Central Plaza Hotel will cut back its investment budget for 2009 by one billion baht to just 1.6-1.7 billion in light of the global and domestic economic slowdown. Ronnachit Mahattanapreut, the Centel senior vice-president for finance, said the hotel operator would also delay existing construction and renovation projects to reduce expenditures this year.

The two-billion-baht Centara Phuket Resort, now 20-30% complete, will have work delayed, a move that Mr Ronnachit said would help reduce ultimate construction costs for the project as materials costs fall in the future with the slowing economy.

A renovation plan for the Sofitel Centara Grand Bangkok at Central Lat Phrao will also be scaled back and delayed.

Mr Ronnachit said Centel had previously earmarked one billion baht to renovate the hotel over an 18-month schedule. Centel will now extend the timeframe to three years and cut back spending to 800 million baht.

''We pursued a similar strategy during the 1997 financial crisis, where we delayed construction to take advantage of falling costs,'' he said.

Mr Ronnachit said Centel had also locked in credit lines of six billion baht with local banks, with loan facilities dated as long as nine to ten years.

Centel plans to drawdown 2.3 billion baht in funds in the first half to finance ongoing work at the Centara Grand at CentralWorld. Another 2.1 billion baht will be allocated to the company's Pattaya projects and 1.6 billion for its Phuket projects.

Mr Ronnachit said the funding lines would also be drawn to help clear existing short-term liabilities.

Centel also planned to seek shareholder approval to issue up to 3.5-4 billion baht in debentures to take advantage of falling interest rates and reduce the company's funding costs.

In any case, Centel expects revenues this year to reach nine billion baht, up 12% from 2008 thanks to contributions from the CentralWorld hotel.

The Centara Grand, the group's flagship property, opened in mid-2008 and generated 516 million baht for the company. Revenues this year are projected at 1.028 billion.

But Mr Ronnachit said hotel revenues, which accounted for 52% of total company revenues, were likely to drop to 45% this year due to the global economic slowdown and decline in the tourism sector. Centel's food operations, which includes international franchises such as KFC, Mister Donut and Pizza Hut, account for the remaining revenues.

Centel aims to maintain hotel occupancy rates at around 65% this year, or on par with 2008. The company also plans to expand its hotel management services, both overseas and locally, with a goal of doubling revenue contributions to 20% of total hotel segment revenues within 3-4 years.

Centel reported nine-month profits of 304.8 million baht, up from profits of 233.9 million during the same period the year before. Revenues for nine months ending in September totalled 6.04 billion baht, up from 5.2 billion in the same period in 2007.

Shares of Centel on the Stock Exchange of Thailand closed unchanged yesterday at 3.1 baht on trade of 1.94 million baht.

source : www.bangkokpost.com