Morning, everyone. I think we're ready to start. Welcome, everybody, to this an alyst meeting to present our recent developments as well as our first quarter results, which we released last week. We have an honor to have our Group CEO, Dillip Rajakarier, to present for us for today. He will go through presentation slides, which I believe on our website. If you have a hard copy, some of you have hard copy as well. Once we're done with presentation, we're open to address any questions that you may have afterwards. Please welcome Mr. Dillip Rajakarier.
Good morning, everyone. Thank you for joi ning us today. I'm sorry we had to delay a little bit because I understand the traffic coming into Riverside was a bit heavy or on this side of Bangkok. I'm glad you're able to join us, and also, a lot of them are joining us online as well. Thank you for being here. Today I will walk you through our recent business developments, and also our strategic priorities, including our first quarter results, which was announced last week. The key message here is that Minor continues to demonstrate resilience and also the execution capability with a clear strategy in terms of growth, in spite of the backdrop of what's happening today globally, and also the volatile situation we are facing in different regions as well, which we will address in our presentation today.
Despite the ongoing macro volatility and geopolitical uncertainty, because of our diversified platforms across hotels, restaurants, our business model continues to support the resilient performance which you've seen in Q1 this year in our results, which we announced last week. I understand that Q1 wasn't as badly as affected as Q2, but I think I will also walk you through Q2 and Q3 and also quarter 4 expectations for this year as well. We continue to also progress on what we call our asset-light growth, and our digital transformation, in terms of maximizing efficiency, and also use of capital discipline for Minor as a company as well. Looking at some of the recent developments. I will maybe start with some of our recent developments on the asset light for Minor Hotels today here.
For Q1 this year, both Minor Hotels and Minor Food continue to make progress across the key strategic priorities in terms of growth. For hotels, the focus always remains asset-light expansion, brand conversion, or we call conversion of brownfield, which means a straight conversion from existing brands to our brand. Also entry into some of the new markets, which we have done as well. Coming back to Thailand. In this quarter, we opened our NH hotel in Hua Hin. It was a conversion from another brand, and it was a management contract, so it's asset light. This was one of the good examples of bringing some of our international brands, to what we call a high-demand domestic and regional market, with limited capital deployment because this was a asset light or management contract. That was NH making its debut into Thailand.
As you know, we have few NHs in Bangkok, in Phuket and now one in Hua Hin. In Oman, we also opened our Tivoli LA VIE Muscat in Muscat, which was added to the portfolio. The opening actually benefits from the demand of relocations within the region, which shows our ability to capture demand even during periods of market disruption. Oman hasn't been as badly affected as the other Middle East regions. Basically, we opened Oman earlier than expected to capture the demand from the other Middle East markets. I think Oman has done well with regards to conventions, meetings, and also the functions as well. We've also entered into some of the new markets, in Croatia.
Again, it was a rebrand, which is now going to be called the Anantara Adriatic Istria Resort. In Slovenia also, it's a new market, the first time entry as well, which is the Hotel Palace Portorož, which will also join one of our new brands, which is under the Minor Reserve Collection. We continue to rebrand hotels under the iStay brand, which is our select service brand, which again, we launched last year with three hotels in Germany, Spain, and also in Italy as well. Excuse me. These openings actually support free income, brand distribution, and also, as I said, efficient capital expansion as well. These were the new hotels which we opened in the first quarter. Moving on, our asset-light pipeline continues to accelerate. In the first quarter, in spite of what's happening today, we've signed nine new fee-based contracts.
For the first half of the year, we expect to sign more than 30 contracts under the asset-light model. This is on track, and with our target for this year, hopefully, we will exceed over 50 management contracts for this year, which we will sign for the full year. The pipeline is geographically diversified across markets. For example, in Thailand, the Colbert Collection in Samui and Avani Koh Phangan, which again, has been signed. In the U.K., we signed what's called The WestDill Mayfair Hotel in London under the Colbert Collection. It should open next year. It's a hotel which is right opposite The Wolseley in London, in Piccadilly. In Italy, we signed the Tivoli Palazzo Gaddi under the Colbert Collection as well. Turks and Caicos, again, is a new destination where we signed the Anantara Turks and Caicos Resort and Residences as well.
In Egypt, we've signed the Anantara Somabay Resort & Residences in Egypt as well. This shows the strong demand from asset owners with regards to our Minor Hotels brands, the distribution, and also the capabilities of our people as well. Importantly, we remain quite selective. Our focus is to ensure that we sign quality contracts with sust ainable fee income and long-term value creation, rather than going for quantity. So we're more focused on quality, which you will see also in the first quarter as to how our hotels continue to increase their ADR and going more on the quality side on ADR and also not focusing too much on the occupancy because we continue to maintain our rates and keeping that high standard as well. On the Minor Food side, we continue to build momentum across the different brands and also the different geographies as well.
We launched some new concepts under Minor Food. The Stone is our new Japanese dining concept, which specializes in udon. Hot Stone reflects our ability to create fresh dining formats that respond to evolving customer preferences today. Swensen's created what is called The Creation. It is another example of an innovative concept with a core brand introducing more customers with crafted ice cream experiences. The second development is across brand expansion. In Indonesia, we introduced Sanook Kitchen, which is our Thai concept in Indonesia and The Pizza Company to the country. In India, we are also looking at Sanook Kitchen is gaining traction, so we are opening Sanook Kitchens in India. In Laos, Sizzler was introduced as the first entry in Laos. The franchise momentum also continues in Thailand and also the international markets.
In Thailand, we continue to roll out Dairy Queen, GAGA as franchise outlets, and initiated first franchise expansion of The Steak & More, which is a brand which we created last year as well. Internationally, we continue to roll out in Vietnam, Indonesia, and Japan across our different food brands also. The product innovation on the food side remains a key driver with strong launches from Dairy Queen, Swensen's, and Bonchon. For example, the Swensen's mango products featuring San Pa Tong sticky rice delivered with a 40% uplift in product sales, demonstrating the success of product innovation while embedding the sustainability throughout support for local sticky rice suppliers. We also increased our stake in GAGA Beverages (Thailand) Company Limited from 70%- 100%.
We own now 100% of GAGA, which will strengthen our position in the high-growth beverage segment. This provides us with a higher profit contribution and enhances our ability to scale our brand as well. Moving on to some of the strategic highlights. Here, our brand aspirations and also 2026, and beyond. Overall, the performance for the year 2026 is still expected to remain above last year, which is supported by relatively resilient operating performance despite ongoing geopolitical uncertainty related to Iran and the Middle East situation. Meanwhile, our medium-term aspirations actually remain unchanged. By 2028, we aim to reach 850 hotels and 4,150 restaurants. This will include the signed contracts as well. This expansion will be delivered by a combination of asset-light growth, selective new markets entry, and deeper penetrations in high-growth regions.
Financially, we are targeting high single-digit revenue growth and a 15%-20% annual profit growth and a ROIC of 12% on a three-year CAGR basis. At the same time, we remain focused on balance sheet strength, including the successful execution of value-unlocking initiatives. We target to get our net debt to equity to the range of 0.75- 0.85 with some of the initiatives which we are launching. And the net debt to EBITDA below four times in the coming years. That is pretty much our growth aspirations and also growth beyond this year. The next slide is to show the resilience across the different cycles. Minor International resilience is supported by five structural strengths.
The first one is all about diversification across the businesses, the hotels and the restaurants, the business models, which is asset-light, and the geographies, which is now 71 countries, and the feeder markets and supply sources as well. The second one is to support the asset-light growth with more than 90% of our hotel pipeline and more than 65% of our restaurant pipeline will be asset-light in the coming years. The third one is, as always, our strong proven track record from navigating past disruptions, including COVID, including inflation in European countries, including the European energy crisis, and also the geopolitical events as well, which we have demonstrated in the past years and in every single quarter as well. The fourth one is the agility in demand relocation, pricing, and optimization.
As we continue to be agile with our systems and processes, we are able to maximize the demand in the different geographies as well. The fifth one is strong brands and loyalty platform that support the owners and their interests, which creates demand for our pipeline in the future. Actually these strengths makes Minor resilient, not only in the current environment, but also across the different business cycles as well. The next one is, we manage volatility with three pillar framework. The framework is simple, but also it's agile and it's executional as well. The first one is to protect the revenue, also capturing the demand and reallocation. We're using pricing discipline without discounting. We drive domestic markets wherever possible when the international markets are soft due to prices in airfares and some of the restrictions we have.
We are also reallocating market spend towards alternative feeder markets, where demand remains healthy. For example, the crisis in the Middle East is pushing other segments coming into Thailand and coming into other regional markets as well. The air restrictions and also the airfares are pushing high demand within Europe, as we have seen. We prioritize rebooking and postponement over cancellation. Any of the cancellations, we've managed to rebook them into Q3 and Q4. Therefore, that avoids any cancellations or loss of business in the coming months. On the second resilience, we manage our costs across raw materials, energy, wages, and leases. This includes procurement savings, menu engineering, staff optimization, technology adoption. For energy cost management, particularly in Europe, we already have hedged almost 100% of our energy costs in 2026.
On the procurement side for food as well, we have hedged our food supplies for the next six months in spite of some of the increases we're seeing. But of course, on the food side, the paper products have increased, and that's a slight cost increase we are facing in terms of paper and packaging. But the other raw materials, we've managed to keep it under control because of the long-term contracts we have. We monitor the performance real-time. We also track the daily performance and run scenario planning in terms of adjusting and taking actions quickly, as we have done in Q1. The next one is just to talk a little bit about the transformation and digital initiatives which we have. Transformation remains a major value driver for MINT.
This was started even before COVID, and during COVID, we accelerated it, and we were one of the first companies to come out of COVID very strong, both on the food and the hotel side, mainly because of the transformation initiatives which were implemented prior to COVID. At the corporate level, process standardization of AI-enabled cloud platform and Oracle Fusion optimization are expected to deliver efficiency gain, and procurement is being reali zed as well. The savings on the procurement side being realized also. For Minor Hotels, we are building what we call the unified guest data platform to support personalization and direct engagement, as well as improve our conversion and loyalty across brands and channels. As we know, we introduced Minor Hotels as a platform last year, as a unified platform last year.
We brought all our hotel brands under one unified brand, which is called Minor Hotels, and that was launched last year. We are able to drive demand through one unified platform with different brands and our loyalty program also being unified as well. For Minor Food, the focus is on an end-to-end digital monetization, leveraging customer data, and expanding own channels, such as with the QR ordering and the self-pickup. Investments in digital and infrastructure and order management system will support scalability and also operational efficiency as well. These initiatives are not only about cost savings, but it is also about building a scalable, data-driven, and customer-centric platform for the future. The next one is to talk about the profitability expansion, the roadmap. We remain focused on driving sustainable growth and EBITDA and net profit across the group.
The magnitude of improvement in pre- TFRS EBITDA margin will be more pronounced than post-TFRS, as per TFRS matrices, which also reflects the benefits from lease optimization and initiatives, which maybe we will explain a little bit later. Because most of our leases, we managed to move them from fixed to variable leases. When you move them from fixed to variable, it goes above EBITDA, and it is embedded into the EBITDA margin. Whereas before, when it was a fixed lease, it is below EBITDA. Therefore, when you look at it on a pre-TFRS basis, I think you can compare apples with apples. We expect the margin expansion to accelerate towards the latter part of the third-year plan or the three-year plan and scale benefits from asset-light expansion and will become much more visible.
In addition, a lower cost debt and continued de-leveraging will further support the growth in our core net profit and enhancing the overall earnings quality for MINT. The next slide is to talk a little bit about Minor Hotels' expansion pipeline. As you can see here, we have the 636 hotels, which are 66% is asset-heavy today, and 34% is asset-light. This year, we expect to sign at least 50 management contracts, but I think it is going to be more because we have already signed 30 in the first half of the year. Next year, based on the pipeline, we expect to sign about 80, and the year after, we expect to sign about 110, which will take us to the 850-hotel mark. The mix of that will be 49% asset heavy, so going down from 66%- 49%. Really pushing the asset-light strategy.
34% from this year to 51%. More than half of our portfolio by 2028 will be under asset light, which will be the 850 hotels. As you can see on the right-hand side, you can look at the hotel openings in terms of brand conversions, greenfield and brownfield, how it will contribute, and some of the key focus markets. The current markets where we will grow much stronger will continue to be Southeast Asia, Sub-Saharan Africa, Middle East, India, Vietnam, U.S., China, Europe, and the U.K. Some of the new markets or new entries will be North Africa, as we have entered Egypt, and we will be announcing something for Morocco as well, South Korea, Japan, Turkey, the Caribbean, and also the CIS countries as well.
What I would like to emphasize here is that our strategy in terms of the growth of quality will remain persistent and on track by year three. The Middle East conflict has not affected our contract management signing with asset owners in the region as medium to long-term opportunities, they remain quite compelling. We have signed nine contracts this year in the first quarter, and we hope to get to 30 by the first half of the year. Then we hope to get to at least 50 by the year-end in terms of signing new management contracts. Some of them have been conversions as well, which we saw before. There will be some delays in terms of some of the hotels opening or the pipeline because of the current crisis.
I think the opening of some of our hotels, even in the Middle East, was brought forward. For example, as I said about Tivoli LA VIE Muscat Hotel & Residences, we opened it in advance. What we have done is, in order to reduce our costs, we have also moved our team members across from the Middle East into Muscat for the opening, and we are moving them into the other regions. So we will not have too much of a cost impact within the business model as well. Some of the new additions is here for 2026. You can see the NH Collection in Italy, which is leased. The Tivoli Palazzo Gaddi in Italy again, which will be managed. The Avani+ in Vientiane in Laos will be under a management contract. The Kota Kinabalu Avani, again, will be a managed contract.
In the Americas, we have signed also NH Residences in Guadalajara, in Mexico, which will be managed. The Wolseley in New York will be launched early next year. It is a conversion from an existing brand, and it will be under a management contract. So our first The Wolseley Hotel launch, and that will be in New York, and it is in Midtown. The location is great. It will be a good business hotel, and it will be great for The Wolseley brand as well. We will be opening in Oceania.
We will be opening the NH Collection in Sydney, Wentworth, which will be this year, again, under a management contract. The last one is the Avani Mooloolaba Beach Hotel, which is in the Sunshine Coast in Queensland, Australia, opened last week. This is a franchise. So we are moving quite well on the franchise side as well. In Australia, we have got about seven franchises.
This will be a fully serviced Avani hotel in Mooloolaba under a franchise contract, and it is open already. We strengthen our presence in Europe, as you can see, in the Indian Ocean, with adding properties in Malaysia, Laos, and also Australia, and also in the Americas, and expanding now into Mexico and entering the U.S. as well. I think this slide is something which we thought would be useful to really understand where our earnings are coming from and how our growth is happening as well. We look at the four segments, Europe and Americas, Asia, Middle East, and Oceania, which is Australia and New Zealand. While the geopolitical tensions in the Middle East have created a near-term uncertainty, the overall impact on the group remains quite resilient, as you can see here.
Europe and the Americas represent the majority of our hotel earnings and continue to benefit from resilient leisure and business intra-regional demand. The group is also capturing positive tailwinds from demand allocation and we have some solid forward bookings to support the room revenues growth through 2026. When we look at Europe, 74% of our earnings actually come from Europe. When you look at it by quarter, Q1 we are up, Q2 we are up, and the first half of the year we are up. The demand for the rest of the year, which is Q3 and Q4, which is our high season, because as you know Europe Q1 is low season, and in spite of low season, we did quite well. Q3 and Q4 is our key seasons, which is our high season.
When we look at the demand for the high season in Europe, it is higher than last year, same time last year, and our rates are also higher than last year. As you have seen in Q1, the results of Europe, our ADR was one of the highest compared to our concept within Europe as well. Europe, 74% of our earnings come from Europe on the hotel side, and that is quite resilient and it is quite strong. The next is Asia. Asia, like Thailand and the Maldives, although the short-term softness may occur in certain periods, particularly in Q2, the demand is expected to recover on the second half of the year with positive RevPAR growth on bookings. Here, we have actually shifted our sales strategies into short-haul feeder markets like China, India, Hong Kong, Singapore, Japan, Korea, Russia, Israel.
Do not forget, Asia is the opposite of Europe. Q1, Asia is strong, and Q4, Asia is strong as well. Those are our high quarters for Asia. Whereas Europe, Q1 is soft, Q2 is better, Q3 and Q4 is the peak quarters. The cycle is quite consistent, and it helps to level our earnings over the year. We then move to Middle East. 5% of our earnings come from Middle East. Sorry, on Asia, like you can see, Q1, our performance earnings was high. Q2 is slightly soft because, again, we are going into what we call low season. The second half of the year, in Asia, again, what we have on our books on the regional travel looks higher than last year, and our rates also look better than last year as well. Moving to Middle East.
Middle East is 5% of our earnings contribution. It is very low for us. Our exposure in the Middle East is quite low. It is only 5%, and they are all management contracts, so we do not have any exposure from an equity perspective. While the geopolitical volatility may affect the hotel performance, our exposure is limited, mainly because it is all asset-light. Nevertheless, the region still remains quite intact. Middle East, it is 5%, but when I look at the on-the-books revenue compared to last year, Q1 was down, Q2 was down, and the first half will be down, but it only accounts for 5%. Q3 and Q4 so far, it is holding on. Again, it depends on the situation. The last one is Oceania. Oceania actually is supported by domestic demand for both Australia and New Zealand.
As we all know, Australia and New Zealand is predominantly driven by domestic market, which is about 90%+ of the business comes from domestic market. The long-haul international travel does not have much impact for us in Australia and New Zealand. Oceania only accounts for 3% of our earnings in total. Overall, the diversified portfolio, the footprint allows us to manage these different pockets of volatility while we continue to capture the demand. The next one is, just want to show on the, what we call high-value fee-based residences. As we all know, most of the hotel owners are moving into a residential or a mixed-use concept because that is where they also will gain a lot of the value in terms of branded residences. Branded residences has always been one of our key pillars.
On the left-hand side, you see what we have done with regards to our residential projects. We have a very strong track record. Our pipeline of branded residences has an IRR of up to about 30%. The IRR is quite high. The demand for branded residences continue to grow, especially also in Thailand as well. On the right-hand side, you see the branded residences, where we have signed under asset light, but putting our brand and getting fees for the brand as well. Here, the estimate from 2026- 2032, we have the existing ones has about $53 million of residential fees, which we will earn. On the new ones, which is on the bottom, like Anantara Turks and Caicos, Somabay, Pemba Island in Tanzania, and also the Perth, the hotel, the Anantara, which we signed.
That will give us a further $12 million in fee income. Just the branded residential component, based on what we have today in our pipeline and what we have signed today, will give us about $65 million between now and 2032 in terms of residential fees. This is coming from asset-light. In addition to, on the left-hand side, the branded residences we are doing, which will give us about a 30% IRR as well. On the food side, we continue to expand on the asset light. Again, our strategy remains quite consistent. By 2028, the franchise outlet will account for a larger share of the network supporting margin stability and also strong cash generation as well, which is, again, focusing more on the asset light as well.
Geographically, we are prioritized on high growth markets such as Indonesia, alongside continued expansion in Thailand and broader Southeast Asia as well. Here you will see how our business model moving more towards asset light and where we will have 49% owned, sorry, franchise, moving to 56%. The owned hotels, sorry, the owned restaurants will reduce from 51%- 44% by 2028, with the outlets growing from 2,746 to about 4,150 restaurant outlets, mainly driven by franchise. The next slide is to look at Minor Food, the dual growth engine strategy. Minor Food is built around two growth engines. The first one is to strengthen the core brand equity through food innovation across all the key markets. In Thailand, we are evolving new store concepts and menus.
We continue to enhance the creativity through new product development and to create new consumption occasions and broaden the customer segments. We also accelerate the rollout of Sizzler Special and the Dairy Queen modular format. We have now moved into modular formats as well, which is much more cost-effective from a CapEx as well. Singapore serves as Minor Food's innovation hub, leveraging its scale, its profitability, and also its operating discipline, being one of the largest in the region, and also cost-intensive market as well. With 24 brands in the market, including Sanook Kitchen and Poulet, Singapore provides a strong platform to test and refine concepts before we roll them out into the other countries.
In China, we are continuing to reposition our riverside restaurant concepts through revamping our menus and also store redesign, transforming it into a grill fish concept more than a versatile dining platform as well. In Australia, we continue to introduce new menus, refresh our stores designs to keep the brands relevant, especially The Coffee Club. In Indonesia, we are launching our new menu items across our brands such as Dairy Queen's Royal Dessert, and also the Thai tea dessert, as well as GAGA Thai tea, the Thai milk tea rock salt mousse as well. The second engine is creating and scaling our new brands. We build the new brands such as The Steak & More, Kob Kob, The Stone, and Swensen's The Creation. At the same time, we are also expanding our footprint through both domestic and international rollouts.
Domestically, we continue to scale our brands such as Dairy Queen, The Steak & More, GAGA, Burger King, The Pizza Company, and Swensen's. Internationally, we are expanding our markets such as Indonesia, Vietnam, Laos, and also India. Moving to Q1, the first quarter financial highlights. First quarter, Minor delivered a core revenue of THB 38.5 billion, which represents a 5% growth year-on-year and driven both by the hotel and restaurant performance. Looking at our core profit, we achieved THB 145 million, which is the strongest growth of 189% year-on-year from the ability to capture the demand, benefit from low interest rates, low interest expenses, and following a reduced cost of funds and tax-efficient management. As a result, our core net profit margin improved 30 basis points year-on-year. Minor Hotels contributed 79% of the revenue, and Minor Food contributed 21% of the revenue for Q1.
Minor Hotels Q1 performance. In the first quarter 2026, RevPAR delivered a robust year-on-year growth, reflecting improved underlying operations across all key markets. RevPAR was mainly driven by ADR growth. For owned and leased portfolio in Europe and the Americas, RevPAR increased 7% year-on-year in Euro terms, as I said, led by ADR growth. Italy was the standout performer, benefiting from the Winter Olympics related to demand in Milan, while Spain and Central Europe also recorded solid growth. Our RevPAR outperformed our global peer group, supported by the pricing discipline which we've had in Europe. In Thailand, RevPAR actually surged 15% year-on-year, driven by room rate uplifting following the completion of some of the renovations in our flagship properties which we had last year, and strong performance in resort destination.
I think, as you all know, we did about 12 of our hotels, owned hotels, a major renovation last year. One is still not finished, or it's continuing because we're doing the other half, hence the reason we are all here today, because Anantara Siam is undergoing a major renovation. The rooms and the lobby will open today. The ballroom and the convention center, we should be opening by August this year, which will really uplift the brand. If you get a chance to have a look, we're also launching by June. By end of this month, we're also bringing La Petite Maison, which everyone knows as a brand. It's amazing F&B brand. It's a bit like Zuma, globally, how it's recognized. We are bringing La Petite Maison for two months. Only for two months, in June and July at the Anantara Siam.
I really hope you guys will be able to experience the brand. If everything goes well, we could also look at putting it up as a permanent feature in the future, like what we've done with Zuma. Zuma at The St. Regis and also Zuma at Layan, Anantara Layan in Phuket, which is doing extremely well. Again, bringing some of the international cuisines and international brands will help us to elevate our brand. The Anantara Siam, for many of you who don't know, it's going to be the only hotel in Bangkok which will have pool access villas. When we did the renovation, we also converted some of the existing rooms into six pool access villas. In Bangkok, I think it's the only hotel which will have pool access villas.
I was told that we're already starting to sell those rooms at THB 40,000 a night. When these rooms in the past, when it was just a room, was getting only about THB 7,000. You can see the renovation and the pool and the new concept, how it's increased. We will see the benefit of Anantara Siam towards the end of the year, and very strong next year. In Australia, in Maldives, our portfolio maintained a strong growth trajectory. The RevPAR in U.S. dollars surged by 9%, in spite of March also being a soft month, because in March is when the problems started. Our RevPAR, we're still maintaining strong RevPAR in the Maldives.
In Australia, the performance improved as higher average room rates were supported by strong demand in Sydney, CBD hotels, and New Zealand benefited from the musical events and business travel, including the film production and cruise, which we are hosting as well. Financially, our core revenues increased 6% year-on-year, supported by both hotel operations and mixed-use contributions. Overall profitability improved, with seasonal losses narrowing to THB 500 million in the first quarter of 2026 from THB 595 million last year. We continue to reduce our losses in Europe. Earnings performance would have been stronger, excluding the impact of Anantara Siam Bangkok renovation and also the foreign exchange movements as well.
The Siam has been slightly delayed, which has affected our earnings a little bit for this year in the first two or three quarters, but we hope that by Q4 it will come back quite strong when the hotel is fully launched. This gives you, by region, so you can see. Minor Food Q1 performance. Minor Food delivered a 2% year-on-year growth of revenue on the first quarter. The growth was mainly attributable to the expanded contract roasting operations and higher coffee sales volume to the local specialty coffee under the Nomad operations in Australia and continued network expansion and the introduction of new brands in the Singapore hub. Moving to operation matrices in Thailand, total system sales grew by 2.7% year-on-year the first quarter, predominantly driven by network expansion, while same-store sales stabilized in March, returning to positive growth.
Excluding the limit impact from geopolitical developments in the Middle East and Thailand, and the Thailand-Cambodia border situation affecting our franchise store, the same store would have been recorded with a growth. The sales of several brands including Bonchon, GAGA, Dairy Queen, Swensen's, and Burger King, delivered encouraging positive momentum, supported by a successful product launch and initiatives to drive traffic, which helped to offset the softer performance in our other brands. Australia saw some pressure, but total system sales have grown year-on-year, including the Nomad Coffee roasting business, supported by higher contract roasting and specialty coffee. Singapore total system sales grew by 5.7% from expansion and new concepts. China performed strongly, supported by market initiatives and seasonal launches.
China, as you can see, same-store system sales growth, for the first time we had 8.6% positive and total system sales was +9.9% because China did suffer in the last year. On the bottom line, our core net profit remained stable year-on-year, despite softer consumer spending and a highly competitive operation environment across several markets. Excluding the limited impact from Thailand-Cambodia border, the situation, the delayed store openings in the Maldives at the new airport, the Minor Food core profit would have increased year-on-year. The next one is to touch base a little bit on what we call our disciplined CapEx allocated to drive growth. In 2026, we expect the total CapEx to be about THB 15 billion-THB 16 billion.
Our capital deployment focuses on value creation and the criteria includes ROI-driven margin, enhancing asset maintenance upgrades, and capital-efficient branded residences, where we capture both development returns and fee upside. Highly selective expansion on high-growth markets and organization-wide efficiency and transformation initiatives. On the CapEx side, as I explained before, last year, we had 12 of our major hotels under renovation. This year we see the uplift and the ADR growth, including partially Anantara Siam. The rates have already gone up. We see the benefit of the CapExes as well, and the CapEx supporting our residential growth, which will materialize as soon as some of the residences complete and when we transfer these residences to the owners. For example, the Anantara Kiara residences, we should be transferring by Q3.
We will see an uplift in terms of those capital, the CapEx returns coming back into the business from a cash side as well. 65% of our CapEx goes into hotel maintenance and upgrades, but they are all ROI-driven and 10% on digital and transformation, which we are spending. Branded residences, about 10% goes into that. Then restaurant, we have about 10% and 4% on hotel expansion. The next slide is on the balance sheet management. On the balance sheet management, it remains our key priority as we continue to focus on both our earnings and also our balance sheet as well. Our net interest-bearing debt to equity is 2.88 and the net debt to EBITDA at 4.69 at the first half of 2026.
Slightly higher from 2025, and this was mainly due to the increase in borrowing from financial institutions, partly to support the working capital need for the low season for Europe, and also some of the transition adjustments recorded on borrowings. At the end of the second quarter this year, the leverage ratio will increase temporarily because of our redemption of our US dollar, the perps of $300 million, the perpetual bonds. However, it is expected to decline towards the end of year, supported by the proceedings from the IPO of the hotel group. Some of the assets of the REIT. The REIT IPO. Note that the first quarter of 2026, the MINT average cost of debt declined to 4%, down from 4.6% the same time last year. MINT continues to exercise disciplined capital management through strategic debt optimization and competitive refinancing and proactive interest rate hedging as well.
These are some of the key highlights. Our target is to also reduce the net debt to equity, net debt to EBITDA, to about 4x in the coming years. Also the net debt to EBITDA as well. That comes to the end of my presentation. To summarize, our asset-light pipeline continues to accelerate in both hotels and restaurants, as you have seen. We continue to invest in transformation, both on our digital capabilities and improve our efficiency, including scaling and on the returns as well. At the same time, we also remain focused on capital discipline and balance sheet management, and de-leveraging as well. We believe that MINT is well-positioned to deliver a sustainable growth through these cycles.
I am sure most of you will also want to know how we will end the year, based on what we have today on our books. When we see our bookings at the same time last year, higher this year compared to same time last year, mainly coming from ADR. Our Q3, Q4 looks fairly strong. We believe that we will be able to deliver net income higher than last year in spite of the current economic, geopolitical, and war, and the disruptions which we are facing in some of the regions. I would like to end my presentation, and I would like to thank you all for being here. Happy to open up for Q&As at this moment.
Hi. I am Gail from Bualuang Securities. May I ask on the outlook for the second quarter that you mentioned that Thailand would be softening from the geopolitical impact. Would you be confident on the second half that it would improve on year-on-year basis that you guided in the presentation? Can you give us more color on that? Also on the tailwind from the Europe asset as well. I thought that you have not seen any negative impact so far. Can you also give us more color on this?
Okay, sure. I think, the reason we are quite bullish about the outlook for Q2. When we look at Q1, Europe was up mainly driven by ADR. What we see today is, because of the flight restrictions, because of the cost of the flights have moved up quite significantly. A lot of the people within Europe are traveling in Europe, are traveling within Europe. They are not going to the Middle East because of the current situation, and they are not going long haul. Our European travel, the demand is quite strong, especially in the high season coming into Q3 and Q4. As I said, Q1 is a soft quarter for Europe. In spite of the soft quarter, our rates were high, and we managed to reduce our losses in Europe quite significantly. That is for Europe.
Now, for the second half outlook, if I look at Asia, again, yes, we will have travel reduced from Europe. But where we are seeing an increase in demand is the regional travel. The regional travel into Asia is also quite strong, especially as far as Russia and Israel. Because again, the Russians and the Israelis are not going much into the Middle East, because of the current situation. We see a lot of demand coming into Thailand because Thailand is safe. We see the demand coming into Thailand from Chinese, from Indian market, from Japan, Singapore, Hong Kong, and as I said before, also from Russia, Korea, Taiwan, and Israel as well, in spite of the long-haul market not coming into Thailand. Q2, because Thailand Q4, the outlook, what we have on our books is stronger than last year.
The tailwind of Europe, we are actually seeing a headwind coming into Europe because of the current situation. People are traveling within Europe and the demand in Europe is quite strong. The thing which we are trying to control in Europe is the costs. That is a little bit of our concern, and those are the measures we are taking to control the costs in Europe, which is what we are doing. Overall, when I look at Q3 and Q4. Let us say, for example, today, if I look at Q3 and Q4, Australia is about 18% higher than what we had on our books the same time last year. Again, Australia is a very domestic market, but our demand is quite strong. Europe is about 5% up on last year. As we know, Europe is all last-minute, and we believe that the demand will come.
The indications are quite strong because we are still 5% up on bookings of last year. Asia, here we are also up for Q3 and Q4 based on what we have on our books today. At the moment, and that is the reason we are quite confident that the full year will be better than last year in spite of what is happening today. I hope that helps.
Yeah. I also have following questions on this. With the short-term demand from the short haul, is that go through your residences or AVC business as well, or you see only in the hotel side?
Both. We see both on the hotel side as well. Because, yes, the short-haul business, the length of stay is much shorter than the long-haul business length of stay. But our length of stay, the turn over is much faster. So we see the demand coming through the short-haul markets. Even though they are short length, the average length of stay is shorter, the demand is there. AVC, yes, AVC is up on last year, and it is a different business model because you already have the members. They paid for their membership, and they are using the AVC, the inventory as well. Of course, on the residences, the market is also quite strong because some of the high-net-worth guests are coming into Thailand, which is quite nice.
I am sure people have heard that the Thailand residential market is starting to become quite strong because a lot of people are moving to Thailand.
Have you seen any particular growth into Phuket province especially or only in Bangkok? When you talk about the residences growth, you see that in your property in Phuket or you are talking about the property in elsewhere?
No, it is Phuket. Yeah, it is Phuket.
Okay.
Samui, Bangkok, we have residences as well. Phuket is quite strong, of course, because of the ALIF. Samui, we do have some residences. We have some residences in Malaysia. We have some residences in Bali. So those markets are also quite strong.
Okay. Another question is on the hotel after renovations. Of course, the ADR lifts up a lot, double digit after the renovation we have seen in the last quarter. Is that because you can get a new customer? Or is it uplifted of the normal base of customer they already have, but they willing to pay more? Have you seen any opportunity to engage more customer base from the renovation?
It's a combination of both existing customers now paying a higher rate. But more, actually, you're right. More coming from a new market segment. Say, for example, we use the same market segments. But say if you take India as a market segment, there are the guests who are willing to pay the THB 6,000, THB 7,000, THB 5,000, THB 6,000 in the old days. But we're now targeting guests who will be paying THB +9,000 in the future. So it's targeting the new customer segments who would pay a higher rate.
But the portion is still small. Can you give us more portion of the new customer base after the renovation that you can get, or it's hard to say that? The quantify to the numbers of the new base that you found.
I think if I look at Anantara Siam Bangkok Hotel, even though the hotel is not fully launched yet because we are still under renovation our rates it's gone up about 16%-17%. In the Maldives, it's gone up. In Chiang Mai, Chiang Rai, it's gone up. In Hua Hin, it's gone up because, again, Hua Hin was another major renovation we did. Samui has gone up, as you know. So the rate increases, each hotel it's gone up at a different percentage.
Okay. Last question is on REIT. Can you update us on the progress of the REIT setup that you plan for second half of this year? Is that delayed from your original plan?
No. At the moment, we are on track. The target is to launch by second half. We are still on track.
It could be in early fourth quarter this year? Or when you say second half, can you be more specific on the target?
Early fourth quarter.
Early fourth quarter.
Yeah. Because we are going through the usual regulatory compliance and filings and everything. The filings are done. We are just going through the usual process, and we hope to get this launched by Q4.
The size, the details of that is still on track that you announced earlier?
Yes.
Okay.
Yes.
Thank you.
The same assets. The asset base, the number of assets is also the same.
It is just the progress of that took take times from the beginning of this year through the third quarter, basically it is only market performance that it could—
Our target was always to launch the REIT at the end of the third quarter.
Okay.
We will launch it by early Q4.
Thank you.
Hi. Thank you, Dillip. I have a couple of questions. First, if I may start off with observation. We talk about outlook being relatively resilient from top line. We talk a lot about top line and ADR-driven. But what about from the cost side, right? You said you were worried about cost in Europe as well, and you have highlighted that you are looking at cost discipline and all these things. But what would the margin look like in the second half of profitability from your perspective?
If we have a look at Q1, your top line actually did well. ADR did well. That part did well, but the margin did not really expand. Then I understand it is about the leases and stuff like that you have mentioned, but what is the direction for the rest of the year, especially with the Middle East conflict? We can start with that first. Thank you.
I think, and you are right, Q1, our top line increased by 6%+. EBITDA but the reason was there are a few. One was the lease, as you rightly pointed out, the variable lease, which gets reclassed above EBITDA. The other one was CPI increases on the leases. So we had some leases have a CPI increase, so that also has an impact. The energy has an impact. Then the other one was the payroll, also has an impact as well. But the bigger one was, the majority was some of the assets, like some of our key assets are not being able to launch fully. Say, for example, Anantara Siam is one of our major assets. So Q1, Q2, we are still under renovation. Even though it is open, half the hotel is open, we are still affected. We are not getting the full impact, the full potential.
We strongly believe that by Q4, our margins should start to improve because all the hotels will be back into operation, and we will be able to get a much higher rate. More importantly, a much higher occupancy as well. Because today, if I look at Anantara Siam, we have about 100 rooms, and we are running at about 30% or 40% occupancy, so that really affects us. But the cost base is still there because we are managing our costs, to ensure that we do not lose our key team members. If I look at full year, I think full year, as I said, our net income should continue to grow, mainly coming also from asset light as well, and asset light starting to kick in. As you have seen, we are more focused on the asset light side, and hopefully, that will start to kick in.
Plus, we will also see on the residential side, the handover of the units in Phuket, the completion coming in Q3 will help as well. That will again help us with the margin on the residential side as well. I think overall, yes, like every other hotel group has challenges with the margins, but I think we are controlling it in a more effective way by looking more into digital transformation, looking at restructuring our business, and also looking at further strengthening using tech as well.
Then a follow-up to that. You touched on the signing or the asset light expansion, right? You talked about the target this year being 50, already 30 in the first quarter, so it looks strong. But when are these expected to translate into operations or come into effect? Over the next couple of years, you have 200, I think, 250 hotels, right, looking to be add. When will it be operational from expected signing?
Okay. This year we had some asset conversions. Like say for example, out of the nine we had, Huahin was a conversion, Slovenia, Croatia is conversions. We have quite a few conversions. Then we have some new ones. This one here, these are the openings this year. They are all open. Last year, we opened about 28 hotels. This year, the plan is to open close to about 50 hotels, and then it starts to ramp up in the following years because some of the hotels which are under development will also start to materialize and open next year as well. We see a mixture, and I think to your point, our target is to get to about 850 hotels in the next three years, which will be open and signed contracts. But I think most of it will be open by then.
The last question from me is about coming slightly back to cost again. When we look at your CapEx plan, you are spending THB 15 billion this year. If we look around the world now, we start to see because of the cost push, inflation rates are beginning to look to come up down the road. The question is, do these CapEx, THB 15 billion, THB 14 billion over the next couple of years need to be spent right away? Would it be better for the company in terms of cost savings to repaying down your debt and deleveraging, which has been your key strategy as well? I wanted to get a sense of these CapEx as well. Thank you.
Sure. I think 65%, like you see here, 65% of our CapEx is maintenance and upgrades, which is a normal course of the business, which we have to do. These actually, some of them have ROI, some of them don't. Like, say, replacing your plant and equipment, replacing the lifts, replacing some of the M&E items. We have to do it. But it does produce efficiency in terms of some cost savings, like chillers and AC units and all those, and solar, which we're also installing as well. Some of them are also spent on upgrades. The upgrades actually has a good ROI for us because every single CapEx we spend is approved based on ROI. So we evaluate, do we spend that money or do we pay down debt?
Most of the time, the reason we spend it is because it's also sustainable and the rate keeps growing for us to keep moving assets and to maintain these assets so that people will continue to use our brand. As I said, we focus a lot on quality. So we need to maintain that quality of assets so that we can charge those rates, and we can get a better customer segment as well. Now, if we don't, the downside is that the asset starts to deteriorate, and your guests will start to complain, and they will not pay that rate, which means we have to start dropping the rate. You start dropping the rate, your cost base is still there, and therefore your margins will start to erode if you move the other way.
I think it's a balance of the two to see, okay, do we pay down debt or do we invest and get a higher ROI? So if the answer is to get a higher ROI, then those CapExes are approved. Every single CapEx is evaluated, and we have a CapEx committee actually who really go through this. But not only go through it and do it, but also to monitor it whether we get those returns in the following years as well. It's a bit like what's happened last year. The 12 assets we have, we monitor it based on the returns as well. The other one is branded residences. Branded residences has a 30% ROI, IRR. So when we have a 30% IRR on branded residences, we have the land.
All we are doing is sweating the land and making sure that we turn that land and make it into residences, and we make a 30% return. At the same time, some of those owners also put their residences back into the rental pool. We get those assets free back into the rental pool, where we have to only share maybe 40% of the revenue with the owners, and the 60% is kept by us. And the 60%, okay, there is some costs and all those things, but you are getting that asset for free. That is why we focus a lot on branded residences as well. But the other thing is when you look at it on the right-hand side, the good thing is all these asset-light models we are signing has a residential component.
Because those owners also realize that just doing the hotel might not give them the best yield. But if you do a hotel with a branded residence, with a good brand, then they will be able to also earn the same as what we are doing, a 30% IRR. But we have no exposure. All we are doing is we are getting branded residence fee. Our residential fee income by 2032, because these assets have two years, three years construction period, it amounts to about $65 million. That is just fee coming straight to our bottom line. That will, again, in the future years, will also help us to enhance the net profit. In the future years, the net profit enhancements is asset-light. Maybe it is signing more HMAs and franchising contract like some of the other big brands.
We have a— We have quite a big base, as I said before, in terms of the assets we own. About 60%, 65% is owned. We just need to reduce and we need to increase our asset-light base. Hence, the reason we are also looking at the REIT. The REIT is the first step, where we are putting 12 of our assets and again, reducing our debt. That will help us in the future. And once we launch the REIT, we can always start to inject more and more assets in the future once it starts to work. That is pretty much the strategy long-term, the near term, and the long term.
Near term and the long term is, number one, is to ensure our earnings continue to grow, because you do not want to, let us say, by putting these 12 or 14 Tivoli hotels into a REIT, and we own 49%, the REIT IPO owns 51%, our share of earnings will drop. But our balance sheet will strengthen. You just have to balance the two to ensure that at the end of the day, for our shareholders, to make sure that the EPS, earnings per share, continues to go up, and we continue to de-leverage as well. It is a balancing act you have to do carefully so that we do not take a shock in earnings drop. At the same time, yes, the balance sheet is strengthening. We just have to balance the two.
Hi, Dillip. Just a couple of questions. First of all, can I confirm with you again? I think you have mentioned about locked the contract on the food supply for this year. Is it only for Thailand or is it across all of the regions?
Our food business, 75% is Thailand. Thailand is locked. The other regions, we are managing.
Okay. I'd like to mention on the cost side. Regarding the cost pressure, do you see other notable cost pressure other than the packaging? Is there a concern on energy cost in Thailand?
No. So far, no. We also have other initiatives in terms of reducing energy as well. One of our KPIs is also preserving energy or reduction in energy savings, or achieving higher energy savings. Water usage, and also wastage as well as some of the sustainability initiatives which we have. Yes, whilst the energy costs might increase, we have taken measures to see how we can reduce them as well, the usage.
Okay. Just to mention on the cost side in Europe that, you mentioned that you have some concerns, right? Given that most of the energy costs are hedged and also the labor costs are already recognized in the first quarter increase, right? What are the concerns of the costs in Europe?
As you know, the concerns are, if you look at what happened last year, suddenly because of the war, the energy cost all went up. Last year. We all know what happened in Europe last year. But in spite of that, you also know what measures we took to mitigate some of those as well, because luckily we had contracts and long-term contracts which we signed. This year also, we have to always expect the unexpected. Making sure that we've taken measures to reduce any of those risks in case something happens. Like now, Qatar is unable to export their gas because of the Strait of Hormuz is shut down. Again, we see in some of the countries there is a gas shortage. How do we mitigate that and the cost prices are going up?
We see some countries where the cost of energy or cost of electricity has gone up. It's all about making sure you are managing these costs in this highly volatile situation at the moment. Managing the cost is, one way is, yes, of course, we've got these contracts locked in with the suppliers and everyone else in terms of our supply for the food. About 70%-75% is coming through Thailand. At the same time, there are things which happens beyond their control. Whether it's packaging or whether it's paper products, has gone up a lot, because of the restriction, even in Thailand. Again, that is something we are controlling internally as well. I have to say, our supply chain, and the procurement, I would say it's been fine-tuned and they've managed the crisis situation really well.
The main reason being, Thailand's always had a crisis every year. People are quite proactive, and they know how to manage in these situations.
Okay, my last question is in Europe. As you have mentioned that Intra Europe has kind of intensified due to the current situation, right? Could you give us some colors on the bookings in Europe, perhaps in the second quarter on how is the momentum and how strong it is, like the bookings in May and June, perhaps?
Europe for the second half of the year, at the moment, what we have on the books is 5% up compared to same time last year, which is quite good. Because as you know, in Europe it's mainly. I think one of the things we need to realize is there's a shift in booking. It's becoming more and more last minute, because people are not sure, based on what's happening in the world. Like whether some of the airlines have cut the schedules. Ryanair yesterday came and announced that they will maintain the schedule and they will be running all their flights because they have enough fuel to cater for the demand. Like here, as we have seen, Thai Airways cancel about 47 flights. AirAsia has canceled.
Again, people wait till the last minute to book because they don't want to be in a situation where they book and pay, and then suddenly the airline has canceled, and then they have to pay much higher to change their booking. We anticipate that the booking, even though it's 5% up, we anticipate that because the pace has changed closer to the time, we would pick up much stronger. In some countries, we are picking up 35% for the month, the demand in the same month. That's how the whole thing has changed. But it doesn't mean that we panic, because like some of the other operators and just drop the rate because, that doesn't help. We're quite careful from a dynamic pricing and making sure that we don't panic and drop the rates. But at the same time, we also anticip ate our booking demands.
And this is where technology helps. We can use tech to really anticipate and plan the demand periods and making sure that we yield our rates as high as possible, which we saw in Q1.
Hi. Please allow me to ask two questions. The first one is regarding the renovation plan. Last year you had big renovation in Thailand, but what about this year? How big is the renovation? How would that impact your capacity in Thailand and in Europe mainly?
The only renovation in Thailand is the continuation of Anantara Siam, which should be done by August. Actually, the lobby and the rooms they opened today. The pool villas are all open as well. By August we will have the ballroom and the conference rooms open as well. I think the impact is minimum compared to last year. Last year, the hotel was fully under renovation. In Thailand, that's the only one. Then we have some of the small renovations, which are normal enhancements, which is something which we manage. What we do is we use this period, the low periods, to do the renovation so that we are ready for the high season.
The second question is on the Maldives market. How should we think about the margin in that market? How does the cost inflation impact your overall cost, and can you really offset by increasing ADR this year? Thank you.
Yeah. You saw like in Maldives, our rates for the Maldives, for the first quarter, in spite of what's happened. At the moment, what we have on the books for the Maldives Q3 and Q4 is still looking quite strong. In spite of, yes, the energy costs have gone up because of fuel, but we introduced a fuel surcharge. We actually offset that cost increase. Our margins are not that affected because our rates are quite high. As long as there's a price elasticity of demand and supply, then we are okay. In Maldives, normally Q1 is the high season and then Q4 is the high season. Q2, Q3 is shoulder season. We're okay. If there is no more questions, again, I'd like to thank everyone for taking your time to come to Riverside.
I know it's a long way out, but hopefully our next analyst meeting will be in a brand new ballroom and a fantastic hotel, which is the Anantara Siam. We would like you to, again, as I said, to go visit La Petite Maison, which opens in June, next week actually. We'll be launching and experience the new cuisine and also the hotel and the outlook as well. Thank you all, and have a great day.