Tourism & hotel

Tourism & hotel 

 

- Bangkok blast kills 20  

A bomb exploded at the Ratchaprasong intersection yesterday evening (around 7.00 pm), killing 20 people and injuring over 100. 

- Tourism, tourist confidence shaken  

The incident will sentimentally affect the tourism and hotel sector since it has seriously damaged confidence in travelling to Thailand, possibly resulting in a decrease in the number of tourists, especially those who are sensitive to violent situation. Particularly, Chinese tourists, which account for the highest proportion of 27% of total tourists in 1H15, were most affected by the situation. This issue has to be monitored closely. The Thai government has to explain details about the cause of the situation to the public as soon as possible to create understanding among foreign tourists. If the government can quickly find the truth and control the situation, the adverse effect will be limited only in the low season in 3Q15 and the Thai tourism would revive again in the high season in 4Q15. We will keep an eye on the situation to estimate the impact on the tourism industry. 

- Downgrade to NEUTRAL. Stay away from investment  

This negative factor will unavoidably affect tourism and hotel stocks, making investment in the low season less interesting. Therefore, we downgrade our recommendation from OVERWEIGHT to NEUTRAL. In the short term we recommend staying away from these stocks. For three tourism-hotel stocks under our coverage, ERW is the most at risk because over 90% of its revenue comes from the hotel business and the bombing took place in front of Grand Hyatt Erawan (20% of its revenue). CENTEL has 43% of its revenue from the food business and 47% from the hotel business, 26% of which comes from hotels in Bangkok and Centara Grand at CentralWorld makes up less than 15% of the hotel business in Bangkok. MINT would be least affected by the incident thanks to its diversified businesses; its hotels in Bangkok make up less than 10% of its revenue from operation.