Good morning, everyone. Welcome to first quarter analyst meeting of The Erawan Group Public Company Limited. Today, we have Mr. Youssef El Khomr i , The Erawan Group's President, and Ms. Apinya Ngamapichon, CFO. Let's start.
Thank you. Good morning, and thanks for coming today. Today we're going to be covering our first quarter performance of 2025. The agenda will be starting by an overview of the performance. Then we're going to go into more detail in terms of financial achievement by segments. The third agenda will be a consolidation review. Then finally we're going to end with the outlook for 2025. The first quarter, I'd like to touch on a few points and firstly on our portfolio. We continue to deliver consistent growth across all key financial metrics for our portfolio. Thanks to our diversification and resilience. Our growth segmentation from luxury to budget allowed us to capture diverse source markets, and groups of clients, which reduced our reliance on a few large markets, specifically China, and also the fluctuation of international arrivals.
From a growth perspective, we continue to work on expanding our budget segment with HOP INN brand as well as the economy and midscale segment with our new project in Phnom Penh. These segments continue to yield the best returns and remain our focus for new development. I just would like to highlight that the non-luxury segments have especially grown for our company within the past few years and today representing 65% of our revenue in term bookings. Moving on to finances. We're sitting today on a very solid balance sheet. Our leverage ratio is at a healthy ratio of 1x, thanks to good profitability, which also give us room for new investment and support our growth strategy. On the revenue side, we grew total revenues in the first quarter by 7% year-on-year.
We also continue to focus on the average rate growth. We achieved a 2% growth in average rate despite few market challenges which I'm going to touch on later on. We keep pushing pricing up when market demand support it, but we also remain agile in adapting to pricing to market fluctuation. Looking ahead, we foresee a softer Q2 performance. April has seen a short-term impact from the earthquake. That impact lasted for around 10 days. We've seen overall pace of new bookings reduced by around 70%. Then after 10 days the pace got back to normal. However, we continue to see a weakening of arrivals from some key markets such as China, Taiwan, and South Korea. We expect to see a recovery of these markets in Q3.
Overall, the pace of booking for Q3 is quite good, and we expect a return to higher demand environment from there on. In terms of overall performance for the group, we achieved in the first quarter an occupancy of 80% with an average rate of THB 2,010 . Overall occupancy, as you can see, has been a bit of pressure compared to previous trends. Year-on-year, we were down 1% and year-on-year we were down 2%. However, average rate, we were able to grow on a year-on-year basis by 2%. RevPAR, as you can see on a consolidated basis, we were showing a - 1%, but once we split by segment, we're actually up luxury and economy are up 5% and total revenue for HOP INN is up 29%.
Basically, the weight of HOP INN is reducing the overall RevPAR for the group. As we are expanding more budget hotel, the average RevPAR actually is, the global RevPAR is declining. But split by segment, we're showing a good growth of RevPAR across the board. Just like to highlight that the occupancy decline had a bit of pressure from the decline of Chinese arrival, especially from February and March. January was very strong from Chinese New Year and other markets that have been very strong from Middle East to Europe, U.S. Overall, demand was very healthy in Q1. We still achieved a good occupancy in general and we're also still able to yield the rates during that environment. We're quite satisfied with the achievement in Q1. That's overall performance, and I will pass to Apinya to go a bit more in detail by segment.
Let's take a closer look now on the properties that perform across different segments. Most of our hotel in economy to luxury segments are located in Thailand. Our performance here is closely tied to inbound tourism trends. In the first quarter of 2025, Thailand welcomed approximately 9.5 million international tourists, representing a 2% increase year-on-year, and the top five source markets remain consistent China, Malaysia, Russia, India and South Korea. If you refer to the left-hand side chart on this page, you will notice that January lacks the performance of this quarter with a strong growth of tourism arrival, especially for China. However, this upward trend did not sustain through the quarter. February and March saw a noticeable decline in Chinese tourists, largely due to heightened concern on safety and security in Thailand.
This sentiment has had a clear impact on our country's inbound. It will likely remain a key challenge for the industry throughout the remaining of the year. While we have managed to hold the rate positioning across our portfolio, this is a reminder for the importance of market diversification. We'll show you in the next slide, going forward, how are we going to diversify our market portfolio. Building on that tourism outlook, let's now examine our customer mix in more detail, focusing on the source markets that contributed to our luxury to economy segment. In the first quarter of 2025, our top five source markets in the luxury to economy segment were China, United States, Thailand, India, and Singapore. Together, these markets accounted for 46% of our room revenue in this segment. Let's start with China, which remained our largest source market in quarter one.
Despite challenges, this market still accounted for 14% of revenue in this segment. However, as noted earlier, booking momentum from China weakened in February and March. As a result, the room revenue from Chinese stays dropped 6% year-on-year. Still, this was relatively better than the industry considering that overall Chinese arrivals declined by 24% in the same period quarter. Moving next to the United States. The U.S. represents 14% of our room revenue and has grown year-on-year. This increase in the U.S. segment helped offset the decline from China and leading to a 9% increase in group revenue year-on-year. In addition, we also see strong growth from the Indian market, leading to revenue growth of 18%. This reinforces the importance of our ongoing effort to diversify source markets both geographically and demographically.
Now let's turn to the overall performance of the luxury to economy segment, which continued to be a key revenue driver for The Erawan Group. In the first quarter of 2025, this segment delivered solid performance, supported by rate growth across categories. We achieved an average room rate of THB 3,569, which represents a 6% increase year-on-year. This growth was driven by strong performance of the mid-scale and economy segments, with the luxury also showing positive rate actions despite a dip in volume. Occupancy across this segment stood at 83%, which is considered a healthy and competitive rate. If we dive deeper into the performance of each segment, starting from luxury. As mentioned earlier, the luxury segment faced some challenges, primarily due to weaker Chinese demand in February and March. The occupancy rate of this segment was 75%, which was 8% below the same period last year.
However, we were able to increase the average room rate for luxury properties, which helped to partially offset the decline in occupancy. As a result, RevPAR for this luxury segment declined by 4% year-on-year. Despite these challenges, the luxury portfolio remains strong, and we are confident that the recovery will come as travel patterns stabilize in Q3. From the mid-scale segment. The segment had a standout performance in Q1 as the key highlight is from the successful renovation of Holiday Inn Pattaya, which significantly boosted occupancy in this category. The rate growth was also solid with a 5% increase year-on-year. Consequently, the RevPAR of this mid-scale segment grew by an impressive rate of 14% year-on-year. This was a key driver for overall performance and this demonstrates the strength of our mid-scale offerings. The economy segment continued to show resilience.
Occupancy in this economy segment was 86%, which is 4% below last year due to a slowdown in Chinese demand. However, the rate growth of 11% offset the drop in occupancy, resulting in RevPAR growth of 6% year-on-year. The ability to maintain a healthy occupancy rate combined with solid rate growth underscores the effectiveness of our strategic focus to focusing on the value enhancement strategy. In summary, luxury faced some headwinds. Mid-scale economy delivered strong results demonstrating our diversification strategy. On the financial side, for the luxury to economy segment, we saw a solid 2% year-on-year growth in terms of revenue. This growth was driven by strong room revenue performance as well as an increase in food and beverage revenue.
In terms of room revenue, the growth of room revenue was primarily due to rate increase as mentioned earlier. We achieved a 4% increase in EBITDA, which is a result of revenue flow growth and effective cost management, particularly in marketing and admin expense. Our EBITDA margin for this segment also saw improvement, rising to 35.3%. This reflects the strong operating leverage that we have built through careful cost control and a diversified portfolio. Next is performance of budget segment. For budget segment, HOP INN brand has shown continued positive growth, driven by strong domestic demand and effective positioning across different markets. Starting from Thailand, domestic demand remained robust in Q1, driven by estimated GDP growth of 3.4% and 4% year-on-year increase in number of domestic travelers.
Despite challenges in other parts of the economy, the domestic travel sector remains a reliable source of demand in budget segment. This has helped HOP INN Thailand deliver solid results with high occupancy and growing revenue. For Philippines, similarly, domestic travel demand was strong in Q1. GDP, which represents domestic consumption, grew by 5.4% year-on-year. As a result, we saw growth in both organic and inorganic dimensions, with new openings boosting overall revenue growth. For Japan, the performance was particularly strong due to higher contribution from Thailand and Philippines source markets. There is also another factor of cherry blossom in late March that support the travel demand into the country. As part of our ongoing commitment to expand the diversity of our budget segment, we successfully opened three new hotels in Thailand in this quarter.
These properties are located in key regions, including Pattaya, Songkhla, and Loei, adding a total of 256 rooms into the portfolio. Right now, our hotel in the total portfolio is reaching 96 hotels across Thailand, Philippines, Japan. We remain focused on HOP INN brand, which has proven to be highly effective in capturing demand in both domestic and international travelers seeking affordable yet quality accommodation. We will continue to expand into high-demand locations going forward. Now let us look at operational performance of our budget segment across different markets. Starting with Thailand. Our HOP INN properties continue to perform strongly. We expanded our number of rooms by 14% year-on-year, resulting in revenue growth of 15% for this quarter.
If we excluding the impact of new hotel openings by showing same hotel revenue, it also show a growth of 4% year-on-year, showcasing our strong organic growth in this segment. In the Philippines, we saw room expansion of 38%, which resulted in 90% revenue growth in Thai baht. In local currency, the revenue growth is 31%, and organic performance excluding expansion in Thai baht show a decline of 9% year-on-year. If we exclude the FX impact, same hotel revenue in local currency still grew by 1%, reflecting the resilience of our operations in the market. Lastly, is Japan. The budget segment had exceptionally strong performance in Q1, driven by continued ramp-up of our HOP INN Japan properties. We saw revenue growth of 111% year-on-year in Thai baht, and the organic revenue also grew by 65% year-on-year.
Performance across Thailand, Philippines, and Japan shows that budget segment remains a major driver of growth with a combination of strong organic growth and successful expansion strategies. Let's look at financial performance of budget segment, which has delivered impressive results in Q1. The budget segment showed exceptionally good performance in Q1. Total revenue reaching THB 481 million, representing 29% growth year-on-year, and this strong revenue growth was supported by both organic and impact of new openings. As a result, our EBITDA also saw a robust 40% increase, reaching THB 200 million. This increase is a direct result of our strong revenue growth, combined with effective cost control in areas such as administrative expense. As a result, our margin improved to 41.6%.
Let me walk you through the company performance for the group. The group delivered strong financial results in quarter one, with revenue reaching THB 2,136 million, which represent a 7% year-on-year increase, and this growth was driven by robust performance in mid-scale economy and budget segments. EBITDA saw impressive growth of 12% year-on-year, which accounted for THB 785 million.
Our strong growth in EBITDA reflects the positive revenue flow through as well as our existing cost management, as mentioned earlier, and EBITDA improved to 36.7%. Our net profit for the quarter reached THB 345 million, which represent 21% year-on-year growth, further demonstrating our strength in our financial performance. We move on to financial position of the group, which continue to be strengthened, providing us a solid foundation for future growth and expansion. In terms of equity base, we have seen a solid increase in our equity base compared to last year, which is due to financial stability and strong profitability.
In terms of our loan portfolio, right now, we currently have 100% floating portion, and this provide us with flexibility, particularly in the light of current trend of declining interest rates. In quarter one, the average cost of funds stands at 4.24%, which remains to be favorable given the market position. In terms of leverage ratio, our leverage ratio continued to decline, reaching 1x in quarter one. This improvement is driven by solid profitability and our disciplined approach to financial management. In summary, our financial position is strong, and we remain committed to maintaining a strategically flexible capital structure to support the group's long-term growth strategy. I have covered operational performance and key highlights for our business. I would like to hand over to Youssef to talk about the outlook of the company.
Thank you. For the outlook, I'd like to touch first on the Chinese arrivals trend. Basically, we put together a chart to show the Chinese tourist arrival versus our occupancy of The Erawan Group. You can see that when you look at the blue bar on the lower part, that's the Chinese tourist arrival. The middle one is the non-Chinese tourist arrival, and then you have the total arrivals per quarter on top. Then we're showing as well the occupancy of The Erawan Group by quarter. Basically, our point here is that despite the situation of Chinese arrival, we're still maintaining stable occupancy. For instance, from the third quarter to the fourth quarter, Chinese arrival declined from 1.8 million to 1.5 million. Our occupancy actually was half. From the fourth quarter to the first quarter this year, there was a decline of Chinese arrivals.
We did decline a bit in occupancy, but we're still maintaining levels above 80%. Our diversification strategy we started since last year actually is translating into a better result, and we have less reliance on Chinese market. Of course, as the drop of Chinese continues towards Q2, we still have a bit of effect, but our diversification will help us to maintain a good level of occupancy. We've been able to increase source markets from Europe, U.S., and some other nationalities that help us to offset some of that decline in China, and we will continue to focus on that diversification as well. Indian market is also a key nationality for us, so we're putting a lot of focus on India. It's growing quite significantly at the moment.
Even despite the conflict that just happened in that area, we saw that the air traffic is back and continue to flow into Thailand, similar to the past in terms of frequency of flights. We expect Indian market to continue doing well, and we see that that's another market that we can grow for our portfolio. Middle East continue to be a focus for us, and we see the numbers actually looking quite good towards third quarter this year. We expect higher contribution from Middle East market looking ahead. In general, Chinese markets have been soft in Q1 and Q2 as well, but we expect China to come back in Q3 and then Q4 as well. For the earthquake impact, just would like to highlight that all our portfolio had no major structural damage and no injuries.
Overall, we come out quite well from that situation. All buildings have been certified as safe by third party company, and we remain operational for guests. There were some repair that were needed, and all that cost was fully covered by insurance, so there will be no impact to our financial statement. We estimate the impact of earthquake for the month of April, a drop of 3% lower year-on-year, which is limited to a short-term effect. We don't see any more earthquake impact post the month of April. Overall operation remains stable and our pickup trend have normalized by April 10th. Overall, this was a 10-day impact from the earthquake. In terms of guidance, we've revised our full-year guidance. Our group revenue growth for the year, we expect a 6%-8% growth.
The decline is from the economy to luxury with the impact on Q2. Overall, for the full-year economy to luxury, we expect 3%-5% growth and the budget remains same at 23%. Our key focus will continue to be on expanding our portfolio, but also diversification in term of source market, as I mentioned earlier. Then, making sure that we stay agile in term of pricing strategy and managing well our cost to improve our margins. Some of the tailwinds. We expect India and Middle East to be a key driver of demand in the next quarters. We also see a stronger euro against Thai baht, which should support market growth from European markets. Some of the headwinds. Again, international geopolitical uncertainties, and then the tariff impact, which is still uncertain and we have to see how that plays out.
But in general, so far, we don't see any impact on the business from the tariff situation. We are observing that closely. In term of pipeline, we expect this year to open 10 hotels in Thailand, all under HOP INN. We already opened in the first quarter, three hotels with 256 keys in total. In the second quarter, we are going to open another three with 217 keys in total. Then we have another three hotels in Q3, another one was in Q4. So for a total of 10 hotels and 789 keys for the year that we have so far.