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S Hotels & Resorts Plc (SHR), the flagship hospitality arm of Thailand’s Singha Estate, said the impact of the energy crisis on its hotels in the UK will be limited.
Dirk Andre L. De Cuyper, SHR’s chief executive officer told efinanceThai on Friday that the company already hedged the risks from the cost of natural gas and the current contract will last until 2023, especially during the winter season when the demand for natural gas in Europe and the United Kingdom is high.
The company’s comments came after Credit Suisse downgraded its investment recommendation for SHR and Minor International Plc (MINT) on Thursday.
The Swiss bank said both SHR and MINT have hotels in European Union and the UK and their portfolios in these 2 regions will be affected by the energy crisis after Russia slashes supplies of natural gas.
SHR owns 28 hotels in the UK and its shares closed at 3.42 Baht on Thursday, down 9.52%.
On Friday, the share went up by 0.58% to 3.44 Baht during the morning session.
SHR’s CEO said the company still expects the cost of natural gas to continue to account for 3% of its revenue in the UK portfolio in 2022 so the company is “confidence” that the impact of the fluctuation of natural gas prices on their hotels will not be significant.
He pointed out to the latest prediction that energy prices could drop by half in Q2 of 2023 as European countries’ gas reserves are high enough for the winter this year.
He said that the occupancy rate of their hotels in the UK is now better than the situation during the Covid-19 pandemic and the prices of their rooms had climbed to an average of 80 pounds per room which was 20% higher than the average before the pandemic.
The company is also conducting an asset rotation routine to sell low-quality assets and use the income to upgrade high-performing hotels so that they can continue to increase room prices by 15-20% in the coming years.
The CEO said the company is still expecting to make more than 8.5 billion Baht in revenues in 2022 from stronger portfolios, especially in the Maldives. The tourism recovery in Thailand could also push its revenues up to 10 billion Baht in 2023, he said.