Confident Centara sharpens regional focus
Southeast Asia, the Indian Ocean and the Middle East offer the most promising opportunities for Centara Hotels and Resorts to expand its presence, says a senior executive.
In line with the strategy of its parent Central Group, the Bangkok-based hotel group is aiming for a bigger presence in Asean where market opening has brightened opportunities, according to Suparat Chirathivat, vice-president for business development.
“We are looking at the 10 Asean countries with a focus on CLMV,” Mr Suparat said in an interview with Asia Focus, referring to Cambodia, Laos, Myanmar and Vietnam. “We think we should concentrate more on Vietnam where the potential is high, thanks to the country’s steady economic growth and diligent workforce.”
Centara, which has 65 hotels in total, operates in 10 countries with 22 properties outside Thailand in locations including Vietnam, the Maldives and Sri Lanka. Two hotels are under development in China and 10 others are planned in various countries, including three investments and seven management contracts.
“Asean is our home. Whoever comes in, we have the capability to protect our business. Our origin is here so we want to grow the business here. Tourism is good, while the food culture and hospitality of the people are embedded in our DNA,” said Mr Suparat.
Apart from more investments in Vietnam, Centara is expected to announce a project in Myanmar, where the market is consolidating after a surge in building led to an oversupply. Room rates at top properties have fallen by 20% annually over the past three years from US$300 a night to about $150.
“It is likely we will have a project there within this year as we are having discussions with potential partners,” said Mr Suparat.
Centara also operates a hotel in Vientiane and is looking for more opportunities in Laos along with Cambodia, while the Philippines and Malaysia are being studied.
Hotels abroad generate good revenue for Centara as the room rates are higher than in Thailand. Its two properties in the Maldives are its most successful.
“Room rates in Thailand are not high so we are lucky to have hotels established in countries where room rates are substantial,” he said. “Competition in the Maldives is high but we were there quite early. Our team understands this resort market quite well so the hotel performs quite nicely and the brand reputation is quite good.
“We will invest more in the Maldives. Two projects will be signed this year including one management contract and one investment.”
In China, Centara is signing two new agreements for the Centara Grand Beach Resort Jin Tai Hainan in Hainan province and the Centara Villas Zhaoqing in Guangdong.
“The Chinese market is changing as Chinese travellers have become more digitally connected,” said Mr Suparat. “Hospitality brands around the world need to adapt and understand the needs of this huge portion of the market.”
The Centara Grand Beach Resort Jin Tai Hainan, a five-star family resort, is expected to open in the fourth quarter of 2019 with 350 rooms. Hainan is being promoted as “China’s Hawaii” and the entire island has been designated a Special Economic Zone.
The Centara Villas Zhaoqing is scheduled to open in the final quarter of 2018, as an upscale resort with 46 villas. The Centara Resort Zhaoqing, with 237 rooms, was signed over to Centara in January 2015. Both are located in Zhaoqing, a tourist hub in the Pearl River Delta. Local visitors and travellers from Guangzhou, Shenzhen, Foshan, Zhuhai and even Hong Kong and Macau visit Zhaoqing for weekend getaways. A rainforest-themed adventure water park at the Zhaoqing resort will be an additional draw.
In the Middle East, Centara has five hotels in the pipeline including one in Dubai. Last month it signed a joint-venture agreement with the UAE developer Nakheel for a beachfront resort worth 6 billion baht on Dubai’s Deira Island.
“We explored opportunities in the Middle East for four years and talked to several potential partners,” said Mr Suparat. “We chose the best partner because we know we can’t be there without a partner given the law that requires a local sponsor for investment, which is a person in the royal family.”
Owned by the UAE ruler, Nakheel has 5,300 rooms in 16 hotels, resorts and serviced apartments in operation or under development, with the first two — at Dragon Mart and Ibn Battuta Mall — delivered in 2016.
“We view that in the Middle East, Dubai has the highest potential partly because it has a quite westernised legal framework that protects foreign investment. Dubai law is quite similar to England, making us comfortable to invest there,” Mr Suparat said.
The government in Dubai has assessed the tourism sector and found there are too many five-star hotels with prices rising too fast. Centara Deira Island Beach Resort Dubai, scheduled to open in early 2020, will be a four-star resort featuring a water park.
The first Centara hotel to open in the Middle East will be in Doha, Qatar. The 261room Centara Grand Hotel Doha, located in the new business and shopping district of West Bay, will open in late April with two more coming up, including one later this year.
In Muscat, the capital of Oman, the 152room Centara Muscat Hotel is also due to open later this year. As well, Centara has more projects under discussion in Dubai.
Dubai is trying to position itself as tourism centre given its logistical and geographical advantages. Dubai International Airport is the world’s third busiest, handling 83 million passengers last year including millions of transit passengers.
“The government aims to attract more transit passengers to actually visit Dubai,” said Mr Suparat.
“To establish Thai/Asian hospitality brands, establishing our hotels in key gateway cities is a must,” he added, naming Shanghai, Hong Kong and Singapore as examples.
While the Middle East holds strong potential for the hotel business, Mr Suparat acknowledges that “political and economic stability is of great concern and political tensions are high throughout the region”.
The region of more than 350 million people faces continuing conflicts in Yemen, Iraq and Syria. Israel is always a flashpoint, and declining oil prices have resulted in tighter fiscal policies in many countries.
“Once we decided to invest in this region, we have to be committed with it. We are fully committed to the Middle East,” Mr Suparat said.
“Asean is our home. Whoever comes in, we have the capability to protect our business. Our origin is here so we want to grow the business here” SUPARAT CHIRATHIVAT Vice- president for business development, Centara Hotels and Resorts