Thailand's Central Plaza Hotel CENT.BK (CENTEL) said on Tuesday it had cut its investment budget for the next two years and put an expansion plan on hold as a result of the closure of Bangkok's two airports.
The company would cut its investment by more than 1 billion baht ($28 million) from an earlier plan to about 2-3 billion in 2009-2010, Chief Financial Officer Ronnachit Mahattanapreut told Reuters.
"We have to put a break on new projects, which means our plan to build a new hotel in Phuket will be postponed for another year and be completed in 2011," he said.
Management had discussed the impact of the political crisis and was looking at cutting the number of working days for hotel staff if the airport closures dragged on, Ronnachit said, adding that the firm had no plans to lay off staff at the moment.
Central Plaza runs 10 luxury hotels and five food franchises, including KFC and Mister Donut, in Thailand. The hotel business contributes about 50-55 percent of revenue, while 45-50 percent comes from the food business, he said.
Revenue in 2009 was expected to rise only 5-6 percent, down from an earlier forecast of double-digit growth, as it should take at least a year for Thailand to rebuild investors' confidence and for tourists to come back, Ronnachit said.
"Growth next year will be the lowest rate in more than 10 years," he said.
Central has also cut its 2008 revenue growth forecast to 10-12 percent from 13.4 percent after tourists cancelled trips to Thailand, he said.
Other major hoteliers are also suffering as their occupancy rates have dropped by 50 percent since the anti-government protesters seized Bangkok's airports last week. [ID:nSP131986]
Erawan Group ERAW.BK, which runs luxury hotels in central Bangkok including the Grand Hyatt Erawan, has cut the number of working hours in line with the falling occupancy rate, chief executive Kasama Punyagupta told Reuters.
"We have no lay-off plans, but we have asked staff to reduce operational hours after the rate fell about 50 percent," he said.
William Heinecke, chief executive of Minor International PCL MINT.BK, said its occupancy rate in Bangkok had dropped to 30 percent from a more normal 60 percent after the airport closures.
"Occupancy rate is very low right now as everybody is leaving Thailand, and nobody is coming back," Heinecke said, adding his company would not be laying off staff at the moment.
Some brokers have downgraded their recommendations and cut earnings forecasts in the sector because of the political strife.
Central shares closed down 2 percent at 2.94 baht on Tuesday while the main market was 0.97 percent lower. The stock has fallen 13 percent since the airport closure. ($1=35.62 Baht) (Reporting by Khettiya Jittapong and Saranya Suksomkij; Editing by Alan Raybould)