved on to other parts of the world to render aid as Khao Lak locals pick up the remaining pieces, pulling their community back together. Seaside and inland resorts are indicating full bookings during high seasonal months of November to March. Though some prices have risen to reasonable and pre-tsunami rates, Khao Lak is still a bargain compared to other regions of Thailand and Southeast Asia. Where Phuket
is a destination for most, Khao Lak is experiencing the traveler that wants more secluded beaches, quiet nights and family oriented activities. Hotels and bungalows range from $15USD to $500USD per night depending on your budget. However, this does not mean Khao Lak is exempt from scams, such as Thai tailor scam. Inexpensive bungalows generally feature meager amenities, whereas the 5-Star resorts such as Le Meridien, Ramada or Sarojin Resorts boast first-class amenities. There seems to be something for everyone's budget.
Khao Lak was one of the areas of Thailand hardest hit by the tsunami resulting from the 2004 Indian Ocean earthquake. Many people died including many foreign tourists.
The final death toll was over 4000, with local unofficial estimates topping 10,000 due to the lack of accurate censuses and the mere fact that the Burmese population was not recognized as residents. This conflict between the official death toll and the actual loss of life will forever be debated.
Most of the coastal landscape, i.e., beaches, resorts and vegetation, was completely stripped back by the power of the tsunami. Some replanting programmes have been initiated and a great deal has been accomplished in the rejuvenation of surrounding foliage. Studies suggesting that coastal vegetation may have helped buffer the effects of the waves have ensured that replanting and maintenance of the coastal vegetation have become a priority in the reconstruction of the landscape.
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