Italthai eyes overseas franchises, EV foray
The firm is diversifying to meet global trends, write Lamonphet Apisitniran and Srisamorn Phoosuphanusorn
Italthai Group, one of Thailand’s oldest construction and hospitality companies, wants to modernise its business by franchising its hotels overseas and branching out into electric vehicles.
“We will start franchising our four-star hotel brand Amari and mid-scale Ozo to Australia and China over the next two years as we seek to move into new markets with high growth and large populations,” said Yuthachai Charanachitta, group chief executive of Italthai, the third generation of his family to lead the company.
“We are also interested in diversifying our business to meet global trends such as electric buses in Thailand and China.”
Managing multiple brands from distinctive luxury hotels such as The Oriental to four-star Amari, Onyx and Ozo, Mr Yuthachai said there is no plan to enter the fragmented budget hotel segment.
“My investment strategy centres on financial return,” he said. “Why would we make large investments in exchange for low returns?”
Mr Yuthachai said Italthai will expand its hotel and serviced apartment business overseas with 10 new hotels in Sri Lanka, Malaysia, China and Australia to capitalise on high-growth, high-population markets.
The company has joined with local partners to operate the hotels and serviced apartments through the hospitality group’s brands.
Italthai Group has a total of 20 hotels in the pipeline.
“Italthai expects to spend about 1 billion baht next year for its hotel and serviced apartments business for the overseas and domestic markets,” Mr Yuthachai said.
In 2019, Italthai Group prepared a budget of 5 billion baht for hotels and serviced apartments for a new hotel and renovation project.
On the domestic front, Italthai has a new hotel under development in Pattaya to serve the growing family and expat markets drawn to the area to work in the Eastern Economic Corridor (EEC).
The group currently operates 50 hotels with 8,000 rooms in Thailand, China, Sri Lanka, the Maldives, Malaysia, Laos and Bangladesh.
In addition, Italthai Group is a shareholder in the Mandarin Oriental Bangkok, one of the oldest and most prestigious hotels in the world.
Mr Yuthachai said the hospitality and lifestyle segments account for 40% of revenue, while construction equipment, construction and engineering services represent the remaining 60%.
The lifestyle business is a Horeca solutions provider for hotels, restaurants and caterers across Thailand. The other business is River City Bangkok, a shopping complex and antiques exhibition venue.
Mr Yuthachai expects total group revenue in 2020 of 15 billion baht, the same as the 2019 projection, because of the effects of the global economic slowdown.
“The trade war and the government’s slow disbursement of its stimulus package have weighed on the economy,” he said.
In 2018, Italthai Group announced that total revenue would reach 30 billion baht within five years (by 2022) on business expansion in overseas and domestic markets.
Mr Yuthachai said Thailand faces a major workforce shortage, a key concern of the hospitality sector for the past few years.
“The government must know that we need considerable numbers of overseas workers, especially from our neighbouring countries,” he said. “It’s clear hospitality and tourism will face major problems in recruitment if there is any major reduction in the number of workers allowed to enter from overseas.”
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The government must know that we need considerable numbers of overseas workers. YUTHACHAI CHARANACHITTA Group chief executive, Italthai