S Hotels and Resorts PCL (SET: SHR), a leading hospitality investment and management company and the hospitality arm of Singha Estate PLC (SET: S) is starting to write a historic new chapter as it aims to exceed THB 10 billion in revenue for the first time in 2023 – an increase of 20% compared to last year’s impressive figure of THB 8.7 billion. This projection is based on robust business strategies and economic tailwinds created by the rebound of travel and tourism.
To achieve this target, S Hotels & Resorts is leveraging the “3P” model, which will see it boost profit, expand its investment portfolio and embrace sustainable developments. As a result, the company will likely retain its position as the No.2 Thai hotel operator in terms of revenue for the second consecutive year.
Dirk De Cuyper, Chief Executive Officer of S Hotels & Resorts, said: “The return of international tourists to Thailand following the full reopening of the country, coupled with the strength of our business strategy and our sales & distribution channels, have combined perfectly to attract a more diverse tourists from all corners of the world. These important factors help drive S Hotels & Resorts’ business growth in Thailand, which have now returned to full strength. In the last quarter of 2022, we saw record levels of performance in many different markets, as our Average Daily Rate (ADR) returned to pre-pandemic levels and we generated revenue of THB 8.7 billion, which successfully positioned us as the No.2 Thai hospitality management and hotel investment brand, based on revenue. As a result, S Hotels & Resorts was included in The Stock Exchange of Thailand’s ‘Thailand Sustainability Investment’ list for 2022, while also earning a five-star corporate governance rating from the Thai Institute of Directors Association, in conjunction with the SET. These recognitions reaffirm the company’s commitment to operating in a manner that is underpinned by social and environmental responsibility.”
Forging ahead to create profit by pursuing strategies that increase business strengths and sales channel expansion to attract more diverse customers from all corners of the world.
Dirk added that the company’s business direction for 2023 is clear and consistent. The company is on track to retain its position as the No.2 Thai hotel brand, based on revenue, by increasing its revenue beyond THB 10 billion (+20% YoY). This plan will be supported by the strength of S Hotels & Resorts’ diversified portfolios, which can attract different groups of customers from around the world. Following the full reopening of Thailand, a cluster of four hotels in the Kingdom is expected to contribute around 16% of total company’s revenue in 2023 with the 60% growth from prior year (YoY). While the revenue of hotels in the Maldives and the UK is expected to account for 31% and 36% of the total revenue, representing revenue growth of 30% and 10% YoY, respectively.
“In addition, S Hotels & Resorts appreciates the importance of applying real-time digital technology platforms to support direct bookings, which will help the company to increase ADR and RevPar significantly and consistently. This year, we expect occupancy across all portfolios to be around 75%.
Our operational results in 2022 exceeded breakeven point resulting in a net profit. With our operations now running at full capacity again, 2023 which will likely deliver an occupancy rate growth of 15% and driving significant profit growth, which can help the company to build a new foundation for future growth” Dirk continued.
Expanding portfolio to build on mid-term business plan
Profit-making and business portfolio expansion are an important foundation to build additional future growth of S Hotels & Resorts. The company has devised strategies to expand its portfolio by implementing three key models, comprising asset rotation & enhancement, mergers & acquisitions and asset light operations.
Under the first model, S Hotels & Resorts will sell matured assets in UK and use the sale proceeds, supplemented by additional investment of around GBP 16 million on renovating of high potential assets offering positive upward growth in the future resulting in an all-time ADR of GBP 90 pounds on average, an increase of roughly 10% from 2022.
‘’Other assets under improvement and development plans also include CROSSROADS Maldives project for which the 1st upgrade ended in December by adding high yielded pools in villas and suites. Adding in 2023 will be an upgrade of the marina to accommodate super yachts, retail stores and local community gallery and the picnic park to welcome Male visitors .
‘’Moreover, we have a plan in place to renovate SAii resorts in Thailand; SAii Phi Phi Island Village and SAii Laguna Phuket, with the works set to straddle 2023 and 2024. Other hotels on the list are Outrigger Fiji Beach Resort which has been under renovation since October 2022 and completion is expected in December 2023 in time to accommodate the tourism surge at end of the year. The renovation investment will cost the company between THB 1-1.5 billion and will help us to be able to increase the ADR by between 15-40% for renovated projects.’’ said Dirk.
Apart from that, under its three-year M&A budget, S Hotels & Resorts has set aside THB 7.5 billion, with high potential leisure destinations being its primary targets. These assets will add to the company’s revenue balance and further reinvigorate S Hotels & Resorts’ iconic portfolios, while also adding value and profits quickly as well as reining in the seasonal effects facing its hotels. Initially, the company is assessing assets of interest on the coastal areas of Asia Pacific, including Thailand, the Mediterranean Sea and the Indian Ocean.
The Asset Light model is another avenue of business expansion for S Hotels & Resorts, through partnership development and management platform with world-class business allies, one of which is the SO/ Maldives, a joint venture with the company’s business partners and is on course for opening in Q4 2023.
Planet-friendly business development model inducive to sustainable growth
“This year, we will continue to create sustainability side by side with business building along with Singha Estate’s policy with a vision of sustainable diversity for sustainable growth, to reduce environmental impact from the business supply chain in all dimensions, especially targeting decarbonisation and replacing the use of fossil fuels with clean energy. Since the beginning of this year, we’ve been installing solar panels on the roofs of the hotels under SHR group in Thailand and Maldives, amounting to an area of over 10,000 square metres, which together can generate 2.8 million kilowatt-hours of electricity annually. The installation will help us manage the energy costs efficiently.” according to Dirk.
Over the years, S Hotels & Resorts has developed its business, the company has never lost sight on supporting sustainability projects in consistent with the UN Sustainable Development goals by emphasizing the integration of natural learning with unique experiences. Moreover, SHR provides activities that provide knowledge on marine biodiversity conservation at the Marine Discovery Centres, such as the coral propagation and bamboo shark conservation projects.
In 2023, SHR will develop a project to conserve endangered marine animals in collaboration with the IUCN at CROSSROADS Maldives and partner with the Green World Foundation to preserve the mangrove in the Hat Noppharat Thara-Mu Ko Phi Phi National Park area. Additionally, SHR supports local communities and promotes cultural activities that are integrated into various hotel services to create enriching journeys for all guests.
Thanks to this awareness, the SHR properties in Thailand and Maldives this year received the prestigious Green GlobeTM, the global leader in sustainable tourism and hospitality certification which is a seal of approval of our commitment to sustainable-oriented development model society which can co-exist with society and the environment.