Dusit envisions hospitality upgrade

Dusit International (DTC) has more than 60 years’ experience in the hotel and hospitality field. Founded in 1949 by honorary chairwoman Thanpuying Chanut Piyaoui, whose first hotel was The Princess on Bangkok’s Charoen Krung Road, DTC has since acquired a unique portfolio of distinctive hotels in Thailand and abroad. Chanin Donavanik, the managing director and chief executive, discusses the company’s strategy and outlook.

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What is DTC’s business model?

DTC has three core businesses: owning hotel assets, hotel management and education. We have been a hotel owner for a very long time, and currently the majority of the hotels we own are predominantly in Thailand. However, we are looking to expand our investments abroad. Our second business, hotel management, is a natural extension of hotel ownership. We manage most of our own hotels, and in fact there are only two we do not own.

Under hotel management we have four sub-brands _ Dusit Thani, which targets the premium five-star segment, Dusit Princess in the four-star segment, dusitD2 in the boutique segment and Dusit Devarana in the boutique luxury segment.

Finally, in education, Dusit Thani College has been focused on the hospitality business for 20 years. We have partnered with E{aac}cole Ho{aci}teliere de Lausanne, one of the top hotel schools in Switzerland, and also initiated a programme with the Lyceum of the Philippines University in 2009.

Will DTC look to focus on growing more on the asset ownership side or in management of hotel properties?

We would like to grow on both sides. This year we plan to open seven new hotels, in Abu Dhabi, New Delhi, Doha, Qatar, Guam, Nairobi and Hainan. The goal is to launch quality hotels that enhance the Dusit brand and improve our global recognition and footprint.

Each location we target has a similar characteristic: a growing affluent market that is a popular destination for business and travel. The seven launches are the largest number of properties in terms of growth that we have experienced, and as such this is an important year for the company’s future.

Regarding hotel and asset ownership, in Thailand, we have our property fund, DTCPF, which we would like to grow and use as a vehicle to acquire more hotel assets in Thailand. Internationally we plan to use the company, DTC, to invest in hotel assets.

The main reason for executing this strategy is it allows DTC to diversify our asset ownership and management contracts. Currently Thailand is a popular market, but to have 80% of one’s business in one industry, in one country, is quite risky, so we would like to diversify via international investments.

What differentiates DTC from its competitors in terms of assets and brand management?

For the country it is very positive to have more than one Thai hotel company with its own brand doing well globally. The tourism industry is large enough to accommodate more than one player, and in the future, seeing a Dusit hotel, a Centara hotel and an Anantara hotel would be very positive for us. Our focus is to be very selective about the hotel assets we attach our name to _ we must focus on the quality of the hotel for all brands under our umbrella.

DTC’s revenues have been improving strongly since 2009. However, the company made a loss for the first nine months of 2012. Why was this, and what can shareholders expect going forward?

The improvement in DTC’s business was two-fold. It reflects, first, the continuing growth of Thailand’s tourism industry with more travellers each year and second our own ability to improve and streamline our management and operations.

The loss in the first nine months of 2012 was purely due to a one-time provisioning of the pre-opening expense of a new hotel in the Maldives, so we had to provision everything related to this project and its expenses. Otherwise, excluding these costs DTC is performing much better.

What are the biggest risks facing your business?

One of the main concerns I have is we are playing a numbers game. The government was very happy with 22.5 million visitors last year and is targeting 24.5 million this year, but what is next? Focusing only on the numbers may not be what is best for Thailand, as in the long term the quality may have to decrease and with the current infrastructure Thailand cannot cope with the increased number of visitors.

The other main concern is well known _ politics. However, because it is well known and on each occasion Thailand has had political problems, two or three months later visitors return as the after-effects from political issues have been minimal. Thailand is blessed with its geographical position, its culture and its attractions, so despite the risks, travellers do continue to return.

What impact will the Asean Economic Community have on your business?

The AEC should be quite positive for Thai companies and us too as the market expands to a population of 601 million people. Specifically the benefits will be seen with the larger hotel groups, as they will have the necessary economies of scale to take advantage of the larger market, while the smaller companies will find it difficult to compete.

However, I am concerned for the Thai labour market, as there will be increased labour flow throughout the region. With Thai wages higher on average than in Vietnam, the Philippines, Indonesia and, in the future, Myanmar, Thais will find it difficult to compete unless the government and corporations invest in developing and training the labour force here. On the other hand, it will be positive for hotel groups here, as there is a shortage of labour.

Where do you see DTC in five years from now?

Five years from now, DTC will own and manage more than 50 hotels in popular destinations on two or three continents, and our brand recognition will grow and be stronger as well. I believe Thais are naturally very strong in the hospitality business, and our aim is to able to export this quality of Thai service and experience abroad.

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