Centel planning to run tight ship

Central Plaza Hotel (Centel), operator of the Centara hotel chain and various restaurant brands, will focus on financial discipline until 2016 to reduce its risks after launching a major expansion with three projects worth more than Bt10 billion in the past three years.

Over the next five years, the firm expects group sales will reach Bt20 billion, with annual growth of 10 per cent. Profit contribution to the group from the food and hotel businesses will be in equal proportion. This year, its total sales are expected to increase 20 per cent to Bt13.7 billion, according to Ronnachit Mahattanapreut, senior vice president for finance and administration of Centara Hotels & Resorts.

Despite the flood crisis last year, the company earned Bt550 million in net profit, reversing a net loss of Bt56 million in 2010. 

Ronnachit said the plan would help strengthen future financial performance. Centel’s EBITDA (earnings before interest, tax, depreciation and amortisation) is expected to increase to Bt4.5 billion in 2016, up from Bt3.2 billion this year. Last year, the figure was Bt2.3 billion, an increase of 42 per cent from the previous year. Its credit rating is expected to increase to “A” this year from “A-” last year.

“We intend to break our profit record every year,’’ Ronnachit said. 

Suthikiati Chirathivat, chairman of the board of Centel and Centara Hotels & Resorts, said the group would move its business ahead with new investments, especially abroad, both in food and hotels. For hotels, however, the group will focus more on management-contract agreements for properties rather than its own investments. 

In Asean, the firm plans to expand its hotel chain in every member nation. As a recognised brand, it is easy to move into markets with investment incentives from the implementation of the Asean Economic Community, he said. 

The firm is also looking at new destinations such as Singapore, Hong Kong, London and Dubai. In China, the firm believes its chain has big potential. This year, it will open a local office there. Under its expansion plan, its overall investment will be in the form of a joint venture and a property fund.

This year, Centara will focus on Asian nations, especially Indian Ocean countries and China. The expansion will focus on 4-star facilities and high-value brands because of rising demand. 

In 2016, the group expects to have 17 properties to operate, both its own investments and joint ventures, and management-contract agreements with 60 properties. This year, the number of properties established under its own investment and joint ventures is 15, with 27 contract-management agreements.

“By 2016, the total number of hotels operating under the various Centara brands will triple – with almost 80 per cent being managed properties and more than 40 per cent located in overseas markets,’’ Ronnachit said, adding that Centara currently had 56 properties or 10,804 rooms in nine nations. 

The food business is run by Central Restaurant Group Co (CRG). This year the company will spend Bt1 billion – Bt650 million on new outlets and renovations and the rest on marketing. 

Currently, CRG has 12 brands of fast-food joints such as KFC, Mister Donut, Auntie Anne’s and Chabuton, and expects to have 660 outlets in total this year. In 2006, the number of outlets is expected to increase to at least 1,000, with 16 total brands.