ERAWAN has BT9-BN Plan To double revenues

Group embarks on biggest expansion drive in 25 years

The Erawan Group last week revealed a three-year, Bt9billion development plan focused on the hotel business.

It will build 12 hotels in the country in a bid to raise revenue from Bt3.2 billion last year to Bt6 billion in 2010.

This will be Erawan’s biggest expansion since the group was established 25 years ago. It is now diversifying into hotels after running a property business for more than two decades.

The group has already spent Bt4 billion on the first phase, and the remaining Bt5 billion is set for ongoing and future projects.

The group plans to add 2,300 rooms to the existing 1,200 in four hotels: the Grand Hyatt Erawan, JW Marriott, Courtyard by Marriott and Renaissance Samui.

President and CEO Kasama Punyagupta said the group had made solid achievements since he took charge in 2006. At the time, the group decided to sell its leasehold Amarin Tower to the landowner to reduce risks and later entered the hotel sector.

Five hotels with 1,000 rooms will be built this year, the first a five-star property with 61 pool villas located on Koh Naka off Phuket. It will be managed by Six Senses Resorts and Spas.

The other four will be budget hotels located in central Pattaya and on Koh Samui, Phuket’s Patong Beach and Bangkok’s South Sathorn Road. They will be run by Accor’s Ibis Division.

Next year will see six new hotels with about 1,100 rooms. One will be the Holiday Inn Pattaya. The others will carry the Ibis brand: in the Nana area and on Charoennakorn Road in Bangkok, as well as in Chon Buri’s Sri Racha district, Krabi and Phuket.

And 2010 will usher in the final hotel in the plan: an Ibis in Hua Hin.

“We’re using our own money for all of the development,” Kasama said. “ The group has now become a hotel developer, and we’re confident we’re on the right track. We’re allowing professionals to manage all of the properties instead of doing it ourselves.”

The group projects revenue increasing from Bt3.2 billion last year to Bt4 billion this year, Bt5 billion next year and Bt6 billion in 2010.

Hotel and leisure will contribute up to 90 per cent of operating cash flow in 2010, up 30 per cent year per year. The non-hotel business will remain at 10 per cent of cash flow over the next two years.

Kasama said the group had positioned itself as one of the leading profitable companies on the stock exchange, one that offered sustainable growth for shareholders.

To strengthen its competitiveness, the group has reorganised by creating several departments, including hotel investment and hotel development. More professionals have been recruited from outside, especially from the hospitality industry, while some staff were let go.

The group has no worries over the many threats at this time. It said the US sub-prime crisis, currency fluctuations and global economic downturn were not jeopardising its expansion.

“ Thailand remains strong and good for investment,” Kasama said.

The 12 new hotels, ranging from economy to luxury, along with backing from global hotel chain operators will strengthen the group’s competitiveness with all players.

The group sees Thailand itself, particularly its culture, sites and world-renowned hospitality, as key to wooing international tourists to the Kingdom.

SUCHAT SRITAMATHE NATION