SET-listed Erawan Group Plc (ERW) is planning to expand the Hop Inn via a franchise model to lesser known destinations in Thailand and overseas with a target of 30 hotels in 2025 after it recently sold three ibis hotels to One Origin.
After opening 47 Hop Inn -- its own budget hotel brand -- in 36 provinces, the company decided to offer a franchise model to partners who have buildings or land and want a long-term investment in hotel business, said Petch Krainukul, president of Erawan Group.
The goal for the first year is to open five hotels under a franchise agreement in second-tier provinces or districts.
Franchised projects will increase to 20-30 hotels and help support the target to have 100 properties by 2025.
He said franchising may not generate much revenue, but can help expand the brand into new markets in Thailand, the Philippines and other Asia-Pacific destinations.
This year, there are nine Hop Inn hotels under development worth a combined 800 million baht, of which seven hotels are in Thailand and two are in the Philippines.
Mr Petch said the domestic market will remain a key market for at least the first half of this year as Chinese tourists may not return soon.
The company will also benefit from We Travel Together, a hotel subsidy scheme. The third phase of this programme contributed 10% of total revenue in the fourth quarter of 2021.
"International tourists under the Test & Go scheme are just an appetiser for business, which is a good start, but the volume hasn't yet significantly helped the whole industry," Mr Petch said.
He said the government should scrap all RT-PCR tests to reduce travel costs and provide seamless travel rules as seen in the Maldives, which only requires a vaccine certificate and a negative Covid test result.
ERW reported operating losses of 2 billion baht last year from 1.7 billion in 2020.
Total income stood at 1.5 billion baht, declining by 34% from 2.3 billion in 2020.
He said the company recently agreed to divest three economy segment resorts, generating 664 rooms -- ibis Phuket Kata Hotel, ibis Hua Hin and ibis Styles Krabi Ao Nang to One Origin, a subsidiary of SET-listed developer Origin Property to adjust its portfolio and strengthen its financial position.
The revenue from those properties accounted for 3% of hotel revenue in 2019.
Pitipong Trinurak, chief executive of One Origin, said this acquisition is a part of the five-year plan to generate recurring income.
The acquisition helped increase the number of properties and create its presence in major tourism destinations as One Origin is set to officially manage three hotels by May 1.
The transaction is expected to be finalised during the second quarter with an undisclosed selling price.