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

Cambodian goes sky-high

With apartment now going for up to $1.6 million, the post-war Phnom Penh is barely recognizable

In the market for a million-dollar penthouse suite? Thinking Kuala Lumpur, Bangkok or Singapore? Try Phnom Penh. The Cambodian capital’s rocketing real estate prices have encouraged construction to reach for the skies, according to government spokesman Khieu Kanharith.

A South Korean-funded development, Gold Tower 42, announced this month that it is offering skyscraper apartments from around US$500,000 to $1.6 million, and the development, scheduled for final completion in 2011, will become the tallest in the capital.

‘‘Five years earlier, another company began planning a 32-storey tower on the outskirts of the capital which is yet to be built, and we expect many more such projects,’’ Mr Kanharith said.

‘‘The high price of land makes it sensible to make the most of land investments, and skyscrapers are the perfect solution.’’

Some analysts estimate that real estate prices in Cambodia have increased at least tenfold in as many years as the economy continues to grow and the country enjoys post-war political stability.

For instance, real estate brokers say one square metre of land on Monivong Boulevard — one of the capital’s main thoroughfares and the location of Gold Tower — now goes for an average of $2,500 (84,000 baht). It was as low as $30 when grenade attacks and coups were still daily possibilities.

The changes have come fast — it was only in 2002 that the capital’s first shopping center opened and special instructors were employed to educate shoppers on the previously virtually unknown contraption in Cambodia, the escalator, to prevent injuries.

Cambodia is still eagerly awaiting the arrival of its first international fast-food chain this year and it’s still a race between the Malaysian distributor of Kentucky Fried Chicken and Singapore’s Asian distributors of ice cream giant Swenson’s.

But Kim Tae Gon, general manager of Yon Woo Cambodia Co Ltd, which is building Gold Tower 42, says Cambodia is a ‘‘good marriage’’ for companies such as his.

‘‘The investment climate is good. Cambodia is eager for development. We have sold 40% of our apartments in Gold Tower 42 off the plan already, and the majority of buyers are Cambodians, although Koreans, Chinese and British have also bought as well,’’ he said.

Phnom Penh, known as ‘‘The Pearl of Asia’’ in the 1920s prior to decades of civil war, covers just 375 square kilometres and boasts just over one million inhabitants, compared to the more than 10 million in Bangkok.

With its location at the confluence of the Mekong River and the Tonle Sap River, with much of the French colonial architecture intact and low pollution compared to other regional capitals, Phnom Penh is widely seen as a good investment prospect, according to Gon.

Im Chhun Lim, minister of land management, urban planning and construction, said Gold Tower’s 42-storey, $1.56-billion development was an exciting addition to the Cambodian construction scene, which is now the country’s third biggest industry behind garments and tourism.

During last week’s launch of the Gold Tower 42 showroom, Chhun Lim said the construction industry provided up to 30,000 jobs nationally and revealed that top local technicians could earn up to $1,200 a month — a small fortune in a country where the average wage is around one dollar a day.

Gold Tower 42 will not stay the tallest building for long, however. On Jan 8 the South Korean construction company GS Engineering and Construction unveiled plans to construct a 53-storey skyscraper scheduled for completion in 2012.

Ground-breaking for that new international financial building on nearly seven hectares of land in the heart of the capital is planned for mid-year.

South Koreans have launched an investment offensive in Cambodia to catch up on missed opportunities in neighbouring nations, according to analysts.

An adviser to Prime Minister Hun Sen said that the building will house supermarkets, shops, offices, schools, and accommodation for 10,000 people.

Cambodia’s building industry is booming on the back of double-digit growth and hopes that revenue, and business, will begin rolling in on the back of the expected oil and mineral revenues due to be tapped within the next two to five years. A stock market is also in the offing within a year.

BRONWYN SLOAN