Erawan pursues five-year plan to develop 14 hotels in Thailand

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Undeterred by the recent |flood disaster, the Erawan Group is sticking with its five-year business plan to develop 14 hotels with a total of 2,800 rooms and seek to acquire properties, as well as prepare for expansion abroad as the Asean Economic Community (AEC) nears implementation in 2015.

The group has just reviewed its 2011-15 business plan after experiencing losses from the worst inundation in Thailand in decades. As a result of that reassessment, Erawan has kept the plan unchanged, believing that the country’s tourism industry will soon recover and that foreign travellers still view the Kingdom as the key destination in the region.

Group president Kamonwan Wipulakorn said more players would invest in the Thai tourism sector despite the flooding. It is clear that Thailand is still strong in the hospitality sector.

According to Erawan’s plan, it will spend Bt8 billion to build 14 hotels by 2015 with at least 2,800 and maybe up to 3,000 rooms, she said.

It has already invested Bt600 million in two hotels in Bangkok and one in Hua Hin. Those three properties are under development and set to open in the new year.

Also next year, the group will start construction of new projects in Bangkok, Pattaya, Krabi and Phuket.

“Most of the new hotels will be in the mid-scale segment under several brands such as Ibis and Mercure,” Kamonwan said.

Currently the group operates 13 hotels, consisting of 3,300 rooms.

She added that the group was also looking into opportunities to take over existing hotels in the country, as planned earlier. However, there have been no acquisitions yet.

Also part of the five-year plan is a feasibility study on expanding overseas in view of the upcoming AEC. The group is interested in investing in hotels in neighbouring countries, particularly Laos, Vietnam, Cambodia and Burma.

Kamonwan said the group incurred losses of Bt200 million from the flooding, mainly at luxury hotels such as the Grand Hyatt Erawan and JW Marriott in Bangkok.

Meanwhile, other hotels in the capital and in the provinces ac-|tually gained business during the |crisis. However, the average oc-cupancy rate for the full year is expected to drop from the initial projection of 72 per cent to 70 per cent, which is still an improvement over last year.

In the current quarter alone, |revenue is expected to decrease by |20 per cent year on year, while the occupancy rate will drop from the projected 75 per cent to 67 per |cent.

“We expect our revenue growth this year to drop by 6 points to 14 per cent, but overall business should bounce back and grow by 20 per cent in 2012,” Kamonwan said.

She said the group would spend Bt700 million to renovate one of its flagship properties, the Grand Hyatt Erawan, from 2012 to 2014. The facelift is aimed at making the property more competitive as the hotel business in the area is getting more crowded.


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