Hi, everyone. Welcome to 2Q 2024 analysis meeting of The Erawan Group Public Company Limited. Thank you for joining us. Today we have management, Khun Youssef El Khomri, President. Khun Apinya Ngamapichon, CFO. Khun Jetiya Kitiyodom, Head of Accounting. Khun Ankana Sorpolwit, Head of Finance. I will hand over this presentation to Khun Youssef. Thank you.
Thank you. Thank you for coming this afternoon and for joining the session. Today in the agenda, we have, starting with a brief summary, just to give you an overview of the industry and our company performance as well as an outlook. Then we will move to the company performance by Khun Pi, and then we will be sharing with you the guidance for the remaining of the year. Then finally, we will have an update on our expansion plan for HOP INN. The markets across the three countries where we operate have been very healthy. The trend continues to be very strong, and we still record growth year-on-year across Thailand, Japan, and the Philippines. For the tourism arrival, if we look at it from an Asia-Pacific region, the numbers are closing the gap with 2019 in term of arrivals.
The trend is very positive, and we believe that the tourism target for the three countries where we operate will be achieved this year. The improvement of tourism is also linked to the fact that the flight capacity is recovering and is improving. We see more scheduled commercial flights throughout those destinations. In general, the market is very healthy and that will support our business for the remaining of the year and forwards. For Thailand specifically, the second quarter have seen a strong uptake in Chinese travelers as well as Indian. China, Q1 was very strong. Q2, we saw the numbers also improving, and we expect those numbers to continue growing for the remaining of the year. India has been also lagging last year. This year we see very good sign from the Indian market. Also, the flight capacity from different cities of India have increased.
We see an increased number of Indian tourists to Thailand. Japan have seen record numbers, as the destination continue to see a surge of international travelers, mostly from East Asia. We see China, South Korea growing quite fast into Japan. The market is very healthy over there. The Philippines is still lagging in term of recovery comparing to the other two countries. However, the domestic market is very strong and very stable. For our properties, we have a strong base of domestic, which is supporting our business. In term of our company performance, we have achieved the highest Q2 results in our records. We continue to deliver good results Q-on-Q and year-on-year. Our revenue growth continue to be driven by an increase of tourist arrivals, coupled with our rate strategy.
As we've mentioned to you in the previous meetings, the rates strategy is the key focus at the moment for us. From a volume standpoint, we don't see an increase of occupancy because we're happy with where we are, so we're trending in that 80% mark. Our aim is to continue growing rate, and we're quite successful so far in achieving that. Just want to also highlight in term of rate strategy what we mean by that. There's various factor in term of pricing. The first one is about just price positioning. We're pricing our hotels higher, but we also actively yield the rates on busy days. There is another component which we call mix optimization. Basically, we give priority to higher rated segment. It's an improvement of the mix of our business within the properties that help us to elevate pricing.
If we look at our performance in Q2, our rate strategy allowed us to achieve 7% growth in ADR and respectively as well, 7% growth in RevPAR year-on-year. We see good results in that front. In term of market outlook, we remain very confident on the second half of this year. As I mentioned earlier, the tourism arrival trend is very strong, and that will continue to support our business. When we look at our forward bookings for the remaining of the year, is also showing very good demand trend, very healthy. We are expecting to achieve our targets for the year. That's on the summary, and I will pass it to Khun Pi to go a bit more detail in term of industry overview and company performance.
Yeah. For the three markets that we are operating, we'll go through tourism overview in each market, Thailand, Philippines, and Japan. Starting with Thailand first. In Q2, tourist arrival in Thailand is 8.1 million, growing 26% year-on-year and recovered 91% compared to pre-COVID level. In this quarter, we see strong performance of tourist arrival even though it is low season, supported by free visa scheme from the government and also increase in flight capacity, as mentioned earlier. If we look at the mix of nationalities coming to Thailand, China, Malaysia, India, South Korea, and Russia are the top five. If we compare to the previous quarter, we see the increase in the mix of Chinese to 21% from 19% from the previous quarter.
India, which was on the fifth rank in the last quarter, the rank become the third now, and the mix is 7% compared to 5% in the previous quarter. This is supported by extension of visa exemption from May to November this year. Next is Philippines. As mentioned earlier, the growth is relatively modest compared to the other market that we are operating. Number of tourist arrival is 1.4 million, increasing 5% year-on-year and recovered 71% compared to pre-COVID level. The top five are South Korea, U.S.A., China, Japan, and Australia. Even though the growth is quite modest, our brand is HOP INN which over 60% is local Philippines, so it's not purely reliant on international market. The last market is Japan. This quarter, Japan tourism is very strong. Number of tourist arrival is 9.1 million, growing 56% year-on-year, and already surpassed pre-COVID level by 7%.
The top five are South Korea, China, Taiwan, U.S.A., and Hong Kong. Moving on to company performance on the top five source market of The Erawan Group. The top five are still the same compared to the previous quarter. Nationalities are China, U.S.A., Thailand, Singapore, and India. If we look at the recovery rate compared to pre-COVID level, every market, the growth is higher than pre-COVID or match with pre-COVID level, especially China see strong growth. They are the top one in mid-scale segment and also in the top five of luxury and economy segment. For United States, they are the top one in luxury segment. For Thailand, we see a drop compared to last year. This is due to the renovation of Holiday Inn Pattaya, which the customer base are mainly Thai.
Also in the last year, we have Rao Tiew Duay Kan scheme, which is in effect in April 2023, which drive local demand. As mentioned, our strategy to drive the rate was successfully implemented in quarter two. We see average rate growth of 7%. As a result, our RevPAR grew 7% year-on-year, while occupancy rate was 79% and slightly dropped by 1% compared to last year. This slide will show performance by geography, starting from Thailand first. For Thailand, the rate growth is strong in every segment. The average rate of growth is 6%, and RevPAR growth is 5%. If you look at the rate in each segment, in Thailand it show a strong growth. As a result, RevPAR of every segment except mid-scale grew from last year, especially luxury and economy, which delivered double digit growth compared to last year.
For mid-scale we see a drop in occupancy. This is due to Holiday Inn renovation. As a result, RevPAR dropped 2% from last year. If we exclude impact of Holiday Inn from mid-scale calculation, the RevPAR will grow 7% year-on-year. Moving on to the Philippines market, we still see a strong performance in Philippines. Occupancy rate grew 3% from last year. The rate also grew 3% from last year. As a result, RevPAR grew 7% from last year. For Japan, we have strong performance in Japan compared to the prior quarter that we have ramp up phase. Occupancy rate in this quarter is 73%, improving significantly from the last quarter with occupancy rate of 48%. This is driven by high season of Sakura that support a number of tourists in Japan. Due to strong RevPAR growth, our revenue in quarter two is THB 1,844 million, growing up 12% year-on-year.
It flow through to the EBITDA level. EBITDA level is THB 564 million, growing 13% year-on-year. Our EBITDA margin also improved from the last year. Our normalized net profit, excluding extra item, is 127%, growing 5% year-on-year. The growth is less than the growth of revenue and EBITDA due mainly to higher interest expense to support accelerated expansion. Next is our financial position. Our position remains strong. In this quarter, our interest bearing debt to equity ratio dropped to 1.5x compared to 1.7x at the end of last year. This is due to increase of our equity base, which is mainly from strong net profit as well as capital increase from the exercise of warrant, which give the proceed to the company of around THB 1.1 billion. In addition to that, we also have ample room of cash and available credit facilities to support growth in the future.
Cash on hand is THB 1.6 billion, and available credits facility is THB 6 billion. Let me hand over to Khun Youssef to talk about the outlook of the company.
Thank you. In term of outlook and our guidance for this year, we are expecting to achieve 80% occupancy full year. In term of rate and RevPAR, we are seeing a growth of 5% this year-on-year. Then total revenue between 14% and 15%. If we look at what we presented last month, we've put down slightly the total revenue, from 15% to 14%-15%. One of the reason is the Grand Hyatt. We've received a number of emails from you asking about the impact of the incident, and I just would like to touch on that a little bit to give you an insight on the implication of it. During the incident, our occupancy declined to around 50% during the days of the incident. But the July month, we closed at 65% occupancy for the property. Usually, we're at 80%.
July was impacted by around 15 points of occupancy for this property. August, which is also mostly impacted because we had quite a number of cancellation. Also we'll be closed around 65%. That's our forecast for this month. In September, over 70%. Overall, this incident for Grand Hyatt will have an impact on Q3. The hotel will be back on track in October. If we look at the pickup pace, October is already back to normal trend, so we will be back to our occupancy levels by Q4. Even though we have this impact to the property, the impact to consolidate for Q3 is around 0.5% occupancy. Okay, so it's a limited impact, relatively to the Grand Hyatt. That's where we decided to adjust slightly the guidance.
If we look at the full year, the impact of Grand Hyatt on the full year would be 0.2%, 0.1%, in term of occupancy. Again, this number will change. If we look at just the last few days, the last weekend, the hotel was full. Yesterday we're at 88% occupancy, so the trend is coming back quite fast. The number that I shared with you are a bit conservative, and we hopefully going to see the month of August closing better in term of volumes. In September also, we're expecting to perform a bit better than what we forecasted at 70%. All in all, we don't see any major impact to our company from the incident. Okay. Total revenue, 14%-15%. Our key focus will continue to be on rate.
As I mentioned earlier, this is the strategy that we would pursue for the foreseeable future. F&B also will be a focus. As you know, that food and beverage, in the last few quarters, we shared with you that the performance hasn't been as we wanted in term of events. Our focus, it will continue to be on the event space to maximize the occupancy for our meeting room and bringing back conferences to, especially to our five-star hotel. Also to share from an F&B performance in term of outlet. We're quite at a good level at the moment. We're seeing a good trend in term of cover count across all the outlets for the Grand Hyatt and the JW. We're putting a lot of focus on the commercial side of it to focus on the domestic market to maximize our F&B business.
Of course, profitability and cost leadership is also an area where we put a lot of time on to enhance our margins. We've shown in the last few quarter that we are able to grow margin, and we will continue to put the efforts in that area. Some of the positives, again, as I mentioned, before China is very strong, and we expect that to continue contributing to the growth for the remaining of the year. India as well is one of the market that we continue to see an increased number of arrivals. The visa policies that the government have issues was quite good for the market and for our industry. We've seen good feedback and also good numbers from some new markets that have now visa free, that increased the total number of arrivals.
That have, facilitating for us to reach the tourist target for the year. Some of the, I would say, the possible risks, again, from an international point of view, there is a lot of crisis from the Middle East, in Russia. All these events that could somehow, at a certain point, affect global travel. But at the moment we don't see any impact. But we are watching carefully to see how that could eventually affect the business if, let's say, the war in the Middle East escalate or in Russia as well escalate, that could have an effect on global travel. But so far we don't see any impact. Slower economic growth. This is an area that, of course, across the globe is a concern. But to travel, we don't see as well any impact.
Lastly, to end this part is, of course, the political uncertainty in Thailand, which is ongoing at the moment, and we hope that will not have any impact as well on our business. But again, for us, we focus on improving the business in the hotel, and so far the trend is very positive. As I mentioned earlier, the guidance here is we're quite confident that we'll be able to achieve by the end of this year. Today we added one section to give you an update on the HOP INN growth plan. In the past, we've shared with you, in previous meetings, we've shared with you some of the strategic direction for HOP INN, and that we are planning to scale the brand in Asia Pacific as the growth engine for The Erawan Group.
HOP INN have achieved great success in all the markets where we operate in part of branding, reputation, quality of product and services. Also in term of financial performance. That gives us confidence that we are on the right direction, the right track to keep growing and building on that, to target our plan by 2030 to achieve 150 hotels across the Asia Pacific region. For Thailand, our plan is to reach 105 hotels. Thailand will remain our main market for HOP INN. We still see a lot of opportunities, even though our portfolio today is quite large. We see a lot more options for us to grow the brand in many of the provinces. Philippines, we had already quite a strong presence, and we are continuing to expand, and we are aiming to achieve 14 hotels in the Philippines.
In Japan, with the acquisition of four properties early this year, we are aiming for 15 hotels on the long term. These countries here that you can see from the map, it is currently on a steady phase and eventually would be able to expand as well to those countries. As we scale HOP INN and the contribution increases to The Erawan Group, I just would like to highlight that the benefits is not only from the revenue growth and diversification, but it brings stability to the overall The Erawan Group portfolio. If you look at the chart here, this is our RevPAR recovery by segment for the company. The dark line here is The Erawan Group overall. The green dotted line is economy to luxury segment.
Then the two blue lines here, the dark one and then the light one is the HOP INN Thailand and then HOP INN Philippine. This is the RevPAR pre-COVID and post-COVID recovery. What I would like to highlight here is that HOP INN being predominantly local driven, domestic market driven, it is much more resilient. If you look at during the pandemic, the drops were less severe. The recovery was much faster. HOP INN is bringing a lot of stability to our business. This gives us also more confidence that growing the budget segment and continue to focus on the domestic markets in the countries where we operate is the right strategy. HOP INN, if you look at Thailand, 90%+ is domestic. Philippines is 60%+ domestic. Japan, we are trending very well now and the domestic market is growing.
Our reliance on international travel is very minimal for HOP INN, in contrary to the economy and luxury segment. What I would like to share today is that HOP INN, as we continue to scale, will bring us more stability, especially in our Q2 and Q3. If we look historically for our company, Q2 and Q3 was a bit of a struggle. We had strong seasonality, because of our hotels are mostly focusing on international travel. As HOP INN is scaling, that seasonality will be reducing, and we will have less volatility in our business. If you look at our occupancy, even last year and this year, Q1, Q2, Q3, it is more stable, right? We are at 80%, 79% occupancy, so we are in a good trend overall.
This is one of the reason where we feel that from a strategic point of view, HOP INN is a good plan to continue expanding for overall portfolio. I would like also to touch on Japan. Japan, as Khun Pi mentioned earlier, has performed very well. The first quarter this year, we were at 48% occupancy. The second quarter, we achieved 73% occupancy. The ramp-up was faster than what we expected, and we are performing overall very well across the four properties. I would say that we were quite successful in entering the new market and positioning ourself with the locals. It was not an easy task because there is a lot of local brands. Coming in as an international brand to Japan was a challenge, but we were able to penetrate the market and position ourselves at the right position.
If we look at the hotels that we opened, we were able to achieve a positive EBIT after two, three months. The ramp-up is very fast. On a net profit, we were profitable in the second quarter. Second quarter, of course, was supported by the Sakura season, so it was a high season for Japan. But it was a very good, strong milestone for us to be able to turn positive impact in the second quarter. If we look at it on a full year, we may still be slightly negative. Will depend how the Q3 and Q4 will trend. But we are getting very closer to the breakeven point. The trend is very positive so far for us, in Japan. In term of our long-term plan and contribution of luxury and economy segment and HOP INN.
You can see the dark blue is the luxury and economy. The light blue is HOP INN. By 2019, HOP INN was contributing 12% to revenue and 15% to EBITDA. Today, we are at 26% revenue and 24% EBITDA. We start to get to a good level of contribution, and we are heading towards our goal to achieve close to 40% EBITDA contribution for our budget brand to total The Erawan Group portfolio. Just also to note that as we are scaling and we are accelerating the development pace of HOP INN, we are also working on new development projects for other segments. As we mentioned in a previous meeting that we are mostly looking at Thailand to develop new hotels in the economy mid-scale segment as well, as we still see opportunities for the Thai market to grow or to grow more inventory for our group.
Just to end, an update on this year's pipeline. We are adding 14 new hotels to the portfolio, all under HOP INN brand. This is across the three countries. We have opened in the second quarter four properties, which are in Thailand, Sriracha and Ratchaburi, and then we opened in the Philippines two properties, which are North EDSA in Manila and Iloilo. Iloilo is a new province that we are entering in the Philippines. In this quarter, we are opening two hotels in Thailand, Nakhon Pathom and Prachuap Khiri Khan and in Davao in the Philippines. On the fourth quarter, we will have two properties in Thailand, which are Songkhla and Phayao. We are on track with our plan and with our timeline for these 14 new properties to our portfolio. That is all for us today.