Hi. Welcome everyone to Q4 2025 results and 2026 business plan of The Erawan Group Public Company Limited. Today, we have two management joining. Youssef El Khomri, President. Apinya Ngamapichon, CFO. Hand over to Youssef.
Thank you. Good afternoon, everyone, and thank you for joining today's session. I'd like to start by giving you an overview of the business performance for the fourth quarter, starting first of all, with Thailand. The fourth quarter 2025 marked a shift in trend for our Thailand portfolio, as the performance versus 2024 continued to narrow. Overall travel was in decline actually, tourist arrivals by 6% year-over-year, primarily due to the sustained shortfall from the Chinese travelers. However, our performance remained quite resilient. We successfully compensated the lack of Chinese tourists by capturing surging demand from Europe, Middle East, and India. This diversification allowed us to maintain year-over-year occupancy levels.
However, in terms of average room rate, it still remained lower than the fourth quarter of the prior year, mostly due to the fact that the market was less constrained, and we had less ability to yield and to drive aggressively the rate. That trend, we've seen it mostly in Bangkok and Pattaya, where we had a bit more challenges to drive rates. However, in Phuket, the trend was much stronger, and we've seen, from a rate point of view, a good growth in the fourth quarter compared to the prior year. That's on Thailand. On the Philippines, our properties outperformed the broader market, as we've seen a surge in terms of domestic travel. In fact, the domestic demand for our hotels currently contribute over 80% of our business mix, which reduce significantly the reliance on international travel.
Our portfolio in the Philippines actually does very well, and we've seen, from an international arrivals, 12% growth year-on-year. But the numbers are still below what we used to be prior to the pandemic. For us, the focus continued to be on domestic market. Meanwhile, Japan continued to be a strong market for us. Our properties recorded a robust RevPAR growth, which was driven by a 10% increase in terms of tourist arrival year-on-year. Japan remained a top-tier global destination, and also the fact that the currency exchange is favorable, and that supports tourism and continue to drive both occupancy and room rate for hotels.
Overall, the positive momentum that we have seen across these three markets where we operate and also coupled with the ramp-up of our new hotel opening, we were able to achieve quite a healthy financial performance across all the key metrics. As you can see here, from a revenue standpoint, we were able to grow year-on-year by 1%. EBITDA grew by 2% and net profit by 1%. Considering that we are coming off from a high base in 2024, we believe that we were able to capitalize on the shift of momentum and achieve quite decent results for the quarter. That is on the overview, and I will hand it to Khun Pii to cover the company performance from a financial standpoint.
Starting with luxury to economy, during this quarter, international tourist arrival declined by 6% year-on-year. The top five source markets were China, Malaysia, India, Russia, and South Korea. Notably, Japan exited the top five compared to the previous quarter and was replaced by Russia. The continued softness in Chinese arrivals remain a primary headwind to our tourism performance in Thailand. Total international arrivals declined by 6%, and the contraction was mainly due to 29% decline from China and 14% decrease from South Korea. Given the contribution from this, it has a meaningful impact on our performance. However, we began to see improvement in arrival from both China and South Korea in the second half of the year, especially in quarter four, and we believe that we are recovering from the lowest point in quarter two.
Even though the volume has not yet been normalized, we expect that we will see the gradual recovery trend going forward. On a positive note, India delivered strong momentum with a 21% year-on-year increase in arrivals, reinforcing its growing strategic importance for Thailand. Russia, we also see the growth of 7% year-on-year, which offset the softness in Asian market. Overall, we see external demand pressure remain in some market, but our diversification of our source market for Erawan will help improving the momentum going forward. For our source market for Erawan in the fourth quarter, our top five in luxury to economy remained consistent with the previous quarter. These markets were United States, China, Thailand, India, and Singapore. Collectively, it is accounted for 45% of our total room revenue, reflecting relatively stable geographic revenue mix despite ongoing market volatility.
For the U.S., it represents 13% of our total room revenue. Performance improved compared to earlier in the year, with revenue declining 3% year-on-year versus 8% year-on-year decline in the previous quarter. This improvement was primarily supported by strengthening corporate demand and resilient leisure demand, especially in December. For China, it is contributing 10% of our segment revenue despite continued headwinds. Room revenue from Chinese guests declined by 18% year-on-year, reflecting softer inbound travel to Thailand. This performance, however, was comparing favorably to the broader industry. As mentioned earlier, Chinese arrival dropped by 29% in this quarter. It indicates that our portfolio continued to outperform the market and capture share within this segment. There are other markets that play a key role in offsetting the softness of Chinese and U.S., which is India, representing 7% of the room revenue and delivers strong growth of 12% year-on-year.
We can see higher inbound travel and improved air connectivity, helping to boost the demand of Indian tourists into Thailand. Beyond India, we also recorded growth in room night from Europe and Middle East, reflecting a success of our diversification strategy that we have been implementing throughout the year. Moving on the performance of luxury to economy segment. Comparing to the previous year, our group's overall hotel portfolio recorded 4% year-on-year decline in RevPAR. This was primarily driven by 4% decrease in average room rate and a 1% decline in occupancy. Performance improved significantly compared to the previous quarter. RevPAR in luxury to economy segment increased 31% quarter-on-quarter basis, reflecting strong seasonal demand, successful market diversification efforts, and robust leisure travel, especially in December. I would like to highlight that the performance gap versus last year continued to narrow as the quarter progressed.
Q4 is very strong performance for this segment. Moving next to performance by segment. As you can see, luxury in this quarter outperformed both mid-scale and economy segments. For luxury, this is supported by strong demand in Bangkok and continued recovery across key properties. Occupancy increased by 4%, while the room rate decreased by 4% year-on-year, as we implemented the strategy to maintain occupancy while the demand is still softer than last year. As a result, the RevPAR increased by 1% year-on-year. For mid-scale, we record 3% decline in occupancy compared to last year, while the room rate decreased by 4%, resulting in a RevPAR which has dropped by 8% year-on-year. The shortfall was primarily driven by Bangkok properties, which were more exposed to the decline in Chinese arrivals.
It is also important to note that mid-scale segment operate at a very high occupancy base of 83% in 2024. It makes year-on-year comparison more challenging. Despite this soft demand in mid-scale, I would like to highlight that Holiday Inn Pattaya continued to deliver RevPAR growth. This demonstrating our strength and well position of asset after renovation. The last segment is economy. In this quarter, we record 5% decline in RevPAR. It is driven by 1% decrease in occupancy and 4% decline in average room rate. Importantly, occupancy remained healthy at 87% in this quarter. However, average room rate was a little bit pressured by weaker Chinese demand and more competitive pricing environment. Overall, we can see that the rate pressure remains across all the segment, while occupancy levels remain healthy.
With our diversification strategy and asset enhancement initiative, it will help stabilizing the performance in the next quarter. In terms of financial performance in this segment, in quarter four, total operating revenue was 1,688 million THB, representing 3% decline year-on-year, and the EBITDA was THB 616 million, decreasing 2% year-on-year. During the quarter, the segment continued to incur repair and maintenance expenses related to earthquake. If we exclude this one-off cost, EBITDA would have increased by 1% year-on-year, reflecting our underlying stability of our performance. Despite the revenue pressure, we maintain disciplined cost control across the portfolio, so we can have stable EBITDA margin of 37.6%. For the full year 2025, total operating revenue was THB 5,912 million , representing 5% year-on-year decline, and EBITDA was THB 1,794 million down 8% compared to last year. Excluding repair and maintenance costs from earthquake, EBITDA would have declined by 6% year-on-year.
The majority of year-on-year decline was concentrated in Q2 and Q3, when the luxury was impacted by the drop of Chinese tourist arrivals, but performance continued to improve progressively in Q4. Turning to the budget segment. In the fourth quarter, we opened two new hotels in Kamphaeng Phet and Tak, adding 158 rooms into the portfolio. At the end of 2025, we successfully added a total of 10 hotels into our portfolio. In total, we have 103 hotels and 12,332 rooms in operation across three countries. Budget segment continued to gain more momentum and plays an increasingly important role in balancing our group overall performance. In this quarter, HOP INN delivered another solid result. For Thailand, the performance was driven by domestic travelers and represent a core customer base for HOP INN Thailand.
Overall international arrivals softened, but domestic travel remains stable, supported by a 2.5% GDP growth. During this quarter, we also observed particularly strong leisure demand in regional destinations as well as Bangkok, which helped reinforcing the performance in Q4. For Philippines, the market condition continued to improve. Tourism arrivals increased 12% year-on-year, and domestic travel remained healthy, supported by stable economic growth of 3% year-on-year of GDP. The portfolio also benefited from a balanced mix of leisure and corporate demand, allowing the hotels to sustain both occupancy and rate momentum. For Japan, the inbound tourism continued to grow and international arrival rising 10% year-on-year. This favorable demand environment was supporting ongoing RevPAR growth throughout the year. In total, same store RevPAR increased 6% year-on-year in Thai baht terms in this quarter.
In local currency, RevPAR growth was stronger at 10%, driven primarily by a 6% increase in average room rate and 2% improvement in occupancy. Compared to the previous quarter, RevPAR rose by 17%. This reflects seasonal uplift and stronger travel activities in the fourth quarter. Breaking down the performance by country. In the fourth quarter, HOP INN Thailand performance continued to be strong. Starting with same hotel revenue on the most right-hand side. In the fourth quarter, same hotel revenue increased 6% year-on-year. This is driven by average room rate and occupancy. For revenue from existing hotels, it was THB 283 million, and total revenue for the quarter reached THB 330 million, up 23% year-on-year. For the full year, HOP INN Thailand opened 10 hotels and the performance for the full year went up by 18%. Moving next to HOP INN Philippines.
In Q4, HOP INN Philippines, there is no new hotel opening, so the same hotel equal to total hotel revenue. In Thai baht, same hotel revenue grew by 6% year-on-year, but in local currency, same hotel revenue grew by 12%. The next one is Japan. Japan continued to benefit from the tourism season and sustained growth in inbound travel. There is also no new hotel opening, so in the same hotel revenue, it was THB 109 million, representing a 12% year-on-year increase, and in local terms, revenue grew by 20% year-on-year. Now let us turn into financial performance of budget segment. In the fourth quarter, total operating revenue reached THB 572 million, representing 16% growth year-on-year, and EBITDA was THB 244 million, up 14% year-on-year.
The growth was driven by a combination of same store performance improvement and contributions from newly opened hotels. For the full year, HOP INN generated operating revenue of THB 2,028 million, up by 18% compared to 2024. EBITDA for HOP INN was THB 828 million, increasing by 18% year-on-year. Importantly, EBITDA margin expanded to 40.8%, reflecting improved operating leverage, efficient cost management, and the scalable nature of business model. Moving next to our group performance. In the fourth quarter, our group delivered stable overall results despite external headwinds. Revenue was THB 2,260 million, a 1% increase from last year. EBITDA reached THB 860 million, increasing 2% year-on-year. EBITDA margin improved to 38.9%, up 1 percentage point compared to last year, reflecting disciplined cost control and improved operating leverage.
During this quarter, the results were impacted by repair and maintenance costs, so EBITDA would have declined by 4% year-on-year. Net profit was THB 374 million, increasing 1% year-on-year. If we exclude one-off expense item of repair and maintenance, EBITDA would have increased by 6% year-on-year. For the full year, total revenue was THB 7,940 million, mostly flat to last year, while EBITDA in reported performance was 1% below last year and would have been growing 1% year-on-year if we exclude one-off expense. Net profits was THB 838 million, decreasing 8% year-on-year. Excluding one off item, the net profit would have decreased by 3% year-on-year. In terms of our financial position, we continue to manage our balance sheet conservatively.
In terms of interest rate positioning, at the end of quarter four, our average cost of fund was 3.5%, reflecting a benefit of lower market interest rate. With the recent monetary easing by Bank of Thailand, borrowing costs have also continued to decline. Given the current rate environment, we feel that it is very favorable at this time, so we intend to rebalance part of our debt portfolio to increasing the portion from 100% floating to some of the portion to be fixed. This will allow us to lock in attractive rate and reduce exposure to the volatility of the rate in the future. In terms of our capital structure, our leverage ratio stands at 1.5x in quarter four, significantly below the covenant limit of 2.5x , and it would help us to expand in the future.
There is more room to pursue the expansion plan as we communicated in the next slides. We are also in the process of refinancing some of the portion of our portfolio, both locally and internationally. The transaction will be completed by the end of quarter two. By this initiative, we aim to lower the cost of fund further, but in the short term, there will be some impact from prepayment fee. In the long run, it will be offset by the saving cost of interest. I would like to pass on to Khun Youssef to talk about the outlook of the company.
Thank you. In terms of outlook, the positive momentum that we have established since, I would say, November last year and also the strong results that we are having in the first quarter of 2026 gives us high confidence for the remainder of the year. Q1 is quite strong, especially February. We are seeing a significant rebound of Chinese travelers during the Chinese New Year, but the whole month of February was quite strong and we are seeing high level of occupancy across all the portfolio. We also see continued growth from other markets, which is also giving us good signs on how the year is shaping up. We can clearly see a turning point for Thailand tourism sector. We had a challenging year last year. The trend is moving towards some positive outlook. Looking ahead, March pace is also quite healthy.
We expect overall Q1 to deliver quite a good results. Our strategic focus is now shifting on Q2 and Q3, where we need to proactively build volume business and mitigate the seasonality. That is the period where we need to drive most of the growth for the year. As you know, last year was a very challenging period for us with the earthquake and other issues we had. Overall, the Q2 and Q3 will be critical for us to drive significant year-on-year growth. Consequently, the full year we are targeting a 9% revenue growth for g roup. It is breaking down as 7% for the luxury to economy and then 14% for the budget segment. Some of the tailwinds, we are seeing the Chinese market having a good sign of recovery overall.
We are expecting that a lot of the growth will be driven by that recovery. Also, the other markets I referred to earlier, which are India, Europe and U.S. also showing good signs and we expect to see good growth coming from those markets. The Thai political landscape which is more stable and I think that will help to bring back confidence especially on the corporate and MICE sector and events. That should help also the industry. Some of the headwinds we are seeing that the strong baht continue to be a challenge versus the other Asian currency. This is putting a bit of pressure for incoming inbound travel from, let us say, Singapore, Hong Kong, Korea. That we will have to see how that plays out. But we are still confident that the demand will still be quite healthy from those markets.
Of course, international, regional geopolitical uncertainties, but so far, we are not seeing any effect on that. In general, we are quite optimistic about 2026. The numbers are showing the same. In terms of the first quarter specifically, just showing here some stats for both group and breakdown by segments. For total group, we are expecting to close the first quarter forecasted around 82%. The breakdown will be economy to luxury at 87% and for the budget at 79%. For the rate, we are still seeing a bit of pressure. However, for the economy and luxury, we are seeing a flat pricing compared to prior year. Again, for 2025, it was a high base. The first quarter was actually quite strong. We start to decline from second quarter onward. In terms of RevPAR, we are seeing a growth of 4% year-on-year.
We had better volume overall compared to the prior year. For HOP INN, we are seeing overall RevPAR growth of 1% year-over-year. We have added the revenue growth. I think it is an important perspective because when we look at RevPAR as our budget hotel is expanding, it puts pressure on consolidate. The RevPAR is putting pressure on that, right? Because we are calculating revenue per available room. It is good to look at it from a revenue perspective. It gives a clearer idea by segment. Economy to luxury, revenue growth in the first quarter will be 4%, and then for the budget will be a revenue growth of 10%. That is our guidance for the first quarter. In term of pipeline for 2026 and onwards, this year we are opening nine HOP INN hotels, eight in Thailand and one in Korea.
We have few more slides to touch on the Korea investment. For the projects under development, we have two projects under development in the non-HOP , from economy to luxury, with four brands, four hotels. Also we have eight hotels under development for HOP INN at the moment. This is what we have in the works for 2026 and onwards. As you may have seen in our disclosure, we have secured a new long-term lease land in Asoke area. This is another rare land that we were able to secure for our portfolio. This is coming back to back after we secured our land on Sukhumvit 26. This is an additional projects that will strengthen our position in Bangkok CBD. The location is located between BTS Asoke and Phrom Phong.
We cannot disclose the exact location, but we will be able to share that with you in the next meetings. But the location, it is really good, walking distance to the BTS, also walking distance to EmSphere. We are targeting the product development here to be in the economy and mid-scale segment. From our supply analysis, we believe that these segments will provide the best return in term of investment and also looking at the market dynamics and the supply in the area. Customer mix, we believe this area will have a strong leisure demand, around 70% of the business mix and 30% corporate. We are quite happy with this new addition in our development, and we believe it will strengthen our portfolio here in Bangkok. Total project will have around 400 keys in total. Now, moving to HOP INN plan.
Before going to the Korea project, just wanted to recap on our long-term vision for the brand. For HOP INN, we are aiming to establish the brand as the leading budget hotel network in Asia Pacific. We have committed around THB 10 billion for this vision, and we are aiming to achieve around 150 hotels by 2030 and beyond. Currently, as you know, we are operating in Thailand, Philippine, and Japan, and we have been studying other markets to expand to. The latest one that we are entering now is Korea that we have secured. In term of pipeline for these specific countries, for Thailand, we are aiming for 100+ hotels. Now we have, in Thailand, 72 hotels in operation. By the end of this year, we are adding another eight, so we are going to be around 80 hotels in Thailand by the end of this year.
We are aiming to go for 100+ hotel , and we see the opportunity to expand further. For Japan, we continue to look for opportunities, so we are aiming for five-plus hotels. For the Philippines, we have now around 10 hotels in operation, and we continue to seek for opportunities. Those other markets so far are early stage of study, but definitely once we see the right opportunity, we will go for it. For Korea, we have acquired an existing property in Myeongdong. Myeongdong is a touristic hub in Seoul. This is a prime area for shopping, very good location and from a transportation accessibility, but also centrally located close to all the major landmarks of the city. Myeongdong is an area actually that drives most of the demand in Seoul from a touristic and occupancy standpoint.
We acquired a property at an approximately THB 1,000 million. This investment is for a freehold project, so it is including land, building, and it is including as well the CapEx for the conversion to HOP INN. The total rooms is 97 rooms with a room size between 19 to 24 sq m, so this is really fitting with the positioning of HOP INN. We are expecting the opening to be on the second quarter of this year. We are currently working on the conversion of the property. From a top-line estimate, we are looking at the first year operation with an occupancy of 70%, and an average room rate between THB 2,005- THB 3,000. We are actually quite happy with this new addition to the HOP INN portfolio.
Korea is a very strong market, and having a foothold in Korea will strengthen the position of HOP INN moving forward. Some of the rationale of investment in Korea, overall tourism demand is very strong. As you can see from the first chart that Korea has surpassed total arrivals, the pre-pandemic level, which was at 17.5 million. In 2025, the country closed at 18.9 million visitors. The government is putting a lot of effort to drive tourism in the country, and they are targeting 30 million visitors by 2027. This is a very strong prospect in term of tourism growth for Korea, and a lot of that demand is actually going to Seoul. Another perspective of our rationale of going to Korea is the network leverage.
HOP INN has been building its awareness within the Philippines and Japan, and we already build a very strong exposure to some of the key source market that are going to Korea. Essentially, China, Japan, Taiwan, U.S. and Hong Kong. This market are already having an exposure to HOP INN in those other countries. We will leverage the network to cross-sell and continue to build on that regional exposure to those market. Another aspect of the rationale is the baht appreciation. In fact, if we look here at the chart, the Thai baht to the Korean won is at its lowest from the peak in last 10 years, 35% lower. It gives a better environment for us to move capital to Korea and to invest.
Overall, in terms of real estate in Korea, we have seen a decline of overall real estate, which is also giving a real estate pricing, which is giving a favorable environment for investment. That is on the Korea project. Overall, for the CapEx for 2026, we have an estimate of THB 4 billion CapEx, which will be broken down as follows. We have THB 2.9 billion for the budget hotels and THB 1 billion for the non-budget. For HOP INN, overall, the bulk of the CapEx will go for new investment. We have THB 1.7 billion that is committed, that is including Korea and some other investment and development here in Thailand. We have another THB 1.1 billion as a reserve for new investment as well.
For economy to luxury, the bulk of the CapEx will go for the new development, which will be the two projects that we have on the works, the Soi 26 and the other one in Asoke. There is a part, THB 300 million, which will be allocated for renovation, and here more specifically is for renovation of the Grand Hyatt. An update on the Grand Hyatt Erawan . As you know, and we have been updating you in the last few meetings that we are still in discussion with the landlord to conclude on the extension of the land lease. Just to update that we have continued to pay the annual lease and other remuneration since 2021 until now, and that lease amount is higher than the first term of 30 years. The situation is unchanged and we continue discussion with the landlord.
Having said that, we continue with our plan of soft renovation of the Grand Hyatt, which will start in Q2 this year, and it will be going until Q4 next year. Our plan of this renovation is to do it gradually and minimize displacement of business. For the rooms, we will be doing floor by floor, and also avoid all the festive season and the high-demand period. Overall estimate CapEx for this project will be around THB 500 million-THB 600 million. With all those projects and pipeline, we are actually from a long-term perspective, we are looking at a revenue CAGR of 10% from 2025 to 2030.
As you can see that we have quite a strong growth, which will be driven by the expansion of HOP INN. HOP INN revenue contribution will be moving from 26% currently to 36% by 2030. From an EBITDA CAGR, we are projecting a 12% growth. Of course, HOP INN is also contributing to that, as well as our new projects that are in the works. HOP INN contribution will move from 32% to 41%, and then taking more share from a portfolio diversification.