Centara enters 3-star market

Construction News

Luxury segment has ‘too many players’

Centara Hotels & Resorts hopes its latest launch of three-star Centra and Centara Boutique Collection brands will become its key revenue driver in hotel management over the next few years.

Ronnachit Mahattanapreut, senior vice-president for finance of Central Plaza Hotel Plc (Centel), the parent firm of Centara, said it sees large room to grow in these new hotel segments. The company’s research found demand of four-star hotels and lower has rapidly risen.

“In the next five years, we project revenues from four-star hotels and lower will contribute around 50% of total management revenues that are expected to reach 400 million baht. Initially, the growth of Centra and Centara Boutique Collection will be similar, but Centra will grow more in the long term,” he said.

The five-star hotel segment has many players right now. This year, the revenue contribution of both Centra and Centara Boutique Collection will be only 10%, but will increase to 20% in 2011.

Centel secured four management contracts for Centra including the Centra Ashalee on Patong beach, Phuket, which is due to open this month. Included are two hotels in Pattaya and one in Bangkok that are expected to open by 2012.

The Centara Boutique Collection, which was launched 10 months ago, already has nine properties with 345 rooms. Eight are in Thailand and one is near the Himalayas in India.

The majority are owned by Astudo, such as X2 Samui Villas by Design. The owners of the X2 resorts are investing in the construction of two X2 Residence serviced properties located next to the X2 Samui Villas that will cost 160 million baht. The X2 Hua Hin Buri is an investment of 140 million while a Koh Kood property costs 250 million and will be located next to Away Koh Kood.

“Centara plans to expand this brand to 30-40 properties within the next five years,” said Mr Ronnachit.

The Centara Boutique properties are designed for those who appreciate luxury, fine design and natural surroundings but do not want the experience of a large resort hotel.

Chris Bailey, senior vice-president for sales and marketing at Centara Hotels & Resorts, said there are hundreds of boutique hotels in Thailand and most of them are run by owners.

“They can build what they want but it is not easy to operate the properties. Centara can manage these properties because of its strong network and technology,” he said.

He expects the average occupancy rate at Centara Boutique Collection properties will be around 60% next year.

Centel shares closed on the Stock Exchange of Thailand at 4.82 baht, down two satang, in trade worth 14.99 million baht.

Source: http://www.bangkokpost.com/business/economics/211158/centara-enters-3-star-market

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