LHMH still dependent on OTAs

LH Mall & Hotel Co (LHMH), the operator of Grande Centre Point hotels, says its reliance on online travel agency (OTA) service remains crucial to expanding the customer base.

LHMH property director Kanokvalee Viriyaprapaikit said the four hotels are still confident about using OTA services despite paying high commission fees to such sites as Booking.com, Agoda and Expedia.

LHMH has been using OTA service as the main booking channel for many years, contributing more than 40% of its total guests domestically and internationally.

“OTA service is worth the investment thanks to its widely known platforms among foreign independent tourists,” Ms Kanokvalee said.

Some famous OTAs have a lot of clients with a variety of visitors around the world, and this client network can make LHMH hotels more well-known, increasing brand awareness quickly, she said.

OTA service can help drive the hotel occupancy rate for the whole year, said Ms Kanokvalee.

“Our client base expansion and brand awareness are as important as service quality and product development,” she said.

Ms Kanokvalee said OTA service makes hotels adjust their room rates constantly, regardless of the tourism season.

LHMH plans to increase its hotel rates this year, especially for Grande Centre Point Ratchadamri Hotel, to generate more revenue.

“We see high potential for the hotel business, and our guests from Japan, South Korea, China, Hong Kong and Singapore have higher spending power,” she said.

The Grande Centre Point Ratchadamri Hotel does not plan any renovation this year.

LHMH set aside 5 billion baht to either buy or lease land plots in prime Bangkok locations such as Thong Lor and Ekamai to develop new hotels this year based on sharp growth of international tourist arrivals, especially Asians and Americans.

Despite i ntense competition f rom upscale hotels in Thailand, LHMH believes it has an edge because its hotels are located in Bangkok’s central business district close to skytrain stations, restaurants, fashion boutiques and community malls.

In related news, LH Hotel Leasehold Real Estate Investment Trust (LHHOTEL) will raise 3.89 billion baht by issuing 224.5 million units to acquire the leasehold of Grande Centre Point Ratchadamri Hotel.

LHHOTEL’s newly issued units will be priced between 13 to 13.30 baht each.

After the recapitalisation, the REIT will grow to over 7 billion baht from around 4 billion. Its return is projected at around 7.5% per year, close to the REIT industry average of 6-7%.

LHMH posted 1.75 billion baht in revenue last year, up 15% from 2015, while its occupancy rate averaged 80%.

The company is developing the 400room Grande Centre Point Pattaya Hotel, due to open in 2019. The Pattaya hotel will be the brand’s first outside Bangkok.

It operates four hotels with 1,678 rooms in total, and will reach 3,000 rooms when the Pattaya hotel is opened.