The lingering political problems in Thailand have driven Dusit International, a local hotel management chain, to engage in property development in a bid to reduce business risks.
Chanin: Hotels still the long-term focus
"Our hotel business accounts for almost 100% of total revenue. Heavy reliance on the hotel business is very risky, so we will develop our first two mixed-use properties on our land plots this year," said chief executive Chanin Donavanik.
Dusit's business has been affected by political uncertainty for over four years. Well aware of the political impact, the group expanded its hotel management business abroad the past few years.
Its first project will be located next to the Dusit Thani Hotel Hua Hin, with the combined land area reaching 70 rai.
The other project will be located in Nakhon Ratchasima close to the Dusit Princess Korat, with a combined land area of 20 rai.
Construction for both projects will start this year.
Dusit is also studying the potential of developing condominiums, community malls, villas or serviced apartments, depending on market demand.
After finishing the first two projects, the company will start a third project on Koh Samui.
"Developing mixed-use property will help to support our core business. Moreover, it will increase cash flow in the short term, as the hotel business remains our long-term focus," he said.
Mr Chanin said its property development team, established at the end of last year, will prepare to buy more land plots for additional mixed-use projects after gaining experience from the first three projects.
For its hotel business this year, the revenue growth projection was cut by 15% because of the local political problems. Its hotels in Bangkok are being heavily affected, while other properties in resort destinations are still running well, particularly in Phuket.
The company will open its second hotel in Phuket, the dusitD2 Phuket Resort, in April.
Mr Chanin said the tourism business in Phuket is very strong. Room rates for the new hotel will exceed 3,500 baht per night, and the projected average occupancy for the first year is more than 70%.
The political unrest caused Dusit to cut its revenue growth outlook to less than 10% this year even as many expect 2014 will be a healthy year for the Thai hotel business.
