SET-listed Erawan Group Plc (ERW) will open five budget hotels under its Hop Inn brand in Indonesia and the Philippines by 2017, thanks to the countries' positive economies and booming domestic travel.
The group said domestic travel in both countries had high growth potential particularly as their economies percolate as there are 100 million people in the Philippines and 250 million in Indonesia. Both nations also have a lot of islands.
Total investment will be 1 billion baht. The group's first Hop Inn hotel overseas is scheduled to open in the Philippines at the end of 2016.
Kamonwan Wipulakorn, president of Erawan Group, said the growing Asean economy and huge populations were attractive for hotel investment. Hop Inn's main targets are locals.
She said although Myanmar was interesting, the high investment cost and uncertain regulations made Erawan doubtful about long-term business sustainability over there.
The five Hop Inn hotels will be located in downtown areas to attract businesspeople. Each hotel will have around 150-200 rooms, higher than the maximum of 80 rooms for Hop Inns in Thailand.
"Our price will be in a range of 1,000-1,200 baht per night, which should be very affordable," said Ms Kamonwan.
Kamonwan: Thai tourism rebounding
The number of budget hotel players in both Indonesia and the Philippines is small. The Philippines has only Tune Hotel while Indonesia has Ibis. All Hop Inn hotels in both countries are expected to break even in seven to 10 years.
At home, the group set a 2015 budget of 1.2 billion baht to open 15 Hop Inn hotels, four this year and the rest in 2016. It now operates 10 Hop Inn hotels in Thailand.
Erawan has another 300-million-baht budget to renovate existing hotels under other labels. It runs 28 hotels with 5,289 rooms total in Thailand.
Ms Kamonwan said 2014 was a bad year for the group, which posted a 112-million-baht loss from local political conflicts. But it is confident of the tourism outlook this year.
"Thai tourism business has bounced back, especially in Bangkok. In the first quarter, the average occupancy rate of Bangkok hotels was around 80%," she said.
For the full year in 2015, Erawan expects an average occupancy rate for its hotels in Bangkok of 77%, up from 65% last year.
The group forecast its hotel revenue will rise by 35% to 5.7 billion baht. Average revenue per available room (RevPar) for its luxury hotels in Bangkok such as the Grand Hyatt Erawan Bangkok and JW Marriott Bangkok will also grow by 35%.
RevPar for its two luxury hotels in the provinces, the Naka Island in Phuket and Renaissance Koh Samui Resort & Spa, will rise by 25% this year, while that of its four-star hotels including Courtyard Marriott Bangkok and Holiday Inn Pattaya will grow by 18%. RevPar for Ibis hotels is set for a 10% rise.
ERW shares closed Friday on the SET at 4.70 baht, down two satang, in trade worth 5.77 million baht.