Centel to Take Over Phuket hotel

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. October 14, 2008

By Pitsinee Jitpleecheep, Bangkok Post, Thailand

Knight Ridder/Tribune Business News

BANGKOK, Thailand, March 23, 2006. Central Hotel & Resorts Plc (Centel) has planned to set up a joint venture with foreign investors to take over a 350-room hotel in Phuket.

The venture will raise around 1.4 billion baht to finance the new investment, Centel executives told investors at a briefing at the Stock Exchange of Thailand yesterday.

The name of the hotel, located on the Kata and Karon beaches, was not disclosed.

According to Ronnachit Mahattanapreut, the senior vice-president for finance, of the investment, about 70 percent will be financed by bank loans and the remainder split equally between Centel and the new foreign partner.The Phuket hotel will be upgraded into a four-star resort and rebranded the Central Phuket Resort.

Centel, a unit of the Central Group, now manages 11 hotels in Thailand and is in talks with six other local and regional hotels for hotel management-service deals.

Mr Ronnachit said the Phuket take over would raise total investment by the company this year to 3.2 billion baht, up from 2.1 billion last year.

Centel remained bullish on the Thai tourism and travel industries, with executives citing figures from the Tourism Authority of Thailand that international arrivals would rise to 800,000 per month. Arrivals in the first quarter rose 30 percent from last year, in part due to low base effects in 2005 following the tsunami disaster.

Gerd Steeb, the president of Centel, said the current political situation would have a minimal impact on the tourism sector. "The hotel business has been relatively unaffected by the political problems. The nature of tourists are different from investors who are more easily panicked. From our talks with tour agencies, tourists see this as just an internal problem," Mr Steeb said.

Thiradej Chirathivat, a Centel senior executive vice-president, said the company's food and restaurant businesses were unlikely to be affected by the political uncertainty.

Centel plans to invest 400 million baht to open 63 new restaurants this year under the Auntie Anne's, Mister Donut, KFC, Baskin-Robbins and Pizza Hut brands. The company's total outlets are expected to reach 490 by the end of the year, compared with 427 at the end of 2005.

Centel projected overall sales for Thailand's quick-service restaurant market is projected to be valued at 18.99 billion baht this year, up 8 percent from last year. Around 37 percent of the sales will come from chicken, dominated by the KFC brand, 18 percent from pizza stores, 15 percent from hamburger shops and 11 percent from premium ice cream.

Centel reported a 2005 profit of 535.95 million baht last year on revenue of 6.2 billion, compared with profit of 541.1 million on revenue of 5.49 billion in 2004.

But Centel projects revenue this year to rise 11 percent to 6.9 billion baht, with 2.6 billion from the company's hotel operations and the remainder from food operations.

Centel shares (CENTEL) closed yesterday at 34 baht, unchanged, in trade worth 8.54 million baht.

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Copyright (c) 2006, Bangkok Post, Thailand