Hi, good morning, everyone. Welcome to analyst meeting of The Erawan Group Public Company Limited. Today we have two management joining. Youssef El Khomri, President, and Apinya Ngamapichon, CFO. Hand over to Youssef El Khomri.
Thank you. Thank you, and welcome to all of you for our third quarter review for the year. I would like to start with an overall update on the market trend and touch a bit on the outlook as well. Starting with Thailand overall. For the quarter three, we have seen a decline of tourism arrival of 13% year-on-year. The Thai tourism sector continued to face headwinds in the third quarter with key source market, particularly from Asia, showing a continued decline year-on-year. China, which is the major market, remain on a downward trend, which contributed to softer than expected overall arrivals for Thailand. In addition, the regional tension, especially with Cambodia, likely impacted traveler confidence from the neighboring markets during the third quarter this year.
Despite those challenges, we have seen some market that are still resilient, especially from Europe, India, and Middle East, where the contribution and arrivals to Thailand still showing good numbers for the third quarter. Domestic market for Thailand also show a good trend with a 3% year-on-year growth. The domestic demand benefited from the government-led travel campaign, which supported occupancy especially outside of Bangkok destinations. For the Philippines, the trend of international tourism was soft, recording a decline of 5% year-on-year. While domestic market demand continued to show good growth on a year-on-year basis. For Japan, on the other hand, a very strong year-on-year growth of 19%. Japan continued to be an appealing destination in Asia. The country shown strong inbound growth, especially from China, Taiwan, and South Korea. For our company, more specifically.
The total revenue and the subsequent financial indicator, as you can see here, recorded a year-on-year decline, which was pressured by the soft market environment. Our hotels continue to pursue a geo mix diversification with targeted initiative to the Middle East, India, and Europe. Our strategy as well has focused on building base business from groups, which was successful in some of our hotels while we maintained the focus on retail and corporate segment that are coming at a higher yield. On the good sign, if we look at China trend, in October, the decline of China compared to last year has narrowed. It was around -25%, while in the prior months, the decline was above 30%. We start to see good sign of recovery from China, and we see that same trend and higher demand from China coming towards Q4 and Q1 next year.
That's a good sign overall for Thai market and for our hotels in general. With that, combined with the continued growth from other markets, we expect our portfolio to lift up occupancy back above 80% in Q4, and the coming quarters as well. With the demand strengthening, we also gradually reposition pricing for our hotel, as pricing went down slightly in Q3. We are repositioning pricing for Q4, which should support ADR growth, especially during high and peak season upcoming. Some of other special highlights that I would like to mention. During this third quarter, we had several product enhancement projects. We've done the completion of The Naka Island renovation, which was successful, and that will contribute to the performance improvements, especially in Q4.
We had other smaller project for some of the ibis hotels and Mercure in term of product improvement as well. Overall, those projects should contribute to improved performance moving forward.
Moving on to operational performance of The Erawan Group in quarter three. This quarter, the continuous slowdown in arrivals from East Asia and Southeast Asian market resulted in year-on-year decline in both occupancy and average room rate. As a result, group RevPAR was 10% lower than last year, driven by 1% drop in occupancy and 9% decline in rate. However, this marks an improvement from the previous quarter, where we see RevPAR fell 13% year-on-year. Across all segment, from luxury to economy, the company's hotel portfolio record average RevPAR decline of 10% year-on-year, mainly due to softer occupancy and room rate. Nonetheless, this represent improvement quarter-on-quarter because in the previous quarter, we saw RevPAR of luxury to economy decline by 13%. This signaling early signs of stabilization of RevPAR. In terms of luxury segment under HOP INN brand.
This segment continued to perform very well, posting 2% year-on-year growth in RevPAR, supported primarily by 1% growth in room rate. Next, let's look at key driver across our luxury to economy portfolio, which is tourist arrival. In this quarter, international tourist arrival declined by 13% year-on-year. The top source market were Malaysia, China, India, South Korea, Japan. Compared to the previous quarter, Russia dropped out from the top five, replaced by Japan, and the trend that is aligned with the performance patterns observed in our hotel as well. The continued decline in Chinese arrivals remain a major headwind for our performance. Specifically, the 13% decrease in arrivals was largely driven by 35% drop in Chinese arrival and 18% decline from South Korea. On a positive note, we saw a gradual improvement in certain market, especially for Chinese arrival.
We see improvement in quarter three compared to quarter two. For quarter four, we also see improvement going forward, and we expect the recovery trend will continue throughout the year. Additionally, we also see India showing a strong 15% growth on arrival year-on-year, supported by more flights and more spending power, as well as visa exemption that we gave to Indian market. In terms of The Erawan Group customer mix, focusing on key source market of The Erawan Group in luxury to economy segment. In this quarter, the top five source markets for this segment remain unchanged from the previous quarter. The top five are China, Thailand, U.S., India, and Singapore. Together, this market accounted for 46% of total room revenue. Starting with China, which remained a largest source market for The Erawan Group, it contributed 13% contribution to the revenue, despite ongoing challenges.
However, due to the softer inbound demand to Thailand, room revenue from Chinese guests declined by 32% year-on-year. This was likely better than broader industry stat, where overall Chinese arrival to Thailand fell 35% year-on-year. For U.S., it accounted for 10% of room revenue, which was 8% lower year-on-year. This was primarily due to softer demand in our luxury segment in Bangkok from softer corporate demand, as well as in Phuket from ongoing renovation at The Naka Island. I would like to highlight two market which we see strong growth, which are, the first one is Thailand, which contributed to 10% of the room revenue, and the revenue grew 5% year-on-year. This is supported by government campaign, which started in July and lasts until October. Another market that I would like to highlight is India.
It represented 7% of our room revenue, and we achieved 12% year-on-year growth, driven by our effort to drive Indian market across all segment. Apart from this top five, we also see room night growth from several market, including Australia, Western Europe, and Middle East. This helped diversifying our customer base further. Moving on to operational performance of luxury to economy segment. Compared to quarter three last year, our hotel portfolio, in this segment, saw the drop of RevPAR 10% year-on-year. It was because of the decrease of occupancy by 3% and the rate by 7%. In terms of quarter-on-quarter, we see improvement by 4% of the RevPAR. Next, we would like to dive deeper into the performance of each segment, starting from luxury.
Luxury segment recorded a decline of 2% in occupancy and 10% in average room rate year-on-year, resulting in 12% year-on-year decrease in RevPAR. The performance was continued to be impacted by the continued slowdown in Chinese market and the phase renovation of The Naka Island, which will be completed in November. Despite these challenges, we continue to implement effective diversification strategies by expanding our customer base to other market, including Western Europe, India, Middle East, Australia, and Japan. We see the improving trend of this market aligning with the trend of tourist arrival to Thailand. For mid-scale segment, the segment can maintain occupancy level comparable to last year. While we see 6% drop in rate, which led to 7% drop in RevPAR. For this segment, we saw a smaller drop of RevPAR comparing to luxury and economy.
This is supported by a full quarter contribution from Holiday Inn Pattaya, which we reopened the hotel after the renovation in September 2024. Next is economy segment. RevPAR was pressured by the drop of Chinese tourists, as well as temporary disruption from the repair and maintenance from earthquake. In this quarter, we see occupancy dropped 7%. The rate also dropped 7%, leading to 15% drop of RevPAR. Moving on to the financial side of luxury to economy segment. Overall, in Q3, total revenue was recorded at THB 1,311 million, representing 8% year-on-year decrease. EBITDA was recorded at THB 302 million, reflecting 21% decrease. For this quarter in particular, this segment we have impact of repair and maintenance expense from earthquake. If we exclude this impact from this expense, EBITDA in Q3 dropped by 16%.
We expect to claim for this repair and maintenance expense, so the claim will come in the later period, along the year or maybe move to next year. For nine months, total revenue was THB 4,223 million, 5% decrease year-on-year, while EBITDA was THB 1,179 million, 11% decrease. If we exclude impact from repair and maintenance cost, EBITDA dropped by 9% year-on-year. Moving on to budget segment. We continue to following our expansion plan in non-luxury segment. For budget segment, in this quarter, we opened two new hotels in Chiang Mai and Phrae. Noting that for Chiang Mai, this is the fourth hotels that we opened in Chiang Mai, following the high demand in this province. In total, we add 156 room into our portfolio. Currently, The Erawan Group has 101 hotels, 12,174 room across three countries.
We will continue our expansion plan within the non-luxury segment going forward. In terms of performance of budget segment, we continue to see strong growth momentum across all key market, Thailand, Philippines, and Japan. In terms of macro perspective for all three market, we experienced positive tailwind starting with Thailand. Domestic travel grew by 3% year-on-year, supported by government co-payment initiative, which stimulated local tourism spending. Also, for GDP, we saw the expected growth of 1.4%. In Philippines, while overall tourism demand remains soft, domestic travel, which contributed to more than 70% of HOP INN demand, continue to be resilient. GDP growth in quarter three is 4% year-on-year growth. For Japan, tourism performance continued to be strong with international arrivals up by 11% year-on-year. All of the macro factors in these three market contribute to the growth of HOP INN performance as well.
Looking at year-on-year performance for same store hotel or HOP INN on the right-hand side of the table. RevPAR in Thai baht grew by 2%. While if we look at local currency terms, RevPAR increased by 5%, driven by rate, while occupancy remains stable at around 76%. On the left-hand side of the table, on quarter-to-quarter basis, RevPAR declined by 5%, mainly due to seasonal impact in Japan following the high base during the cherry blossom in Q2. Now, we move on to operating performance by countries, starting with HOP INN Thailand. We break it down to three major metrics.
Number of room, total hotel revenue, which include the new opening hotel as well, and on the most right-hand side is the same hotel revenue which we exclude the impact of inorganic growth, comparing only the same hotel which we have this year and last year. In terms of same hotel revenue in Thailand, on the right-hand side, in this quarter, it grew by 4% year-on-year, primarily driven by board room rate. Occupancy remains stable by room rate grew by around 5%. This reflects sustained ability to drive the rate by dynamic pricing. For HOP INN Philippines, same hotel revenue increased by 9% year-on-year, supported by both occupancy and room rate growth. If you look at total hotel revenue growth, it also grew by 16%. This region is successfully grow both organic and inorganic growth in term of the revenue.
Lastly is Japan. Performance remain particularly strong. We see the growth in source market from Japan, Philippines, and U.S.A. Same hotel revenue grew by 4% year-on-year in local currency. Mainly driven by increase in occupancy, while the rate slightly declined from last year. With this strong performance, HOP INN financial result continued to show strong trend. In terms of revenue, it reached THB 478 million, reflecting 11% increase year-on-year. EBITDA was THB 118 million, up by 7% year-on-year. The margin showed a slight decline year-on-year and quarter-on-quarter, primarily due to the ramp up of newly opened hotel, while year-on-year margin remained healthy. For the nine-month period, total operating revenue was THB 1,456 million, 18% increase year-on-year, while EBITDA also increased by 20% year-on-year.
For the group performance in quarter three, operating revenue was THB 1,789 million, representing a 3% year-on-year decline, which was from luxury to economy segment pressure from tourist arrival, which we present earlier. As a result, EBITDA dropped by 13% year-on-year. Excluding impact of repair and maintenance, EBITDA declined by 9% year-on-year. For net profit, we closed the quarter at THB 57 million, representing 54% decrease year-on-year. While we exclude the impact from repair and maintenance cost, impact declined by 38% year-on-year. For nine-month performance, the revenue was flat versus last year. EBITDA, we saw 2% decline. If exclude impact from repair and maintenance, EBITDA declined by 1% year-on-year. The impact was closed at THB 465 million, 13% drop year-on-year. Excluding this special expense, impact dropped by 9% year-on-year.
For The Erawan Group financial position, we continue to have strong financial foundation. What I would like to highlight for this quarter is our average cost of fund, which continued to drop from our floating loan portfolio. Currently, our cost of fund is 3.79%, which dropped from 4% from the previous quarter, reflecting the trend of declining interest rate and our loan portfolio is flexible when the interest rate is dropping. In terms of leverage ratio, it remained healthy at 1.1x to support the further expansion. In terms of financial position, we are currently working on strengthening our loan portfolio further by securing lower cost of fund, both in Thailand and overseas. Going forward, we expect to see the lower cost of fund for The Erawan Group. While we are considering to restructure some of the portion of our loan portfolio to get further lower interest rate.
There will be a short term impact to the P&L by this exercise because there might be some prepayment expense to be recorded in the short term period. We expect that some of the prepayment cost will be booked in Q4 this year, and most of the cost will be booked in quarter one in 2026. But in the long term, this lower interest rate will help the P&L in the future. This is the plan that we want to communicate to all of you. Now, I would like to hand over to Youssef El Khomri to talk about the outlook for this year.
For the remaining of this year, due to the softer than expected quarter 3, we had to revise our guidance. We are expecting to close the year just on par with last year, in term of growth. The impact mostly is on the luxury and economy. As you can see, we're expecting a -5% year-on-year. Budget, however, continued to perform well despite a bit of a softer Q3 as well. But we see the year closing at +18%. Overall, I would say that we were expecting Q3 to see better numbers in term of arrivals. But unfortunately, the Asian markets haven't fully recovered as expected. We see that coming more into Q4. Performance overall towards the end of the year will be much stronger.
We are quite optimist on the trend moving forward, especially from those emitting markets in Southeast Asia. In our priorities from an operating strategy, we continue to focus on expanding our footprint, especially on the budget segment. On an operation as well strategy, commercial strategy, we continue to focus on diversifying. I think there are opportunities for us to grow more mix from certain nationality mix, such as Middle East and India. Those will be one of the priorities for our hotels. We continue to make sure that we control cost at all levels so we can maximize our margins. In general, even though we've reduced our guidance, we see that the trend is looking better moving forward.
Now, we would like to provide guidance for Q4 for all of you. For total group, we expect in Q4 occupancy to be 81%, which is on par with last year, while the rate is 7% drop year-on-year, resulting in RevPAR drop of 7%, which following our strategy to maintain volume while the rate might be impact a little bit from last year. Breaking down into different segment performance, economy to luxury RevPAR dropped by 6% compared to last year. Performance of luxury RevPAR dropped 5%, mid-scale 7%, and economy 6%. For HOP INN, for same hotel statistics, RevPAR grew 1% year-on-year. This is only same hotel only, not including inorganic growth performance. We continue to expand our luxury segment, especially in budget.
For quarter four, we will open two more hotels, adding the total openings for the year to be 10 hotels, aligning with committed expansion plan that we communicated to all of you earlier. This is the result and explanation of performance of The Erawan Group.