quarterly meeting 1/2019 -...

4Q18 & 2018 Performance & Outlook

27 February 2019

Quarterly Meeting

1/2019

2 © 2019 ERAWAN. All rights reserved.

The views expressed here contain some information derived from publicly available sources

that have not been independently verified. No representation or warranty is made as to the

accuracy, completeness or reliability of the information. Any forward looking information in

this presentation has been prepared on the basis of a number of assumptions which may

prove to be incorrect. This presentation should not be relied upon as a recommendation or

forecast by The Erawan Group PLC. Nothing in this release should be construed as either

an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction.


4Q18 Executive Summary

9.7 million

international tourist

arrival

5% Growth from 4Q17

Tourism Industry Hotels Statistic*

80% Occupancy with

+3% ARR growth

4Q Results

+7% Total Revenue

+11% EBITDA

+12% Net Profit

Hotel Development

*Total group ex. HOP INN

+4 Hotels

+564 Rooms


Industry Update


International Tourist Arrivals by Quarter

Source : Department of Tourism as of Dec-18

7.8

7.07.3

7.8

9.0

7.6

8.27.8

9.2

8.1

8.89.3

10.6

8.9 9.1

9.7

Q1 Q2 Q3 Q4

2015 2016 2017 2018

15%

Thailand Tourism Industry continues Growing

9% 3%

5%


International Tourist Arrivals


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

2015 YTD 29.9 M 2016 YTD 32.6 M

2017 YTD 35.4 M 2018 YTD 38.3 M

YoY 2018-2017Millions

FY18 38.3 millions, +8% y-y

Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

+11% +19% +16% +9% +6% +12% +3% +3% +4% - +5% +9% %YoY


-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60% Chinese Russian India

2018 Chinese, Russian and Indian Arrivals to Thailand


%YoY Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Chinese +13% +52% +27% +32% +14% +18% -1% -12% -15% -20% -15% +3%

Russian +28% +26% +26% +19% -13% -16% -11% -8% -2% -4% +2% +4%

India +22% +15% +17% +13% +12% +9% +7% +11% +6% +4% +20% +21%

% Growth


International Tourist Arrivals by Source Markets


Continent4Q18

YoY

2018

YoY

East Asia 6% 10%

Europe 1% 4%

South Asia 14% 12%

The Americas 6% 4%

Oceania 1% 2%

Middle East 13% 7%

Africa 7% 7%

Total 5% 8%

2018 Contribution

East Asia68%

Europe18%

South Asia5%

The Americas

4%

Oceania2%

Middle East2% Africa

1%

38.3

Million


Thailand Tourist Arrivals


4Q17

Weight

4Q18

WeightYoY

2017

Weight

2018

WeightYoY

1. China 26% 22% 10% 28% 28% 7%

2. Malaysia 9% 13% 42% 9% 11% 22%

3. South Korea 5% 5% 7% 5% 5% 5%

4. Laos 5% 5% 7% 5% 5% 9%

5. Japan 4% 4% 9% 4% 4% 7%

6. India 4% 4% 16% 4% 4% 13%

7. Russia 5% 5% 1% 4% 4% 9%

8. United States 3% 3% 8% 3% 3% 9%

9. Singapore 3% 3% 6% 3% 3% 4%

10. Vietnam 2% 2% 14% 3% 3% 10%

Other 34% 33% 3% 33% 32% 5%

Grand Total 5% 8%


Performance Review 4Q18 & 2018


1,582 1,701

5,995 6,256

4Q17 4Q18 2017 2018

4Q18 & 2018 Core Performance Summary

Group Operating Income

EBITDA

506 561

1,844 1,897

162 180

506 536

4% YoY7% YoY

3% YoY11% YoY

Net Profit

6% YoY12% YoY

4Q18 2018


Statistic Summary 4Q18 & 2018 by Segment

Segment

4Q18 (YoY) 2018 (YoY)

OCCARR

+/-

RevPAR

+/-OCC

ARR

+/-

RevPAR

+/-

Thailand

Luxury 78% 5% 5% 74% 3% 2%

Midscale 81% 1% 5% 85% 4% 1%

Economy 80% 9% 1% 81% 8% 3%

Total Group(ex HOP INN)

80% 3% 1% 81% 5% -

HOP INN 75% 5% 2% 75% 7% 8%

Philippines

HOP INN 77% 2% 8% 76% 5% 5%

Remark : calculation in THB


Luxury Segment

4Q18

RevPAR Total Revenue EBITDA

5%

3%

5%

2018


2% 2%

9%

4Q18 & 2018 Performance Growth

• JW Marriott operated with 100% room inventoryafter

40% under renovation during 2Q-3Q18

• Revenue growth witnessed from both room and F&B

• Luxury Resort still impacted from Chinese slowdown

% to Total Revenue % to Total EBITDA

4Q18 Performance Highlight

46% 40%

2018

4Q18

46% 38%


Midscale Segment

4Q18


5%

7% 8%

2018


1%

4%3%

• Novotel Sukhumvit 4 opened in Oct-18 with OCC

>50% in the first quarter

• Midscale BKK ex. new hotel posted RevPAR growth

at 3%

• Revenue growth witnessed from both room and F&B

4Q18 Performance Highlight4Q18 & 2018 Performance Growth


24% 26%

2018

4Q18

24% 28%


Economy Segment

4Q18

2018



• ibis Styles Sukhumvit 4 opened in Oct-18 with OCC

>60% in the first quarter

• Economy BKK ex. new hotel posted RevPAR growth

at 6%

• Phuket and Samui hotels still impacted from

slowdown of Chinese & Russian

3%2%


1%

3%

in line

4%



17% 17%

2018

4Q18

17% 17%


HOP INN Thailand

4Q18

2018


• 36 HOP INN in Thailand as of 4Q18. Most

comprehensive budget hotel network in Thailand

• Room rate improvement at 5%.

• Organic hotels recorded revenue growth at 11%


2%

25%

37%


8%

44%

69%



7% 9%

2018

4Q18

7% 9%


HOP INN Philippines

4Q18

2018


• 5 HOP INN in Philippines, all located in Manila city

• Average occupancy increase by 7%, despite 3 new

hotels opening

• Organic hotels posted revenue growth at 10%

• Expected positive net profit in 2019


5%

164%

460%


8%

160%

211%



3% 3%

2018

4Q18

2% 2%


Hotel Revenue by Room & F&B

(Unit in MB)11% 1%

1,524

1,637

8%

5,773

6,022

4Q18

7% YoY

2018

4% YoY

1%

Good momentum in Bangkok hotels

HOP INN generated highest growth


ERW Tourist Arrivals by Key Source Markets

Remark : Exclude Philippines

Key Source Markets4Q17

Weight

4Q18

WeightYoY

2017

Weight

2018

WeightYoY

1. Thailand 18% 20% 18% 16% 19% 23%

2. China 12% 11% 1% 14% 13% 5%

3. United States 10% 10% 3% 10% 9% 1%

4. Singapore 6% 6% 14% 6% 6% 9%

5. India 5% 5% 9% 5% 5% 11%

6. Hong Kong 4% 4% 15% 4% 4% 6%

7. Russia 4% 4% 11% 4% 4% 7%

8. Australia 3% 3% 5% 3% 3% 4%

9. Germany 3% 3% - 3% 3% 3%

10. South Korea 3% 3% 4% 3% 3% 4%

Other 31% 31% 4% 32% 30% 1%


Consolidate Profit & Loss StatementIn Baht Millions 4Q17 4Q18 %YoY 2017 2018 %YoY

Hotel Operating Income 1,524 1,637 7% 5,773 6,022 4%

Rental and Service Income 58 64 9% 222 234 5%

Total Operating Income 1,582 1,701 7% 5,995 6,256 4%

Other Income 14 16 13% 55 52 6%

Total Income 1,596 1,717 8% 6,050 6,308 4%

Operating Expenses (1,090) (1,156) 6% (4,207) (4,411) 5%

EBITDA 506 561 11% 1,844 1,897 3%

Depreciation & Amortization (188) (212) (738) (776)

Finance Costs (88) (98) (344) (360)

Taxes (52) (54) (172) (164)

Minority Interest (20) (20) (60) (57)

Normalized Net Profit / (Loss) 158 177 12% 530 540 2%

Extraordinary Items

Share of Profit/(Loss) from ERWPF 4 3 29% (24) (4) 85%

Net Profit / (Loss) 162 180 12% 506 536 6%

EBITDA Margin 31.7% 32.6% 0.9% 30.5% 30.1% 0.4%


16,048 16,949

2017 2018

Total Assets

Summary of Financial Position

10,645 11,240

2017 2018

Total Liabilities

5,403 5,709

2017 2018

Total Equities

1.7 1.7 1.71.7 1.7

1.0

1.2

1.4

1.6

1.8

2.0

5,000

6,000

7,000

8,000

9,000

10,000

2014 2015 2016 2017 2018

Total Interest Bearing Debt (MB) & Interest-bearing Debt to Equity (x)

3.00%

4.00%

5.00%

6.00%

2014 2015 2016 2017 2018

Average Cost of Debt (%)

4.19%


Phuket, Kata

Strategy


ERAWAN 5-year Strategic Direction (2016-2020)

Vision

Mission

Strategy

“To be the

Leading

Hotel Investor in

Thailand and ASEAN”

“To continue growing quality

hotel portfolio in Thailand and ASEAN

which optimize values to our shareholders

as well as stakeholders”

Hotel Growth

Strategy

“Continue expanding

in high growth

segments and destinations”

“Provide optimal return to

our shareholders”

Return Enhancing

Strategy

“Ensure stability and

sustainable growth of

the organization”

Sustainable

Platform Strategy


2016 2017 2018 2019F 2020F

Hotels in

Pipeline

41 Hotels

6,385 Rooms

52 Hotels

7,328 Rooms

61 Hotels

8,485 Rooms

70 Hotels

9,559 Rooms

>10,000 Rooms

7 HOP 1 HOP

10 HOP 1 HOP

Novotel & ibis Style Nana

5 HOP 3 HOP

o Mercure & ibis Sukhumvit 24

o 7 HOP

• Opened 1st Hotel

in Philippines

• More than 30

HOP INN across

all regions in

Thailand

• Opened 1st

Novotel in CBD of

Bangkok, a 2nd

combo project

• To open 3rd

combo project,

the biggest hotel

in Bangkok with >

500 rooms

• 2 HOP INN enter

Bangkok

Long-Term

ObjectiveContinue expanding in high growth markets & high growth segments

1. ERAWAN Hotel Growth Strategies

Network Expansion Economy of Scale Diversified Portfolio


Non Bangkok (46 hotels)

2 Luxury

36 Budget

2 Midscale

6 Economy

Erawan Portfolio in Thailand

2 Luxury

Bangkok (10 hotels)

3 Midscale

5 Economy

56 Hotels in Thailand

No. of hotel and room as of 31 December 2018


Erawan Portfolio in Philippines

Manila

Ermita Makati

Aseana Alabang

Tomas Morato

Quezon City

5 HOP INN in PhilippinesNo. of hotel and room as of 31 December 2018


Thailand

55%Philippines

30%

Asset Improvement

15%

Investment Framework (2016-2020)

Investment

10,000 MB

CAPEX (MB)

2016 900

2017 1,600

2018 1,700

2019F 3,300

2020F 2,500


More than10,000 Rooms in 2020

Erawan Room Growth in Thailand and Philippines

8,485

>10,000

HOP INN Thailand

652 Rooms

Midscale and Economy

Thailand

501 Rooms

1,781

Rooms

HOP INN & Midscale

Philippines

628 Rooms

Secured Pipeline


HOP INN Thailand Track Record

1015

22

303627%

53%

70%75% 75%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2014 2015 2016 2017 2018

0

5

10

15

20

25

30

35

40%OCC & No. of HOP INN Hotels Successful Track Record

• First mover to Budget segment with owned brand

in Thailand

• Most comprehensive budget hotel network in

Thailand as of 2018

• Maintained occupancy while growing no. of hotel

• Strong revenue growth with positive EBITDA in

2nd year of operation

0

100

200

300

400

500

2014 2015 2016 2017 2018

Revenue of HOP INN Hotels (MB.)


Performance Highlight

• Double digit RevPAR growth for 5 consecutive

quarters and still continue

• Average occupancy >75%

• Very good rating from TripAdvisor

• Expected positive net profit in 2019

Ramp up continue for 5 HOP INN Philippines

24%

20%

13%

20% 19%

4Q17 1Q18 2Q18 3Q18 4Q18

Opened

HOP

Aseana

Opened

HOP

Alabang

RevPAR Growth yoy

(Currency: Peso)

Opened

HOP

Quezon


Our Strategies to Deliver Sustain Growth to HOP INN

“A Network of Reliable Budget Hotels”

First Choice for

Frequent Travelers

To be top of mind

Most Cost Competitive

Deliver quality product with competitive development and

operating cost

Extensive Network and Expansion Initiative

Target to have > 50 hotels in Thailand

Customer Retention

Improve Customer

Experience and Engagement


HOP INN : The Success Brand Journey

1%11%

17%

20145 HOP INN

Total 788 Rooms

201836 HOP INN

5 HOP INN

Total 3,653 Rooms

HOP INN Other Hotels

2020F50 HOP INN

7 HOP INN

Total 5,525 Rooms

EBITDA from HOP INN has increased over the time

20142018

2020F

HOP INN will be key growth driver to ERAWAN


Ongoing Initiatives to Improve Operating and Financial Capabilities

Asset Improvement /

Operation Excellence

Capital Structure

Optimization

Asset Monetization

Program

To continue assets enhancement

and competitive edges to optimize

return on investment

To optimize capital structure for

financial flexibility, balancing cost

and risk

To optimize short-term return

and long-term value for

shareholder

2. Return Enhancing Strategy


Asset Improvement Program

to Ensure the Hotels will remain Competitive

2016

2017

2018

2019

2020

JWM Guest Room Renovation

JWM F&B Outlet renovation

Naka Add new 13

Deluxe Room

ibis soft renovation

Naka Add new 10

Deluxe Rooms


ibis Soft Renovation Timeline

Opened

• Patong

• Samui

• Sathorn

2008

2019

2020

2021

2 years period Soft

Renovation for 3 ibis hotels

during low season 2Q-3Q

2017 10 years anniversary for 3 ibis hotels

Patong

Samui

Sathorn


Corporate

Governance

Core Value

System

People

Information

Culture

Environment CultureCommit to success

Learning & Improvement

Integrity

ENjoy to serve

Team spirit

CompetenciesInvestor

Developer

Operator

3. ERAWAN Sustainable Platform


Hotel Investment

Project Development

Asset /Operation

ManagementExperience and professional

management team

Successful track record of execution project with efficiency time , quality and

cost management

Invest in right product in right market at the right

time

Competitive Advantages to Deliver Long Term Growth

Core Competencies


Erawan CSR Project : Happy Home Happy Stay

• Sharing knowledge and experience of managing

accommodation to the community.

• Support skills and equipment to facilitate tourist

services

• Support equipment, pillows, blankets, bed linen, life

jackets etc.

Sustainable Tourism for Community

First Project :

Banlaem Homestay

Nakorn Sri

Thammarat


2019 Outlook


2019 Outlook

41.1Million

Tourist Arrival

80%Occupancy Level

3-5%RevPAR (ex. HOP)

Growth

10-15%Revenue Growth

9Hotels

Opening


2019 Revenue Growth Contribution Outlook

Existing

Hotels as of

2017

47%47%

Hotels opening in 2019

6% Expected Growth

5-7%

Expected Growth

>200%

Hotels opened

in 2018

10-15%Revenue Growth

Growth drivers are equally from existing hotel and ramp up of new hotel opened in 2018

Growth Contribution


+4 To be

opened

in 2019

2019 Thailand Hotels Opening

+9 Hotels and Adding 1,074 rooms in Thailand

Non Bangkok

46 Existing

Hotels

+5 To be

opened

in 2019

Bangkok

11 Existing

Hotels


Bangkok Metropolitan Region

Mercure Sukhumvit 24

201 Rooms Potential opening 4Q19

ibis Sukhumvit 24


HOP INN Changwattana


Khon Kaen (3rd Branches)

HOP INN Rangsit



Chiang Rai (2nd Branched)


Rayong(2nd Branches)


Hat Yai (2nd Branches)


Nakorn Pathom


From 61 Hotels in 2018 to 70 Hotels in 2019, with

Total 9,559 Rooms

2 HOP INN entering BKK


HOP INN Bangkok : Changwattana (108 Rooms)

Potential opening 3Q19

• Locate in soi Chanwattana 23

• Close to pink line mass transit system (Khae

Rai - Min Buri) : Chaeng Watthana-Pak Kret

28 station

Nearby Attraction

• Central Changwattana

• Impact Arena

• Government complex

soi 23

Sri Ratch Expressway

Ch

an

gw

atta

na

Ro

ad

Sukhothai University

Government Complex

Punyapiwat

Central

Changwattana

MRT Pink Line

Chaeng Watthana-Pak Kret 28

station


Phaholyothin Road

Ra

ng

sit-N

akh

on

Na

yo

kro

ad

ad

HOP INN Bangkok : Rangsit (79 Rooms)

Potential opening 3Q19

• Located near Major Cineplex Rangsit

• Gateway from central, northern and

northeastern to Bangkok

• Close to hub of public van

Nearby Attraction

• Future Park Rangsit

• Major Ciniplex Rangsit

• Don Muang International Airport

Future Park Rangsit

Major Cineplax

Rangsit


Luxury

Midscale

Economy

HOP INN

Luxury

Midscale

Economy

HOP INN

53%25%

18%

4%

2016

47%

29%

19%

5%

2019F

46%

24%

18%

12%

41%

26%

17%

16%

Projected Hotel Revenue and EBITDA by Segment

Hotel Revenue by Segment

Hotel EBITDA by Segment

2020F

43%

26%

18%

13%

37%

27%

18%

18%

2017

45%

29%

19%

7%

51%

25%

18%

6%

47%

25%

18%

10%

2018

40%

30%

18%

12%


2020F

58%

37%

5%

55%39%

6%

2019F

57%39%

4%

54%42%

4%

63%

37%

2016

64%

36%

59%

39%

2%

2018

61%

36%

3%

2017

61%

38%

61%

38%

1%

Projected Hotel Revenue and EBITDA by Destination

Bangkok

ASEAN

Non Bangkok

Bangkok

ASEAN

Non Bangkok

Hotel Revenue by Destination

Hotel EBITDA by Destination


Erawan : 2019 Recap

Thailand will maintain its competitive advantage in tourism. Tourist arrival to Thailand is expected to increase 7.5% to 41.1 million in 2019

Our hotel growth strategy create strong network and adding capacity to drive return

Return enhancement from asset improvement program and appropriate capital structure

Continue to maintain sustainable platform to deliver long term growth

Target revenue growth 10-15% in 2019, adding 1,074 rooms from 9 hotels

1

2

3

4

5


Q & A


Success with Integrity


Appendix

4Q18 & 2018 Review


4Q18 & 2018 Hotel Statistic by Segment

Hotel Properties Rooms Occupancy ARR (Bt/room/night) RevPAR (Bt/room/night)

YoY 4Q17 4Q18 4Q17 4Q18 +/- LY 4Q17 4Q18 +/- LY 4Q17 4Q18 +/- LY

Thailand

Luxury 979 979 70% 78% +7% 6,094 5,789 -5% 4,295 4,498 +5%

Midscale 1,282 1,467 85% 81% -4% 2,980 2,964 -1% 2,523 2,391 -5%

Economy 2,253 2,386 87% 80% -7% 1,267 1,380 +9% 1,096 1,104 +1%

Total Group ex.HOP INN 4,202 4,832 83% 80% -3% 2,657 2,737 +3% 2,193 2,182 -1%

HOP INN Thailand 2,502 2,810 78% 75% -2% 557 587 +5% 432 441 +2%

Philippines

HOP INN Philippines 312 843 71% 77% +7% 1,020 1,003 -2% 720 776 +8%

Hotel Properties Rooms Occupancy ARR (Bt/room/night) RevPAR (Bt/room/night)

YoY 2017 2018 2017 2018 +/- LY 2017 2018 +/- LY 2017 2018 +/- LY

Thailand

Luxury 979 979 77% 74% -3% 5,685 5,836 +3% 4,358 4,290 -2%

Midscale 1,282 1,467 88% 85% -3% 2,783 2,907 +4% 2,453 2,483 +1%

Economy 2,253 2,386 85% 81% -4% 1,209 1,302 +8% 1,029 1,056 +3%

Total Group ex.HOP INN 4,202 4,832 84% 81% -3% 2,554 2,672 +5% 2,150 2,158 -

HOP INN Thailand 2,502 2,810 75% 75% - 543 580 +7% 407 438 +8%

Philippines

HOP INN Philippines 312 843 76% 76% - 929 980 +5% 705 743 +5%


Success with Integrity

quarterly meeting 1/2019 -...

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