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Challenges for hotels

Despite a downturn in the global tourism industry, with most hotels failing to achieve their revenue targets, some shares of Thai listed hotels are still delivering good returns to investors.

But analysts say the returns would be even higher if tourist arrivals had remained at pre-Sept 11 levels.

Among the 12 listed hotels, Mandarin Hotel produced the highest one-year Total Shareholder Return at 511%, followed by Laguna Resorts and Hotels at 116%. Asia Hotel trailed the field at -17.7%.

A Mandarin financial executive said the healthy return reflected the sale of a Sukhumvit serviced apartment complex worth over one billion baht last year to repay most of its outstanding debt. The sale left the company free to focus on its Mandarin Hotel and Plaza Suriwong Hotel and to control costs.

In the first nine months of this year, Mandarin reported 56 million baht in net profit on 164 million baht in revenue.

James Batt, joint managing director of Laguna Resorts and Hotels, said his company benefited from having a diverse portfolio of properties on Phuket to attract a wide range of tourists.

However, Laguna has ben hit by the tourism decline, with occupancy for December forecast at 45% compared with 61% in the same month last year.

In the third quarter, Laguna reported a net loss of 26.7 million baht, compared with 81.5 million baht for the same period last year.

However, Pongpan Apinyakul, manager of Yuanta Securities said that hotel operators with properties in popular tourist destinations were likely to maintain their sales during the world tourism downturn.

He said that Central Hotels and Resorts, with properties in Hua Hin, Krabi, Samui and East Timor, had been performing well.

"Central Hotels have properties in popular destinations which still continue to attract foreigners. But some operators like the Dusit Group may not have been doing so well because its top assets are mostly in the northern region which is not a 'hot' place for foreign tourists," said Mr Pongpan.

Mattaya Deejingjing, an analyst at Yuanta, said that like Central Hotels and Resorts, Royal Garden Resorts Plc (RGR) was poised to do well because it had diversified to several locations.

"When one location has a drop in sales, other properties could help offset the overall performance," she said.

RGR reported a 580% year-on-year jump in net profit to 38 million baht in the third quarter.

- Nondhanada Intarakomalyasut