Minor reveals 30 billion baht investment strategy after record profit in 2023

With a total investment budget of 30 billion baht, the group plans to invest 10-13 billion baht per year from 2024-26 to meet its ambitious goal of having 780 hotels and 3,700 restaurants worldwide.

Currently, Minor International operates 530 hotels and 2,600 restaurants.

"MINT plans to add 200-250 new hotels and 1,000 restaurants to its portfolio over the next three years,” Rajakarier said. “This ambition is supported by a strong pipeline of opportunities and a strategic focus on an asset-light model, hotel management contracts, and food franchising to drive sustainable growth while minimising capital expenditure, with an emphasis on emerging markets as well as other markets," he added.

The group's three-year goals were expected to increase profitability while also generating significant operating cash flows.

He said that such cash flows would be used to accelerate the company's deleveraging plan, which aims to reduce the net interest-bearing debt-to-equity ratio from 1.0x at the end of 2023 to 0.8x by the end of 2024.

"Doing so in a high-interest rate environment would help boost earnings growth even further. MINT's stronger balance sheet would enable it to refocus on major growth opportunities through a combination of ‘asset light’ growth," he noted.

The asset-light model involves managing and franchising hotels rather than owning them, and he believes the strategy will help the company increase revenue while incurring fewer costs.

Currently, approximately 18% of the company's operations are carried out using the asset-light model. It plans to increase this proportion by 40% over the next three years.

Meanwhile, he said the majority of the investment will go towards rebranding and renovating its hotels and restaurants around the world, ensuring that the products and services in the group pipeline meet the needs of upper-middle to upper-scale groups.

Furthermore, he said that the repositioning and upgrade would allow the company to gradually increase the price of its products and services, pointing out that high-end consumers were willing to pay more for a better experience.

The investment would be distributed worldwide, with 74% going to the international market and 26% to Thailand, one of its major markets, he said.

In terms of expanding its global presence in the hotel industry, the group CEO said that it would continue to focus on the most prominent international destinations. These include the opening of three managed hotels this year in Paris under the NH and NH Collection brands, the debut of the luxurious Anantara Hotel in Vienna, and the launch of the NH Collection in Helsinki.

Furthermore, he said MINT's robust hotel expansion pipeline includes the arrival of Anantara and Avani in Saudi Arabia, as well as numerous new openings in MINT's already thriving Middle Eastern markets, as well as the launch of multiple managed hotels in China to capture both domestic and international tourism.

In the food business, he said the company would increase its presence in ASEAN by opening franchised restaurants in Vietnam and Singapore under the Sizzler, The Coffee Club, and The Pizza Company brands.

Minor Food has acquired a platform in Indonesia to operate Dairy Queen and launch The Pizza Company, Swensen, and GAGA. This would assist the group to expand into other high-growth markets, particularly in ASEAN, he said.

Aside from the ASEAN region, Rajakarier said Minor Food was looking to expand in the Middle East as well.

The company was currently studying its strategy for entering India, which he admitted was a very new market for Minor Food but had a lot of potential.

Minor International's expansion plan follows a year of tremendous success in 2023, with a threefold increase in core net profit of 7.132 billion baht, setting a new record for the highest annual profit in the company's history.

With presence in 63 countries, the group benefited from the strong performance of its European operations while also experiencing a resurgence in travel demand in Thailand. Minor International ended the fourth quarter of last year on a high note, with core net profit of 2.501 billion baht, representing a 77% year-on-year (YoY) increase on a like-for-like basis.

Meanwhile, Minor Hotels' revenue per available room (RevPar) in the fourth quarter of last year increased by 15% YoY in Thailand, as well as by 23% and 27% in Europe and Latin America, compared to the same period in 2019.

According to its annual report, Minor Hotels' overall RevPar in 2023 exceeded 2022 and 2019 figures by 30% and 31%, respectively. Minor Food also saw an 11% YoY increase in total system sales in 2023, thanks to a resurgence in dine-in activities and innovative product and marketing strategies across all hubs.

"This growth in both top and bottom line reaffirms the strength of MINT's diversified business model and its ability to leverage positive momentum in the global tourism and restaurant industries, as well as disciplined cost management, enhanced productivity, and stronger profit flow-through," the CEO said.

He was confident that the positive momentum would continue in the coming years, citing a strong start in 2024 as proof.
He said that room revenue in January and on-the-book value in February and March 2024 had already surpassed levels recorded in 2023 by 39% in Thailand and 20% in Europe.

"As we move forward, our focus remains on expanding our footprint, driving sustainable growth, reducing debt and creating long-term value for our shareholders," he said.

When asked if he had any concerns, he mentioned the workforce.

"Economic slowdowns, high inflation, high interest rates, and geopolitical tensions are all common issues that the hotel industry must address. However, as a heavily labour-intensive industry, finding enough quality skilled workers who are service-oriented is always a challenge, especially in the aftermath of the Covid-19 pandemic," he said.

As a result, in addition to focusing on future brand expansion and repositioning, Rajakarier pointed out that a portion of the group's investment would go towards human workforce development.