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PROPERTY
KANANA KATHARANGSIPORN
Though political uncertainty is hurting the tourism industry, Charoen Sirivadhanabhakdi's property arm TCC Land Leisure Co has been selectively investing in hotel ventures, said senior executive vice-president Paisit Kaenchan.
''We are worried about dipping tourism, which may force some small and medium-sized hotel owners to offer to sell [their hotels],'' he said.
He added that political problems had led to a 20% drop in the number of guests and participants in the Lions Club International meeting held last month. ''The only problem is political stability,'' he said.
In the first half of the year, all of the company's hotels in Thailand recorded an average occupancy of between 60% and 70% _ in line with company targets. But it expects that the second half will be 70% _ below the 80% targeted.
As a result, the overall average occupancy rate would be below 65% for the year while revenue per room would fall 5-10% in 2008. The company would try to make up for this with cost cuts.
However, the company hoped the convention business would boost the number of guests because Thailand costs about 60% less than neighbouring countries like Hong Kong and Singapore.
''Hotels are a long-term investment, but in this time we need to be selective in our investment,'' said Mr Paisit. The company would carefully consider location and price, which had to generate a yield of up to 15% for middle-end hotels and break-even in 10 years.
The company yesterday announced it would spend about three billion baht _ 1.35 billion for renovations and 1.7 billion for rent for 25,000 square metres of space to launch a new hotel. It would lease the space from Univentures, a property venture of Mr Charoen's eldest son Thapana.
The 25,000-sq-m area would be developed for 240 five-star rooms, located on the 22nd to 33rd floors of a new 33-storey building developed by Univentures with an investment of around four billion baht.
The 7.5-billion-baht building will be located on a five-rai plot on the Wireless-Phloen Chit junction, which Univentures would lease for 30 years for 500 million baht for the first four years. After five years, the rate would drop to 20 million baht per year. The remaining rentable area of 28,000 sq m on the 1-22 floor would be grade-A office space operated by Univentures. Building construction would be completed by the end of 2011.
In the second half of the year, TCC Land Leisure plans to invest in a luxury hotel on a 26-rai site in Krabi.
In the first half, it acquired the 230-room Novotel Rockford hotel in Sydney for 2.25 billion baht. The company is waiting for approval from Australia's Foreign Investment Review Board.
''Investment in the hotel business accounted for 40% of TCC Group's total investment but generated more than half the group's value. Land values have increased every year by at least 10-15%,'' said Mr Paisit.
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