Centel to tap budget market as AEC looms

Central Plaza Hotel Plc (CENTEL) is set to launch a budget hotel brand by the end of next month, a move aimed at accommodating growth under the Asean Economic Community (AEC) from 2015.

The SET-listed operator of Centara Hotels & Resorts plans to operate at least 20 budget hotels in 2016.

Ronnachit Mahattanapreut, the senior vice-president for finance and administration at Centel, said vibrant low-cost airlines and the single economic community of the AEC will be factors boosting tourism in the region.

The company began studying the feasibility of expanding into budget hotels during the last two years.

Centel believes the budget hotel brand will cater to not only domestic and international tourists but also working people who are expected to be the biggest traveller group.

Room size is estimated at 18 square metres with 150-200 rooms costing 1.5 million baht each, bringing total investment per hotel to about 300 million baht.

"We're talking with a commercial bank to create loan package for investors interested in our budget hotel brand," said Dr Ronnachit.

"We see huge potential for this segment in Asean as well as China and India, where the tourism industry is promising."

Of the planned 20 hotels, 15 will be operated under management contract and the rest owned and operated by the company.

Centel yesterday raised this year's revenue target to 14.5 billion baht on strong growth in its food and hotel businesses.

It previously forecast revenue of 13.8 billion baht against 11.7 billion last year.

The company operates 31 hotels and plans to increase the number to 35 by year-end.

CENTEL shares closed yesterday on the SET at 16.40 baht, down 10 satang, in trade worth 58.3 million baht.

Sourced: bangkokpost