The Erawan Group (ERW) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue grew 6% year-on-year to THB 1,856 million, with EBITDA up 2% year-on-year, despite luxury segment challenges and higher costs; net profit declined 19% year-on-year to THB 124 million.

• Strong tourism recovery in Thailand (up 21% YoY), Japan (up 37% YoY), and the Philippines (up 5% YoY), with China, Japan, South Korea, and the USA as key source markets.

• Budget and economy hotel segments outperformed, with two new HOP INN hotels opened, bringing the total to 88 hotels and 11,405 rooms.

• Holiday Inn Pattaya renovation completed by end of September, with positive ramp-up and full inventory restored.

• November and December are forecasted to be strong, with high booking pace and robust event-driven demand.

Financial highlights

• Group revenues reached THB 1,856 million (+6% YoY); EBITDA at THB 553 million (+2% YoY, margin 29.8%); net profit at THB 124 million (-19% YoY, margin 6.7%).

• Budget segment revenue up 35% YoY, EBITDA up 31-35% YoY, driven by new hotel openings and strong performance in Thailand and Japan.

• Leverage ratio improved to 1.5x from 1.7x at end of last year; cash on hand at THB 1,241 million; available credit facilities at THB 6,105 million.

• Depreciation and amortization in Q3 2024 was THB 255 million (+9% YoY); finance costs THB 179 million (+19% YoY).

• Group normalized net profit margin fell to 6.7% (from 8.8% YoY).

Outlook and guidance

• 2024 guidance: targeting 80% occupancy, ARR up 5-7% YoY, RevPAR up 5% YoY, and total revenues up 14-15% YoY.

• 13 new hotels planned to open in Thailand, Philippines, and Japan in 2024, totaling 1,257 rooms.

• Focus remains on ADR growth, yield management, margin enhancement, and asset improvement in 3-5 star hotels.

• MICE and F&B recovery prioritized, especially in five-star segment.

• Pipeline on track, with two new HOP INN hotels opening in Q4.