As the world emerges from the shadow of COVID-19, hospitality businesses globally have found themselves navigating a rapidly evolving financial landscape. In a significant recent development, Wuthivet Vetchabutsakorn, Senior Vice President and Group Head of Finance for the prestigious ONYX Hospitality Group shared valuable insights during the celebrated South East Asia Hotel Investors Summit (SEAHIS 2023), held in Thailand’s bustling capital, Bangkok.
Drawing from his extensive experience, Vetchabutsakorn provided a roadmap for accessing bank finance and securing debt in the new post-pandemic reality. His remarks at the summit resonated with attendees, illustrating ONYX’s commitment to helping hotel owners drive their growth by utilizing informed strategic investments backed by the firm’s extensive market knowledge and acumen.
As a pioneering mid-sized hospitality management firm in Southeast Asia, ONYX’s operations emphasize agility to adapt to changing market dynamics while maintaining international standards. “Our success lies in nurturing enduring business partnerships with entities sharing our vision for sustainable, quality-driven expansion,” Vetchabutsakorn stated.
COVID-19 brought unprecedented challenges to the hospitality sector, forcing industry leaders to redefine their financial strategies. ONYX led the charge and demonstrated resilience and creativity by optimizing liquidity management and devising innovative finance approaches. Their longstanding trust-based relationships with local Thai banks enabled them to secure short and long-term loan provisions and renegotiate loans, evidencing their unwavering resolve in weathering crises.
Vetchabutsakorn stressed the importance of transparent, regular communication with financial institutions. By providing an honest view of its business challenges and potential solutions, ONYX maintains its credibility and strengthens ties with lenders. The company also vigilantly prepares liquidity risk assessments through cash flow projections, emphasizing its commitment to pre-paying loans whenever possible.
The finance expert also shed light on how Thai lenders assess loan applications. Crucial factors include project cash flow, collateral such as assets, buildings, land, shareholder guarantees, and shares. Brand reputation also significantly influences their decisions, with banks placing considerable trust in brands with a history of stellar performance.
Hotel businesses face unique hurdles with loan amortization schedules in Southeast Asia, where term loans usually span 7 to 10 years. These loans often entail bullet payments at term-end or refinancing alternatives to optimise hotel performance and lessen financial stress. Cash sweep arrangements are sometimes implemented for high-risk ventures, offering banks a share in revenues exceeding the target as an incentive.
A rising trend among property developers seeking consistent income is diversifying into hotel assets, thus reducing their dependency on ‘build and sell’ real estate types. Southeast Asia, particularly Bangkok and Phuket, has seen a surge in joint venture projects involving foreign investors, indicating a robust investment atmosphere.
As the dust of the pandemic settles, Vetchabutsakorn expects a more conducive lending environment, potentially by mid-2024. The revival of tourism to pre-COVID frequencies and an airlift capacity surpassing 80% of pre-pandemic levels could catalyze this favourable turn.
With its vast portfolio of 44 properties, including 18% ownership, ONYX Hospitality Group is excitedly preparing for the debut of Amari Raaya Maldives, a highly awaited addition to the Indian Ocean’s exotic destinations in 2023.
Written by: Supaporn Pholrach (Joom)