Central Plaza Hotel Powers Ahead with Sustainable Growth in 2023

March 3, 2023

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Centara Hotels & Resorts Central Plaza Hotel Public Company Limited (CENTEL) has achieved a significant turnaround in Q4/2022, with a net profit of Baht 498 million, the highest fourth-quarter net profit in the company’s history. This was due to a combination of factors, including the reopening of countries, the high season, and the festive season. CENTEL’s CFO & VP of Finance and Administration, Khun Gun Srisompong, stated that the company achieved total revenues of Baht 5,502 million, an increase of 47%. The company’s EBITDA was Baht 1,531 million, an increase of 57% YoY, with an EBITDA margin of 28%.

For the full year 2022, CENTEL achieved total revenues of Baht 18,216 million, an increase of 57%, with an EBITDA of Baht 4,411 million, an increase of 120% YoY. The net profit was Baht 398 million, a growth of 123% YoY, compared to a net loss of Baht 1,734 million the previous year.

While the recovery trends in the hospitality industry are encouraging, CENTEL is aware of the challenges ahead, including rising food material costs, energy costs, wage hikes, and an increase in commercial bank interest rates. However, the company has plans to mitigate the impact of cost-push inflation, such as negotiating with suppliers, finding alternative sources for raw materials, installing solar panels and energy-saving devices, adjusting manning plans, and prepaying loans in USD to reduce the impact of interest rate hikes.

CENTEL’s growth in 2023 will be driven by its hotel and food businesses. The hotels in Thailand are expected to continue their recovery, driven by an increase in international tourist arrivals and growth from a low base in 1H2022. The five-star and Centara Reserve brands in Bangkok and key tourist destinations will be the key growth drivers. In addition, the performance of hotels in the Maldives is expected to improve, thanks to an adjustment in marketing strategy to suit the current situation. Revenue growth will also come from the newly owned hotel in Osaka, Japan, which is expected to begin operation on July 1, 2023.

The food business is expected to continue its growth, driven by the reopening of the country and economic activities returning to normal. CENTEL estimates Same-Store-Sales growth of 7% to 9% and Total-System-Sales growth of 13% to 15% compared to the same period last year. The company plans to have a net increase of 120 to 150 outlets, including joint ventures’ brands, compared to 2022. Key expansion brands include KFC, Mister Donut, Auntie Anne’s, Salad Factory, Som Tum Nua, and Shinkanzen Sushi.

Apart from driving business growth, CENTEL is also committed to environmental and social issues. The company has announced a commitment to be net zero in greenhouse gas emissions (Net Zero 2050) by 2050. The company’s long-term plan for 2020-2029 is to reduce greenhouse gas emissions by 20% through effective management of energy and water usage and waste management.

With this strong performance in Q4/2022 and a clear plan for sustainable growth, CENTEL is well-positioned to continue its success in 2023 and beyond. The company’s commitment to mitigating the impact of inflation and its dedication to sustainability should inspire investors and stakeholders alike.