Some plums for picking in quiet field

Nondhanada Intarakomalyasut

Despite the government's policy to aggressively promote tourism, shares of listed hotel companies are not considered attractive as they provide a lower return on investment than in the overall market.

Although the hotel and travel services sector provides steady income in a long run, it is not a high-growth sector, in the manner of residential property development.

Moreover, hotel stocks had low liquidity, said an analyst at Bualuang Securities, asking not to be named.

``There has been no movement to spark the sector. For example, the food sector used to be dull but the potential of export markets has spiced up the industry,'' said the analyst.

However, he recommended some listed hotel companies that performed strongly and offered attractive returns on investment in their shares, particularly Royal Garden Resorts Plc (RGR) and Central Plaza Hotel (Centel).

Centel topped the Shareholder Scorecard for the sector, producing a one-year return of 71%, followed by RGR at 61% and Laguna Resorts and Hotels at 40%. Trailing the field was Shangri-La at -11.5%.

RGR shares were attractive because it had a strong performance and had diversified its portfolio to prime locations across the country, the analyst said. ``RGR has strong growth as it is making the right move in its expansion plans by choosing the prime tourist locations.''

Each RGR location differs in service purpose and environment. Therefore, the company is able to serve many kinds of customer preferences.

Besides the company's performance and business plan, its alliance with the Marriott International group placed RGR in a secure position to achieve more optimal occupancy and room rates.

Acquisitions also were a key factor in driving RGR's growth. Based on the company's track record, further acquisitions would provide more growth for the company, the analyst said.

Another listed hotel group that provides high returns on stock investment is Central Plaza Hotel (Centel).

The group's shares had been undervalued for the past two years, said Gerd Steeb, Centel's executive vice-president. The reason was not related to the firm's performance but because there were not enough shares in the market.

Some 65% of the company's total shares were held by the Chirathivat family and another 11% by the International Finance Corporation, a financial arm of the World Bank. Therefore, only 24% of the shares are available for trading.

But in the last few months, Centel has increased its investor relations activities, providing information on the company's direction, leading to its shares being strongly recommended by analysts, said Mr Steeb. More importantly, Centel had a solid and long-term management team. ``We also have a clear strategy in being the leader in resort hotels which is the strong segment on Thailand's tourism industry.''

Centel is looking for business expansion overseas to add into its portfolio.

Another attractive player in the 11-firm sector is Laguna Hotels and Resorts, which has a strong base in Phuket. Listed operators with poor returns on share investment are mostly hotels that do not have a presence in core tourist cities. _Nondhanada Intarakomalyasut

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