Minor uses asset-light strategy

Minor uses asset-light strategy

Company projects strong growth for both hotels and food

Mr Rajakarier says the Minor portfolio should reach 780 hotels and 3,700 restaurants by 2026.
Mr Rajakarier says the Minor portfolio should reach 780 hotels and 3,700 restaurants by 2026.

SET-listed Minor International projects its room rate to grow this year and targets 200-250 new hotels and 1,000 restaurants in three years.

"Tourism is coming on quite strong and we are able to increase our rates substantially," said Dillip Rajakarier, group chief executive and chief executive of Minor Hotels.

By 2026, he said the Minor portfolio should reach 780 hotels and 3,700 restaurants, from roughly 530 hotels and 2,600 restaurants last year.

Using an "asset-light strategy" to acquire new partners and management contracts, the company expects its asset-light hotel rooms in 2026 to reach 40% of its total portfolio, increasing from 18%.

Minor also wants to expand its food brands abroad using the asset-light model, introducing Sizzler and Gaga in Vietnam while unveiling more brands to Indonesia and India to capture markets with large populations.

In 2024, Mr Rajakarier said the group plans to allocate 10-13 billion baht for capital expenditure, of which 70% is for Minor Hotels for asset repositioning and brand upgrades, helping to push up room rates and revenue, while 30% is for the food business.

The company wants to open 70-80 new hotels and 80-100 food outlets this year, though the most active year for expansion would be 2026, he said.

For the first quarter, Mr Rajakarier said the food and hotel businesses already exceeded its three-year budgeting thanks to strong food sales and hotel bookings.

Minor Hotels secured booking growth of 40% in Thailand during the first quarter, while bookings in Europe and Latin America grew 20%.

He said while the room rate in the first quarter might exceed the same period last year by 20-25%, the average daily rate has yet to reach its peak and there's still room to grow.

The company is investing in upgrading products and guest experiences, said Mr Rajakarier.

With its hotel portfolio targeting the midscale to luxury segment, guests are still willing to pay for upgraded services, he said.

With a diverse portfolio around the world, Mr Rajakarier said Minor Hotels will drive room rates during the peak tourism season, which is the first and fourth quarters for Thailand and the second and third quarters for Europe.

The company will focus on volume for the remaining low-season period, he said.

Meanwhile, Minor Food expects to carry positive momentum from last year, when it recorded a profit of more than 2 billion baht.

Mr Rajakarier said during the next three years, the company forecasts 8-10% yearly revenue growth and 10-20% profit growth.

Minor should report at least 10% return on invested capital, compared with 5% average cost of debt, he said.

As part of a debt reduction strategy, Minor International aims to reduce its leverage ratio to 0.8 by the end of 2024, from 1.0 at present.

Meanwhile, Mr Rajakarier said the company's net debt-to-earnings before interest, taxes, depreciation and amortisation ratio should drop to 4.3 from 6.5 in previous years.

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