Erawan allots B2.2bn for 9 hotels this year
Focus remains on Thailand, Philippines
SET-listed Erawan Group Plc (ERW), a leading Thai hotel company, plans to invest 2.2 billion baht to open nine new hotels in Thailand and the Philippines and increase its revenue this year by 10% from 5.6 billion baht last year.
Of the total investment, 56% will be spent on 16 ongoing hotels in Thailand, 28% on six hotels under development in the Philippines and the remaining 16% for asset improvement, said president Kamonwan Wipulakorn.
“We expect the tourism business in Thailand will continue to grow strongly this year, rebounding from the slowdown in the fourth quarter last year, which was affected by the mourning period and the zero-dollar tour crackdown,” she said.
Thailand expects to welcome 34.4 million foreign tourists this year, up 6% from 32.6 million last year, estimated the Tourism Department. Last year’s tally was the highest in Asean and among the top 10 in the world.
Moreover, Russian tourists are expected to return to Thailand after economic problems in that country eased significantly, said Ms Kamonwan.
Erawan plans to open nine new hotels this year, all under its Hop Inn budget label, of which eight will be in Thailand and one in the Philippines.
After adding the hotels, it expects to operate 50 hotels with 7,153 rooms by the end of this year, up from 41 hotels with 6,385 rooms last year.
“With the strong tourism rebound since January, we expect to increase our room rates for all hotel segments this year,” she said.
Erawan will start construction of two new hotel projects in Sukhumvit Soi 4 and Soi 24 later this year. The 318-room hotel on Soi 4 will have a combination of Novotel and Ibis brands, due to be ready in the fourth quarter of 2018, while the 500-room hotel in Soi 24 will have Mercure and Ibis brands and open in the fourth quarter of 2019.
The investment is part of its five-year plan to expand to 95 hotels with over 10,000 rooms in Thailand and the Philippines by 2020, up from 33 hotels and 5,676 rooms in 2015. Most of the investment will go toward economy and budget hotels.
Erawan projects to have 20 Hop Inn hotels in the Philippines by 2020, up from one. The revenue contribution from the Philippines operations will be 10% of the company’s total the next four years.
“The Philippines has a lot of potential as its economy is growing and the government supports the tourism sector. Our major focus over there are Manila and Cebu,” Ms Kamonwan said.
In Thailand, the budget hotel segment is very promising as it has a higher profit margin than luxury hotels. There are vast opportunities for budget hotels in the provinces, which have a limited supply of quality hotels, she said.
Erawan has 22 Hop Inn hotels nationwide, targeting those who travel to do business upcountry. It aims to have 50 hotels under this label by 2020.
ERW shares closed yesterday on the Stock Exchange of Thailand at 4.42 baht, down eight satang, in trade worth 26.5 million baht.