Erawan branches into budget hotels
The Erawan Group, a listed hotel developer, is spending Bt2 billion on expanding its network into the budget-hotel segment with 30 openings through 2015 under its new Hop Inn brand.
The first opening will be during the second or third quarter of next year and the brand’s launch will make it the first Thai-owned budget chain in the Kingdom, competing head-on with the Tune chain from Malaysia.
Kasama Punyagupta, chief executive of The Erawan Group, yesterday said the budget-hotel segment had big potential, with low risk and a high return.
The ebitda (earnings before interest, tax, depreciation and amortisation) contribution from Hop Inn is projected at 15 per cent of the group’s total ebitda in 2016, a figure that is expected to increase to one-third in 2020, he said.
Twenty-five of the planned Hop Inn hotels will be located in Thailand, and the other five elsewhere in Asean.
The first five properties are under construction, and nine openings in total are scheduled by the end of next year in Ubon Ratchathani, Mukdahan, Nong Khai, Udon Thani, Nakhon Ratchasima, Sa Kaeo, Kanchanaburi, Mae Sot and Lampang.
With an investment cost per room of Bt720,000, each hotel will have 79 rooms and guests will be charged a uniform Bt600 per night.
Business travellers are the group’s main target, with a projected 85-90 per cent of Hop Inn guests coming from the segment.
The segment offers big potential because business travellers seek affordable accommodation all year round, and there are no peak and low seasons as with five-star hotels, he said. The average occupancy rate is projected to reach 80 per cent.
After 2015, the group also plans to expand the budget-hotel network via franchise agreements, said the CEO.
Overseas, each property will require more than 100 rooms, with its own investment. Target market segments will be Thai as well as local travellers.
The Hop Inn chain will enable the group to complete its portfolio from the luxury end through to budget brands.
At present, the company has 16 properties under eight brands.
