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During crash at home, local hoteliers thrive abroad

December 29, 2000

NAPHALAI Areesorn, 48, is a leading female executive in the hotel industry, with a key role in the successful internationalisation of Chiva-Som, the renowned health resort in Hua Hin.

Chiva-Som International Health Resort Co signed an agreement with Sociedade Lusa de Negocious, a holding company of the Portugal Bank of Investment, to manage the US$80-million (Bt3.44 billion) "Chiva-Som at Torres Novas" resort in Portugal.

Before joining Chiva Som, Naphalai worked as a marketing director at Siam Intercontinental. She started with the intention of creating the best health resort in Thailand, and now says the contract to manage an overseas property has exceeded her initial expectations.

Chiva-Som is following another leading Thai hotel group, Dusit, into the international hotel industry, but in a different way. While Dusit is operating new properties, Chiva Som will turn an 18th-century castle near Lisbon into its first overseas resort. It will be operational in 2002.

Naphalai plans to open at least five more Chiva Som resorts overseas over the next five years. She said Chiva Som is negotiating with many overseas hotels and investors for contracts to manage spa and health resorts.

Naphalai said the combination of Thai hospitality and a European spa in Chiva Som is considered the major contribution to the success of the Thai-run health resort.

Last year Chiva-Som was voted the world's most dedicated health resort by readers of Conde Nast Traveller, a top tourism magazine.

The story of Chiva-Som, which translates as "haven of life", began in the mid-1990s when former deputy prime minister Boonchu Rojanastien and a small group of Thai business people invested US$26 million (Bt1.2 billion) to build a first-class health resort in Hua Hin.

Naphalai is now Chiva Som's managing director.

The foresight of Jatuporn

While other hoteliers struggle under debt burdens, Jatuporn Sihanatkathakul of the Landmark Group is contemplating buying another luxury hotel in London to add to a property portfolio that already includes the Royal Lancaster Hotel London and the Landmark London.

The deal would mark another milestone for the group, which has outperformed its peers due to Jatuporn's foresight and management skills.

In the early 1990s, Jatuporn made what seemed then to be a big gamble - expanding the family hotel business into overseas markets.

He was astonished at the madness of the property market boom in Thailand, with developers rushing to build new hotels without any consideration for supply and demand.

In the first year of the Board of Investment's (BOI) promotional privileges for hotel developers, there were 100 applicants.

Sensing trouble ahead, Jatuporn turned his attention to the UK. He was interested in the Royal Lancaster, one of the finest hotel properties in the UK. It was named the best UK hotel for conferences and banqueting in 1992 and 1994.

Jatuporn also eyed the Landmark London. At that time, the UK property market was in a severe downturn, while Thailand was experiencing a boom.

Despite the boom time, Jatuporn saw the growing risk in the Thai property market due to the "gold rush" by developers going into the hotel business, spurred on by the BOI's incentives. This subsequently resulted in oversupply and contributed to the crisis in the banking system and the collapse of the economy.

Jatuporn led Landmark Group to purchase the Royal Lancaster in 1994 for 75 million (Bt3 billion), and the Landmark London in 1995 for 70 million. At that time the baht was trading at about 40 against the pound.

Since then, the value of both hotels, which enjoy an average occupancy rate of 80 per cent, has appreciated steadily. The most recent property appraisals by surveyors in London found that the value of both hotels has about doubled.

This means that the Royal Lancaster and the Landmark London each carry a market price of about 140 million today (Bt8.96 billion at current exchange rates).

In effect, the Landmark Group would reap a 100-per-cent profit - in property value appreciation and in exchange rate gains - of a combined Bt10 billion if the two properties were to be sold today.

But Jatuporn said the Landmark Group has no plan to sell the hotels.

"During the [International Monetary Fund] period, a lot of people called in to inquire whether we had any plan to sell off our London hotels. But I said no. We're in the hotel business and if we sell out, we don't know what else to do," he said.

The Landmark Group also operates the five-star Landmark Bangkok, a 31-storey hotel located on Sukhumvit Road. The Landmark Bangkok has 415 rooms and 55 luxury suites.





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