Centel in PPP deal to run complex

Centel in PPP deal to run complex

Centel's Suthikiati Chirathivat (second right) shakes on the deal with Patchara Anuntasilpa of Dhanarak at yesterday's signing ceremony. They are flanked by Mr Thirayuth (right) and Mr Sumeth.
Centel's Suthikiati Chirathivat (second right) shakes on the deal with Patchara Anuntasilpa of Dhanarak at yesterday's signing ceremony. They are flanked by Mr Thirayuth (right) and Mr Sumeth.

Central Plaza Hotel Plc (Centel) yesterday signed an agreement with state-owned Dhanarak Asset Development Co to operate the Government Complex Hotel & Convention Centre Chaeng Watthana for 20 years.

Under the agreement, Dhanarak grants Centel the rights to run and renovate the convention centre, hotel and meeting facilities, as well as invest in new outlets such as food shops and restaurants in the complex over the next 20 years.

Centel has paid Dhanarak 1.14 billion baht for the deal, the first between the two companies under the government's public-private partnership (PPP) initiative launched in February.

Thirayuth Chirathivat, Centel chief executive, said it will invest 100 million baht in 2018 to renovate the 204-hotel room Centra hotel in the complex as well as the meeting facilities.

Centel is also set to spend an additional 400 million after 2018 for further investment, including on a restaurant.

Centel has been managing the hotel and convention centre at the Government Complex for six years until last month. The contract has now been renewed under the PPP scheme, which allows it to invest and operate in areas with potential to be developed.

Under Centel's management, revenue stayed between 100 and 450 million baht a year. The lowest income was due to heavy flooding in Bangkok in 2011.

"In 2018, we hope to maintain revenue at no less than 300 million in the first year of operation," Mr Thirayuth said. "Some 80% of revenue will come from conventions and 20% will come from the hotel. It is expected to break even within 8-9 years."

The Government Complex Hotel & Convention Centre Chaeng Watthana has high potential for meeting and convention business as more than 400,000 government officials organise 130-180 meeting and business events a year, according to both Centel and Dhanarak.

"The centre is also expected to cope with the growing of business events in the future thanks, to Don Mueang airport expansion and new Pink and Red lines," Mr Thirayuth said.

Currently, Central operates 38 hotels in Thailand and abroad with a total of 7,500 rooms. The group is set to open 53 properties by 2020, with a total of more than 11,000 rooms.

Sumeth Damrongchaitham, Dhanarak managing director, said Centel has the expertise in tourism and hotel business.

"Centel will not only come to manage our properties, but it will help strengthen competitiveness and will bring a lot of business opportunity into the complex," Mr Sumeth said.

Mr Sumeth said that proceeds arising from the rental contract will help Dhanarak write off accumulated loss and swing back to accumulated profit of 5 million baht.

Do you like the content of this article?
COMMENT