Quarterly Meeting# 1/2018

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Madeleine Little
6 years ago
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2 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 ERAWAN. All rights reserved.

Development Performance Industry 4Q17 Executive Summary 19% Growth In Tourist Arrival Strong Tourism Industry Growth Continued in 4Q17 with Record Performance Delivering Hotel Development on Track

3 Development Performance Industry 4Q17 Executive Summary 19% Growth In Tourist Arrival Strong Tourism Industry Growth Continued in 4Q17 with Record Performance Delivering Hotel Development on Track 11% 21% 56% Total Revenue EBITDA Net Profit Growth Growth Growth EBITDA Margin improved by 2.2% +4 HOP INN Thailand Nakorn Sawan, Lop Buri, Khon Kaen 2, Kanchanaburi 2 Total 52 hotels with 7,328 rooms ERAWAN. All rights reserved.

Agenda Industry Update Performance Review 4Q17 & FY17 Outlook

5 International Tourist Arrivals Millions 4.0 YTD 35.4 millions, +9% y-y 2014 YTD 24.8 M 2015 YTD 29.9 M 2016 YTD 32.6 M 2017 YTD 35.4 M YoY Jan Feb Mar Apr May June July Aug Sep Oct Oct Nov Nov Dec Dec +7% -3% +2% +7% +5% +11% +5% +9% +6% +21% +23% +16% %YoY Source : Department of Tourism as of Dec ERAWAN. All rights reserved.

7 Tourist Arrivals by Source Markets Oceania The 3% Americas 4% South Asia 5% Europe 18% Middle East 2% Africa 1% 35.4 Million East Asia 67% Continent 4Q17 YoY FY17 YoY East Asia 28% 9% Europe 6% 6% South Asia 21% 16% The Americas 4% 10% Oceania 3% 3% Middle East 5% 6% Africa 5% 6% Total 19% 9% FY17 Contribution Source : Department of Tourism as of Dec ERAWAN. All rights reserved.

8 Tourist Arrivals by Key Source Markets 4Q16 Weight 4Q17 Weight YoY FY16 Weight FY17 Weight YoY China 19% 26% 67% 27% 28% 12% Malaysia 12% 9% 8% 11% 9% 4% South Korea 5% 5% 22% 4% 5% 17% Laos 5% 5% 16% 4% 5% 13% Japan 5% 4% 11% 4% 4% 7% India 4% 4% 24% 4% 4% 18% Russia 5% 5% 21% 3% 4% 24% United States 4% 3% 6% 3% 3% 8% Singapore 4% 3% 9% 3% 3% 6% United Kingdom 4% 3% 1% 3% 3% 1% Other 36% 33% 9% 33% 33% 7% Grand Total 19% 9% Source : Department of Tourism as of Dec ERAWAN. All rights reserved.

Agenda Industry Update Performance Review 4Q17 & FY17 Outlook Strategy Update

2017 Key Achievements Record Performance with Industry Growth Continued Outstanding occupancy levels exceeding 80% and 5% RevPAR growth Record Performance with net profit at 506 MB, 38% growth from

10 2017 Key Achievements Record Performance with Industry Growth Continued Outstanding occupancy levels exceeding 80% and 5% RevPAR growth Record Performance with net profit at 506 MB, 38% growth from 2016 EBITDA Margin improved EBITDA margin for 2017 was 30.5% compare to 28.3% from 2016 Delivering Hotel Growth Strategy on Track Opened 11 hotels, 10 HOP INN hotels in Thailand and 1 HOP INN hotel in Philippines Completed Asset Improvement as part of Return Enhancing Strategy Completed 1st phase (129 rooms) of JWM room renovation in December 2017 Opened new 13 deluxe rooms at The Naka Phuket to expand customer base ERAWAN. All rights reserved.

11 Statistic Summary 4Q17 & FY17 (ex. HOP INN) No. of Rooms %OCC 84% 83% 83% 4,501 4,501 4,514 4,501 4,514 75% 77% 4Q15 4Q16 4Q17 FY16 FY17 4Q15 4Q16 4Q17 FY16 FY17 Average Room Rate (THB/Room) RevPAR (THB/Room) 1% 3% 7% 5% 2,645 2,640 2,657 2,470 2,554 1,985 2,041 2,193 2,044 2,150 4Q15 4Q16 4Q17 FY16 FY17 4Q15 4Q16 4Q17 FY16 FY ERAWAN. All rights reserved.

12 Statistic Summary 4Q17 & FY17 by Segment Segment 4Q17 (YoY) FY17 (YoY) OCC RevPAR OCC RevPAR Luxury 9% 1% 4% - Midscale 3% 13% 4% 10% Economy 12% 16% 3% 8% Total Group 5% 7% 1% 5% HOP INN Thailand 3% 11% 5% 13% Note : Exclude HOP INN Philippines ERAWAN. All rights reserved.

13 Core Performance Summary Highest Revenue and Normalized Net Profit Group Operating Income 11% YoY 8% YoY 1,216 1,424 1,582 5,571 5,995 4Q15 4Q16 4Q17 FY16 FY17 EBITDA 21% YoY 16% YoY ,586 1,844 4Q15 4Q16 4Q17 FY16 FY17 Normalized Net Profit 66% YoY 60% YoY Q15 4Q16 4Q17 (Unit in MB, unless otherwise indicated) ERAWAN. All rights reserved. FY16 FY17

14 Hotel Revenue Total Hotel Revenue 4Q17 11% FY17 8% Solid Growth for both Room and F&B Revenue 4Q FY F&B Revenue 1, , , YoY Growth 11% 11% 5,357 1,636 5,773 1,686 YoY Growth 8% 3% Room Revenue ,021 13% 3,562 3,888 9% 4Q15 4Q16 4Q17 FY16 FY17 (Unit in MB) ERAWAN. All rights reserved.

15 Hotel Revenue by Segment Luxury Segment Midscale Segment 3% 2% 12% 9% ,848 2, ,337 1,458 4Q15 4Q16 4Q17 FY16 FY17 4Q15 4Q16 4Q17 FY16 FY17 Economy Segment 18% 8% Budget Segment 54% 54% , Q15 4Q16 4Q17 FY16 FY17 4Q15 4Q16 4Q17 FY16 FY17 remark : Exclude HOP Philippines ERAWAN. All rights reserved.

16 Room Revenue by Country of Residence 4Q Contribution Y-Y Contribution Y-Y 1. Thailand 17% 25% 16% 17% 2. China 12% 20% 14% 8% 3. United States 10% 3% 10% 1% 4. Singapore 6% 9% 6% 4% 5. India 5% 15% 5% 9% 6. Hong Kong 4% 1% 4% 6% 7. Russia 4% 46% 4% 37% 8. South Korea 4% 20% 3% 6% 9. Australia 3% 9% 3% 16% 10.Germany 3% 9% 3% 14% Other 32% 11% 32% 6% remark : Exclude HOP Philippines ERAWAN. All rights reserved.

17 Consolidate Profit & Loss Statement In Baht Millions 4Q16 4Q17 %Y-Y FY16 FY17 %Y-Y Hotel Income 1,368 1,524 11% 5,357 5,773 8% Rental and Service Income % % Total Operating Income 1,424 1,582 11% 5,571 5,995 8% Other Income % % Total Income 1,434 1,597 11% 5,611 6,050 8% Operating Expenses (1,016) (1,090) 7% (4,025) (4,207) 5% EBITDA % 1,586 1,844 16% Depreciation (185) (188) (730) (738) Interest Expenses (91) (88) (362) (344) Taxes (32) (52) (122) (172) Minority Interest (15) (20) (41) (60) Normalized Net Profit / (Loss) % % Extraordinary Items Share of Profit /(Loss)in ERWPF % 15 (24) N.M. Gain from sale of shop house N.M. Net Profit / (Loss) % % EBITDA Margin 29.1% 31.7% 2.6% 28.3% 30.5% 2.2% ERAWAN. All rights reserved.

18 Summary of Financial Position Total Assets Total Interest Bearing Debt (MB) & Interest-bearing Debt to Equity (x) 9, ,048 14, Total Liabilities 8,000 7,000 6, ,645 9, Total Equities 5,404 5,073 5, Average Cost of Debt vs Average MLR (%) 8.00% Average MLR (%) 7.00% 6.00% Average Cost of Debt (%) 5.00% 4.00% 3.97% % ERAWAN. All rights reserved.

Flood Coup D'état Driver #1 Strong Growth of Tourism Industry 2018 Target Foreign Tourist Arrivals in Thailand Figures: Million Arrivals +5% Thailand Tourism Industry Remains Attractive with Solid

21 Flood Coup D'état Driver #1 Strong Growth of Tourism Industry 2018 Target Foreign Tourist Arrivals in Thailand Figures: Million Arrivals +5% Thailand Tourism Industry Remains Attractive with Solid Growth Prospect F 2018 Target Domestic Trips in Thailand Figures: Million Trips +5% F ERAWAN. All rights reserved. Source : Ministry of Tourism and Sport, Tourism Authority of Thailand, Tourism Council of Thailand, Department of Tourism, ATTA, Bank of Thailand

Driver #2 Portfolio Expanding 2018 Hotel

prospects 1 Midscale 1 Economy 4 HOP INN 3

22 Driver #2 Portfolio Expanding 2018 Hotel Opening 9 Hotels, 1,157 Rooms Moving forward with proven track record of successful development with high growth prospects 1 Midscale 1 Economy 4 HOP INN 3 HOP INN New Room Inventories Midscale 15% HOP INN Philippines 43% 1,157 Rooms 11% Economy 31% ERAWAN. All rights reserved. HOP INN Thailand

23 2018 Hotels Opening Quarter 1 Quarter 2 Quarter 3 Quarter 4 Feb Opening HOP INN Thailand #33 Krabi 2 (71 Rooms) Mar Opening HOP INN Thailand #34 Surin (79 Rooms) April Opening HOP INN Philippines #3 Aseana (196 Rooms) Aug Opening HOP INN Philippines #4 Alabang (168 Rooms) Sep Opening HOP INN Thailand #35 Chonburi (79 Rooms) Oct Opening Novotel Sukhumvit4 Ibis Style Sukhumvit4 HOP INN Thailand #36 Chiang Mai 2 (79 Rooms) Dec Opening HOP INN Philippines #5 Quezon City (167 Rooms) Total 54Hotels 7,465 Rooms Total 55Hotels 7,661 Rooms Total 57 Hotels 7,908 Rooms Total 61 Hotels 8,485 Rooms ERAWAN. All rights reserved.

24 Driver #3 Operation Excellence Operation Efficiency Satisfied Loyal Customer Create Operation Excellence Platform Delivering Strong Performance Economy of Scale Earning Growth Build Network Hotels ERAWAN. All rights reserved.

26 Strategic Direction ( ) Vision To be the Leading Hotel Investor in Thailand and ASEAN Mission To continue growing quality hotel portfolio in Thailand and ASEAN which optimize values to our shareholders as well as stakeholders Strategy Hotel Growth Strategy Continue expanding in high growth segments and destinations Return Enhancing Strategy Provide optimal return to our shareholders Sustainable Platform Strategy Ensure stability and sustainable growth of the organization ERAWAN. All rights reserved.

and Coverage Growing In High Growth Market Luxury Midscale Economy Budget ASEAN Thailand Total 2 Hotels

27 1. Hotel Growth Strategy Continue expanding in high growth segments and destinations INVESTOR & DEVELOPER AND OPERATOR Before Leader in Luxury Diversification Scale and Coverage Growing In High Growth Market Luxury Midscale Economy Budget ASEAN Thailand Total 2 Hotels 821 Rooms 13 Hotels 3,355 Rooms 33 Hotels 5,676 Rooms >85 Hotels >10,000 Rooms ERAWAN. All rights reserved.

Road Map of Hotel Growth Strategies (2016-2020) Continue expanding in high growth markets & high growth

Hotels 7,328 Rooms +10 HOP Thailand +1 HOP Philippines 2018 61 Hotels 8,485 Rooms Novotel & IBIS Style

Thailand HOP INN Philippines Remark : Development plan as of 2018 2020F >85 Hotels >10,000 Rooms 25

29 Road Map of Hotel Growth Strategies ( ) Continue expanding in high growth markets & high growth segments Hotels 5,676 Rooms Hotels 6,385 Rooms +7 HOP Thailand +1 HOP Philippines Hotels 7,328 Rooms +10 HOP Thailand +1 HOP Philippines Hotels 8,485 Rooms Novotel & IBIS Style Sukhumvit 4 +4 HOP Thailand +3 HOP Philippines 2019 Target opening Mercure & IBIS Sukhumvit 24 HOP INN Thailand HOP INN Philippines Remark : Development plan as of F >85 Hotels >10,000 Rooms 25 Hotels in Luxury Midscale Economy 50 HOP INN Thailand 12 Hotels in Philippines ERAWAN. All rights reserved.

31 2018 Philippines Development Plan #1Hop Inn Ermita (Opened Dec-16) Manila #6-7 Cebu Business Park (To be opened 2020) #2Hop Inn Makati (Opened Aug-17) #3Hop Inn Aseana (To be opened 2018) #4Hop Inn Alabang (To be opened 2018) Cebu Philippines #5HOP Inn Quezon City (To be opened 2018) 2 Existing Hotels 3 To be open in Developing Hotels ERAWAN. All rights reserved.

32 Successful Launch in Philippines with Two Hop Inns Hop Inn Hotel Ermita Manila 168 Keys Opened Dec 2016 Occupancy >80% On Budget On Schedule On Quality Successful opening Hop Inn Hotel Makati Avenue Manila 144 Keys Opened Aug 2017 Occupancy >60% 32

33 33 Three Hop Inns to add to portfolio in 2018

December 2018 Hop Inn Tomas Morato (Quezon

centers and entertainment district August

5 Mins to airport, opposite Hyatt City of

34 Target for an extensive network within Manila Hop Inn Makati Avenue Hop Inn Ermita December 2018 Hop Inn Tomas Morato (Quezon City) 167 Keys Proximity to government centers and entertainment district August 2018 April 2018 Hop Inn Aseana City 196 Keys 5 Mins to airport, opposite Hyatt City of Dreams Hop Inn Alabang 168 Keys Proximity to industrial estates 34

Next Destination Cebu Manila Cebu Philippines 2nd largest city Capital of the Visayas region Fast growing major trade and tourism destination with 9% regional GDP growth in 2016 Major hub for BPO

35 Next Destination Cebu Manila Cebu Philippines 2nd largest city Capital of the Visayas region Fast growing major trade and tourism destination with 9% regional GDP growth in 2016 Major hub for BPO industry Ranking 8 th in the world* - with MNCs like JPMorgan Chase Global Services Center, Accenture, Convergys within 38 special economic zones Strong tourism push with room to grow 2016 saw 4.1m arrival (+26% YoY), half of which is foreigner New International airport Additional terminal opening in 2018 will increase capacity from 4.5 to 12.5m. Airport served 10m passengers in 2017 (+12% YoY). 35 Tholons Services Globalization Index 2016TM (TSGI), Top 20 Super Cities

Cebu Hotel Market Supply comprises 18,000 keys, grouped into 4 key zones:

Park Majority unbranded economy hotels - Red Planet, Marriott (deflag

commerce with leisure and corporate Aged supply, budget to luxury mostly

Citadines, Red Planet CBD Old Town Port Resorts Resorts Leisure market

36 Cebu Hotel Market Supply comprises 18,000 keys, grouped into 4 key zones: CBD Most prime zone for business and retail Comprises Business Park and IT Park Majority unbranded economy hotels - Red Planet, Marriott (deflag 2018), Pipeline: Seda IT Park, Seda B Park Old Town and Port Traditional commerce with leisure and corporate Aged supply, budget to luxury mostly unbranded - Radisson Blu, Best Western, Pipeline: Dusit Princess, Citadines, Red Planet CBD Old Town Port Resorts Resorts Leisure market Luxury resorts, branded and local - Shangri-La, Best Western Pipeline: Sheraton, Novotel 36

High-rise residences Seda Hop Inn Cebu City (217 keys) H Economy targeting domestic travelers Value choice in prime

37 Prime location capturing two markets in CBD Holiday Inn Cebu City (180 keys) Midscale H- targeting international business H travelers The only international H branded offering in CBD H Franchised operation H Mall Offices High-rise residences Seda Hop Inn Cebu City (217 keys) H Economy targeting domestic travelers Value choice in prime location, easily accessible to offices H and malls Self operate Midscale Hotels (2,000-4,300) Economy Hotels (1,100-1,800) 37

2018 2019 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 178 Rooms 133 Rooms F&B Renovation Plan

39 Renovation Updated Room Renovation Plan Completed the first phase of room renovation of 129 rooms in December 2017 Expected 10-15% of room rate increase Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 178 Rooms 133 Rooms F&B Renovation Plan Marriott Cafe Renovation : Take place during low season in ERAWAN. All rights reserved.

40 3. ERAWAN Sustainable Platform Competencies Development Under Management Agreement Operate by Erawan 27% 28% 31% 33% 36% 39% Home 73% 72% 69% 67% 64% 61% By Hotel Revenue Inter 100% 100% 100% 100% 100% By Hotel Revenue F 2019F 2020F ERAWAN. All rights reserved.

Agenda Industry Updates Performance Review 4Q17 & FY17 Outlook Strategy Update ibis

44 Operating Income by Segment 4Q17 FY17 Contribution Y-Y Contribution Y-Y Luxury 49% 3% 49% 2% Midscale 24% 12% 25% 9% Economy 18% 18% 18% 8% Budget 6% 54% 5% 54% Rental 4% 4% 4% 4% Total Group 11% 8% Note : Exclude HOP INN Philippines ERAWAN. All rights reserved.

45 Operating Income by Destination 4Q17 FY17 Contribution Y-Y Contribution Y-Y Bangkok 62% 4% 62% 4% Pattaya 16% 13% 16% 8% Phuket 9% 30% 8% 15% Other 13% 28% 12% 15% Total Group 11% 8% Note : Exclude HOP INN Philippines ERAWAN. All rights reserved.

46 EBITDA by Segment 4Q17 FY17 Contribution Y-Y Contribution Y-Y Luxury 42% 5% 42% 9% Midscale 26% 12% 28% 12% Economy 19% 38% 18% 13% Budget 7% 44% 6% 53% Rental 5% 16% 5% 13% Total Group 21% 16% Note : For illustration purpose only EBITDA by Segment is calculated without taking non-property-specific expenses into account. Exclude HOP INN Philippines ERAWAN. All rights reserved.

47 EBITDA by Destination 4Q17 FY17 Contribution Y-Y Contribution Y-Y Bangkok 62% 4% 63% 9% Pattaya 18% 14% 19% 10% Phuket 8% 165% 5% 93% Other 12% 41% 12% 22% Total Group 21% 16% Note : For illustration purpose only EBITDA by Segment is calculated without taking non-property-specific expenses into account. Exclude HOP INN Philippines ERAWAN. All rights reserved.