Erawan looks to domestic zone, Asean

SET-listed Erawan Group Plc (ERW) plans to rely on the domestic market, aiming for 50 Hop Inn hotels across Thailand.

Petch Krainukul, president of ERW, said local travellers are considered the lowest risk segment, unfazed by external factors unlike the international market.

He believes this is the right strategy for the group to cope with recent challenges such as the Covid-19 outbreak.

Thailand is the biggest source market for ERW’s portfolio, making up 20%, followed by China (12%) and the US (9%).

The group also chose to diversify risk by expanding to the Philippines as it shows the strongest potential with a high GDP, sizeable middle class and sufficient air connectivity as well as low competition.

This year it anticipates total revenue and hotel revenue per available room (RevPAR) to decrease because of the short-term impact of Covid-19.

Looking back to the five-month Sars outbreak in 2003, the group saw RevPAR plunge 40-50%.

The group also shortened the duration of its business plan to three years instead of five to cope with rapid changes in the industry. According to that plan, it aims to build 7-10 Hop Inn hotels each year.

Woramon Inkatanuvat, executive vicepresident and chief financial officer, said the average occupancy rate in January and February for 46 Hop Inn hotels in Thailand and five in the Philippines were 78% and 80%, respectively.

Other hotels excluding Hop Inn, which rely heavily on the international market, posted weaker occupancy rates of around 60% in February, down from 80% in January.

Ms Woramon said the company will prioritise a 1.4-billion-baht budget for Hop Inn expansion in both Thailand and Philippines, with around 80-100 million baht for each hotel.

At the end of this year, the group expects to have 50 Hop Inn hotels across 37 cities in Thailand and five in the Philippines, totalling 4,706 rooms.

This year its hotel portfolio is set to expand to 77 properties after adding seven Hop Inn branches in Thailand.

As of 2019, ERW had 70 properties with 9,569 rooms, of which 65 hotels are in Thailand and five in the Philippines.

The company has 17 hotels in the pipeline in Thailand and the Philippines slated to open between 2020 and 2022. Of that number, 16 properties are under the Hop Inn brand.

The company reported total income of 6.38 billion baht in 2019, up 2%, while net profit was 446 million baht, down 17% year-on-year.

Last year ERW saw the average room rate of the total group excluding Hop Inn drop by 4%, with RevPAR down by 7%.

Hop Inn Bangkok and the Philippines saw RevPar increase by 1% and 5%, respectively.