Erawan dips toe in budget hotel pool

Growing middle class, budget airlines cited

Erawan Group, a SET-listed hotel developer, plans to open 11 new budget hotels and a mid-scale option this year as part of its move into the budget hotel segment.

The company, which operates 16 hotels under the Grand Hyatt, JW Marriott, Renaissance, and Ibis brands, will open with the expansion of Holiday Inn Pattaya next year.

Erawan allotted 2.5 billion baht in investment from 2013 to 2014 to finance hotel construction and expansion.

The 10 two-star hotels will operate under the Hop Inn brand, Erawan's own brand, with half opened in the second quarter next year and the others in the final quarter of 2014, said Kanyarat Krisnathevin, chief financial officer.

Another economy hotel will be opened under the Ibis brand in Krabi. While the new mid-scale offering is Mercure Pattaya, said Thanachart Securities.

"Demand for two-star hotels is increasing," she said.

The fast-growing middle-income sector and low-cost airlines have stoked demand for economy hotels recently.

"By the end of 2014, the company's rooms will rise to 5,290 from 3,800 in 16 hotels presently," said Ms Kanyarat.

The company expects tourists next year will increase by 8% from 26.2 million projected for this year.

Its occupancy rate may grow to 83% in 2014 from 81% this year. It plans to raise its room rate by 10% on average.

Erawan targets 13% revenue expansion next year, thanks mainly to a higher occupancy rate.

Erawan (ERW) shares closed at 4.56 baht on the SET yesterday, up six satang, in trade of 15.46 million baht.

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Writer: Darana Chudasri
Position: Business Reporter