Hi, everyone. Welcome to 3Q 2024 analyst meeting of The Erawan Group Public Company Limited. Today we have management joining. Youssef, our company President, Apinya Ngamapichon, CFO, Jetiya Kitiyodom, Head of Accounting, Angkana Sophonvit, Head of Finance. With that, I will hand over this to Youssef.
Thank you. Thank you, Khun [inaudible]. Good morning, everyone, and thank you for joining today's session. Today's agenda, we are going to go through four sections. I will start initially with a summary of overall market trend and company performance, and Khun P will cover more into detail on the industry and our numbers, and with the overall outlook for the year. Basically, in term of tourism market, the third quarter, starting with Thailand, overall, the industry have seen a mixed trend, where we had a very strong arrival in July and August, followed by a very soft month of September. September has recorded the lowest tourist arrival of the year. That month in particular, historically, has been a low demand month for the destination due to seasonality.
This year, that seasonality was also coupled with other factors such as the strengthening of the Thai baht, which made the destination less competitive, and also the flooding crisis that affected travel demand, especially from domestic markets. That was mostly in September. For the Philippines, the tourism industry continued to see challenges in term of international arrival growth, especially from China. The local authorities have applied stricter visa requirement for Chinese nationals, that kind of limit the ability to grow tourism numbers. However, there are good signs from other markets with new scheduled flights from Europe, Japan, and South Korea. If you look at Philippines in third quarter, domestic market was the top feeder market for hotels. For Japan, the tourism sector continued to experience substantial growth in international visitors.
The surge has been largely driven by a significant influx of Chinese tourists as well as South Korean, Taiwan, and other nearby Asian countries. For our company performance in particular, the third quarter, we recorded a 6% year-on-year growth in revenues and a 2% growth in EBITDA. Despite a soft month of September, we were able to grow overall Q3 RevPAR, thanks to a strong performance of economy and budget hotels. Midscale segment had a minimal year-on-year growth, and we will look at a more detailed number later on, but Holiday Inn renovation was still going on this third quarter, while last year, third quarter was fully operating with full inventory. The renovation of Holiday Inn Pattaya has been completed by end of September, and the hotel had a positive ramp- up so far. For the month of November, we are forecasting to close at 80%.
The property is now up and running full inventory. For the luxury segment, for us, we continue to have, for the third quarter, we continue to have an impact by the Grand Hyatt. As we mentioned last meeting, due to the incident, we had a softening of demand and a few cancellations, which impacted the third quarter. Overall, Grand Hyatt recovery was slower than what we expected. The impact lasted until end of October. November occupancies for this month are back to normal. Currently, our month-to-date occupancy for Grand Hyatt is 87%, and we're expected to close the month around that range, 85%-87%, and the rate as well is at a good level. The Grand Hyatt is already back above trend. In term of outlook, October has been a soft month as well.
If we look at the early of October, the demand from Chinese market, especially on the Golden Week, was below expectation. That has impacted overall our forecast. However, November is trending very well. The beginning of November, especially the first week, have seen a lot of city events and corporate demand. The hotels were very busy. We also see that continuing towards the remaining of the month of November with strong events, strong MICE, and strong corporate overall. For December, we're also forecasting to be a very strong month. Currently, we're seeing a high pace of booking, especially towards the festive period. Overall, we're optimist on the fourth quarter. October was a bit soft, but the remaining of the Q4 will be very strong, and we should record a growth year-on-year, of course.
That's on the summary, and I will hand it over to Khun P to go through the industry overview. Thank you.
For tourism industry overview, we'll go through three countries that our hotel is present right now, Thailand, Japan, and Philippines. Starting with Thailand first. In Q3 2024, Thailand attracted 8.6 million tourists, and the growth is 21% year-on-year, and the recovery rate is still 89% recovery compared to pre-pandemic level. This is supported by increased flight capacity and relaxation of visa policy. For the top five countries for this quarter are China, Malaysia, India, South Korea, and Japan. If we look at the change to the previous quarter, Japan become top five for this quarter, replacing [Russia]. Next is Philippines. Philippines welcomed 1.4 million tourists this quarter. As mentioned earlier by Youssef, the growth is quite moderate compared to the other markets that we are operating in. The growth is 5% year-on-year, and the recovery rate is 70% compared to the pre-pandemic level.
For the top five countries, South Korea, U.S.A., Japan, China, and Australia. Japan has been moving up to the third rank compared to the previous quarter. Due to moderate demand, our hotel, again, it is under HOP INN brand, so 70% of the demand is local Philippines. We are growing and do not rely on international demand that much. For Japan tourism, tourist arrival was 9.1 million, growing 37% year-on-year, and the recovery exceeds the pre-pandemic level already by 17%. The top five countries are China, South Korea, Taiwan, U.S.A., and Hong Kong. For this quarter, China became the top rank of tourist arrival, replacing South Korea. Next is our company performance. In terms of Erawan top source market continues to be five countries, China, United States, Thailand, Singapore, and India. This top source market revenue growth has already surpassed pre-COVID levels.
The main growth drivers are still China, which the mix has been increasing compared to last year and the past quarter. China is the main source market for economy segment and also the top source market for midscale and luxury segments. For United States, they are the top source market in luxury and the top five source market in midscale. For Thailand, the mix has decreased a little bit from last year, and they are the top source market in economy and top rank in the budget segment. Now moving on to the operating performance of The Erawan Group this quarter. Our RevPAR, if you see the trend, it dropped slightly from last year by 2%, driven by the softer occupancy rate. However, overall rates grew 3% year-on-year.
The reason that RevPAR slightly dropped from last year is because of the higher contribution of the lower rate segment, which is budget and economy. While for this quarter, our luxury segment performance was relatively soft due to the Grand Hyatt incident. However, ADR for all segments continued to grow year-on-year. For the luxury to economy segment, RevPAR grew 2% year-on-year. We see a strong rate growth of 5%, while the occupancy dropped 3% year-on-year. This is due to the performance of the luxury segment, while economy and midscale continue to deliver RevPAR growth year-on-year. This page will be the breakdown of performance by segment, starting with luxury first. Luxury, as mentioned earlier, performance in this quarter is relatively soft. RevPAR was 4% below last year because of the impact from the Grand Hyatt incident.
If we exclude the impact from the Grand Hyatt incident from the performance, RevPAR grew 7% year-on-year. Moving on to midscale. The RevPAR continued to grow year-on-year at 1%, and the growth continued even though there is an impact from Holiday Inn renovations. Holiday Inn Pattaya renovation is already completed in September. In October, we will have our full inventory back. For quarter three performance, if we exclude the performance of Holiday Inn Pattaya from the midscale segment, the RevPAR will grow 7% year-on-year. You can see the light blue box that we have already excluded Holiday Inn performance. Next is economy performance. Economy is a strong performer in this quarter. RevPAR grew double digits in this quarter to 14%, driven by strong growth in both occupancy and rate.
With this operating performance, it is translated into the financial performance of the luxury to economy segment. Our profitability in terms of EBITDA dropped 6% year-on-year. This is due to the softer revenue, which is on par due to the performance of Grand Hyatt Erawan Bangkok and the renovation of Holiday Inn. However, if we look at year-to-date performance, both revenue and EBITDA continue to grow year-on-year. Next is the performance of the budget segment. Budget segment continued to be solid. RevPAR grew 13% year-on-year, and the rate grew 21% year-on-year. This is due to higher contribution of performance of Japan, which opened this year with higher rate. If we track back the pace of our expansion, we see a continuous expansion in each quarter. This quarter we opened two more hotels in budget segment with additional 231 rooms.
In terms of performance of budget segment by country, Thailand and Japan continue to perform strongly. For Thailand, RevPAR grew 5% year-on-year, even though there is some partial impact from rainy season and flood in north and northeastern parts of Thailand. The rate continued to grow 8%, while occupancy dropped slightly by 2%. For Philippines, RevPAR dropped 12% year-on-year, and this is mainly due to the impact of performance of new hotels, which is still in the ramping up phase. If we exclude the performance of new hotel that is open in 2024, RevPAR slightly dropped from last year by 3%. Lastly is Japan. This quarter occupancy is 68% and the rate is around THB 2 ,900 . The performance, if you look in terms of quarter-on-quarter basis, performance is lower because in Q2 it was high season of cherry blossom.
In this quarter we see the drop in number of customers mainly from Thailand market and we will expect to see the higher performance in Q4. In terms of financial performance of budget segment, revenue contribute to growth strongly by 35% year-on-year and EBITDA also grow 31% year-on-year, supported by revenue flow through, but was partially offset by performance of the newly opened hotels. Year-to-date, performance continue to be very strong. For the performance of The Erawan Group in this quarter, as mentioned earlier, revenue grew 6% year-on-year, while EBITDA grew 2% and impact dropped 19% year-on-year. This was due to softer revenue in this quarter from Grand Hyatt Erawan Bangkok incident, renovation of midscale segment and also impact in HOP INN Thailand from the flooding. And impact also impact by higher depreciation and interest expense from accelerated expansion.
However, our financial position continued to be strong. Our leverage ratio in this quarter is 1.5x , slightly dropped from the end of last year of 1.7x . This is driven by our strong equity base from increase in accumulated retained earnings, while our interest- bearing debt increased as well due to support expansion. We have ample liquidity to support expansion in the future, including THB 1.2 billion cash on hand and THB 6.1 billion credit facilities. Let me hand over to Khun Youssef to talk about the outlook of the company.
Thank you. In terms of outlook, for this year, we are targeting to close with an occupancy at 80%. We remain with initial guidance that we shared with you. In terms of total revenues, we are actually expecting Q4 to see strong growth, especially from the 13 hotels that are open this year from HOP INN in Thailand and Philippines as well as Japan. Q4 is expected to have a strong growth from a ramp- up of those property as well as existing hotels that should do well in November as well as December with the festive season. In terms of key operating strategies, again, the story this year for us, and I guess for overall market, is about rates. ADR will continue to be a focus for us through effective yield management.
That's a combination of price positioning, but also mix optimization and pushing more segments at a higher yield. F&B is also a focus, especially for our five-star segments, where the recovery was not there yet this year. If you look specifically at the MICE, there is a big part of MICE which was contributed from China in terms of meeting and conferences, which this year hasn't been fully recovered. We continue to put a lot of effort in terms of MICE. This Q4, we see a lot of events coming, a lot of meeting inquiries for November and December, and also towards Q1 next year. Profitability remain always a focus for our operations to make sure that we enhance margins. In terms of industry forces, we're quite optimistic on how the trend is going to evolve in the next few months.
China will continue to be one of the key market driver for the three countries where we operate. In terms of headwinds, geopolitical macro, it is still an area of uncertainty, but so far we don't see any impact to tourism globally or in the region. The Thai baht, of course, as I mentioned earlier, was somehow a concern for tourism in September because if you look at the Thai appreciation versus some of the currencies in the region through Singapore dollar or other currencies, Thailand became more expensive, especially in the month of September. The Thai baht kind of softened a bit afterwards, but it's something that eventually, if it's not softened further, might affect the destination from a competitive point of view. That's on the guidance. As well in terms of pipeline, just would like to update.
This is the list that we've presented since the beginning of the year. We're on the timeline on all the openings. We've opened all these properties in [Q4]. The plan is two hotels, HOP INN Prachuap Khiri Khan, which opened in mid-October already, and HOP INN Phrae, which will open by mid-December. We should be able to execute all the opening plan as per our initial plan. Lastly, just would like to update on HOP INN as well, as we presented last meeting on the strategic plan for our budget brand in terms of expansion from now until 2030. We've also exit last month the private equity funding that we've secured. Our company has entered into a strategic partnership with Lapis Hospitality, which is managed by Lombard Asia.
This partnership will allow us to gain insight from Lombard in term of the investment portfolio in the Asia- Pacific region, and also gain experience from them in term of IPO, because also we mentioned that as part of the plan is to spin off HOP INN into IPO filing, expected to be by 2027. The proceeds from this private equity is to support the long-term expansion plan of HOP INN which we have already shared, and we are targeting to achieve 150 hotel by 2030 in APAC. Also to allow HOP INN to have more autonomy in term of self-financing and for Erawan to have more flexibility to finance new projects in the economy to luxury segments where we are now exploring new investments in those segment as well in Thailand. This is the latest update on HOP INN and, yeah. We will conclude there.
We ended—