SET-listed hotel companies posted a mix of profits and losses in the third quarter, but experts say the sector looks strong in the long term after continued tourism growth since the first half of the year.
International tourist arrivals in the third quarter totalled 8.8 million, up 6% year-on-year, a record number for a third quarter. Arrivals from January-October totalled 28.8 million, up 6.7% year-on-year.
The Chinese market has recovered after a crackdown on zero-dollar tour scams in late 2015, while the Russia market is bouncing back as well. Domestic tourism during January to August, was less impressive, with the number of domestic trips reaching 96 million, up 3% year-on-year.
Among the big players, Dusit Thani Plc remained in the red, while Erawan Group Plc, Minor International and Central Plaza Hotel Plc reported healthy growth.
Varied results
SET-listed Dusit Thani Plc reported a total revenue of 1.18 billion baht in the third quarter this year, increasing 0.8% year-on-year thanks to higher revenue from its hotel management and education businesses.
For the nine-month period ending Sept 30, the company's total revenue declined by 5.8% year-on-year to 3.77 billion baht, mainly driven by the lower number of guests at Dusit Thani Hua Hin and room renovations at Dusit Thani Laguna Phuket, Dusit Thani Pattaya and Dusit Thani Manila, as well as lower food and beverage revenue, particularly from the catering service of Dusit Thani Bangkok.
Dusit Thani reported a net loss of 23 million baht compared to a net profit of 39 million in the first nine months of 2016.
But Central Plaza Hotel Plc (Centel), operator of Centara Hotels and Resorts and food business, posted a third-quarter net profit of 369 million baht, a 14.5% increase, with total revenue of 4.85 billion, rising 2.9% year-on-year. This consolidated revenue comprises hotels business revenue of 2.09 billion baht and food business revenue of 2.76 billion.
The Erawan Group Plc, another local hotel chain, posted operating income of 1.44 billion for the third quarter this year, rising 5% from same period last year.
Revenue growth was witnessed in both hotel operations, which is the main contributor to the group, and rental and service income.
The company reported a net profit of 79 million baht for the third quarter -- a 42% increase year-on-year.
For the first nine months, net profit was 344 million baht or a 31% increase from the same period last year.
The group's average occupancy rate (excluding the budget hotel segment) was 83%, in line with year-earlier levels, although JW Marriott Bangkok is undergoing room renovations this quarter.
Its budget hotel segment generated the highest revenue growth for this quarter, a 43% increase from the same period last year.
Minor International or Mint has announced a net profit of 3.8 billion baht in the first nine months of 2017, an 18% increase from the same period of 2016.
For the third quarter, net profit for hotel business increased by 15% to 1.14 billion from 990 million a year earlier, while net profit for Mints food business increased 5% to 442 million baht.
The growth was attributable to strong performance for all three of the company's business units.
Arrivals drive growth
Pongpanu Svetarundra, permanent secretary of the Tourism and Sports Ministry, said on Monday that cumulative arrivals for the January-October period totalled 28.8 million, a 6.7% increase year-on-year. Foreign tourists spent 1.47 trillion baht during the first 10 month, up 9.3%.
The ministry expected tourist arrivals this year at 33-34 million, 1-2 million lower than an earlier forecast of 35 million.
In 2016, there were a record 32.6 million visitors.
During first nine months of this year, local people made 109 million domestic trips and contributed income of 695 billion baht, up 6.3% and 7.3%, respectively.
The tourism industry accounts for 12% of Thailand's economy, Southeast Asia's second largest market after Indonesia.
More investment
Supawan Tanomkieatipume, President of Thai Hotels Association (THA), said domestic tourism will continue to grow and will attract more investors.
But hotel business in major areas such as Bangkok, Phuket, Pattaya and Chiang Mai are already oversupplied.
But Mrs Supawan said new hotel investment will shift away from huge projects consisting of several hundred rooms, reflecting tourist desire for smaller properties at reasonable prices.
Meanwhile, Willi Martin, Area Vice President of Hyatt Hotels and Resorts, Southeast Asia, said that the group will open Hyatt Regency Bangkok Sukhumvit in the third quarter of 2018.
It will be the very first Hyatt Regency hotel in Bangkok, joining sister establishment Grand Hyatt Erawan Bangkok, Park Hyatt Bangkok and Hyatt Place Bangkok Sukhumvit.
Douglas Martell, president and chief executive of Onyx Hospitality Group, said the company will continue bulking up its portfolio with the introduction of Ozo Phuket in Thailand in mid-2019.
The hotel will offer 255 rooms and other features expected from a midscale brand.
