Airport Hotel chairman seeks more capital

“It’s understandable why shareholders were reluctant to inject more money into a business with total losses amounting to Bt850 million since its opening,” Chaiwat Utaiwan said yesterday.
He was appointed chairman about 10 months ago.
“The situation has changed. The conflict between the board of directors and management has been smoothed out.”Airports of Thailand now holds 60 per cent of the business, capitalised at Bt1.02 billion, Thai Airways International has 30 per cent and Krung Thai Bank 10 per cent.
The massive investment in the hotel was mostly to blame for the conflict. Construction of the 600-room hotel cost Bt4.15 million per room, leading to huge depreciation expenses. Worsening the situation was the internal conflict, which led to poor marketing strategies.
Opened in 2007, the four-star hotel has operated in the red and accumulated a loss of about Bt600 million and Bt250 million in interest expenses.
Fiscal 2012 is the first year for the company to show earnings. Net income is Bt20 million, compared with the Bt109.7-million net loss in the previous year. Helping the hotel was a change in accounting standards last year to stretch the depreciation period from 25 years to 50 years and the Transport Ministry’s policy to encourage government agencies to host more functions at the hotel.|