Good afternoon, everyone, and thank you for joining us today for the update for quarter three. We at Minor, of course, very much appreciate your interest and taking the time to join us here today, whether you are joining us here in person or whether you are dialing in today overseas. A very warm welcome. Before I actually dive into the details, let me also start by just giving some overview about the global markets and what is happening today. I am sure most of you. Let us do it after. I am sure most of you are very familiar as to what is happening in the markets today. Just to give you an idea, of course, being here in the home market in Thailand, in spite of a lot of the challenges we faced in Q1, in Q2, and continue to face in Q3.
In Q1, we had the China, the problems with the abduction and the kidnappings, and then we had the earthquake. We had the political instability, and then recently, the Thailand-Cambodia war has not really helped us here in the Thai economy, as everyone knows. Globally, we have seen the crisis in the Middle East, with the escalation of the war and some of the airports being shut down, which has also affected tourism to a great extent. We have also seen the global markets actually taking a bit of a stumble in terms of some of what is happening in Europe, in the U.S., with the trade war, the taxes, and some of the other challenges they are facing. Also, of course, the Russian-Ukraine conflict, which has also increased some of our cost prices within the hotels and the food industry as well.
On the upside, the tailwind for us has been Minor has continuously shown growth, in Q1, in Q2, and we have just released our numbers for Q3. We have delivered a strong performance compared to some of our other peers. I am glad to say that the performance, the trend continues. Q4 is also looking quite strong for us because as we go into our peak season, in spite of Europe going into a low season for Q4, their performance is quite strong, and much stronger than last year, actually. I just saw the numbers for October for the group, and it has come out stronger than last year. That is the silver lining for us, and we see the trend actually improving. We are still quite bullish about our growth, where we say we will achieve anything from a double-digit growth, 15%-20% CAGR.
This year, we will get to about 13% or 14% on a CAGR basis as well for the full year. I think we are on track for the full year. You will also see some of the actions we have taken over the past few years, shaping what we have done from a brand structure, what we are doing in terms of accelerating our asset-light expansion. So putting less pressure on capital for us, in order to preserve capital and reduce our debt next year. There are quite a few steps we have taken, which also I will elaborate on. Also, that is actually translating into a good tangible moment, reducing our risk on the asset-heavy structure as well. Today, I will walk through some of the progresses we have made and also how we are expanding our footprint.
But before that, I would like to share a short video for the audience here. We will share a short video. Sid, these are all the deals we have signed on an asset-light basis. They are all management contracts, which we sign from Japan to India, to the Middle East, to Australia. You have seen when they will open as well. As we are now accelerating our asset-light strategy, it reduces risk quite a bit on the asset- heavy as well. As I said before, our focus is more on driving asset light, and also for next year, our focus is lesser focused on really trying to reduce our debt, the leverage to reduce our debt as well. We do have some of the initiatives on that.
When I look at some of the recent developments, here you will see that some of the things we have done. Here, when you look at, we continue to build our strength on the brand portfolio, and we have been focusing on the global presence. We are doing this through an asset-light model with some strategic partners. As you can see, we signed a joint venture with a group called the SUNRISE Resorts & Cruises in Egypt. Egypt being one of the big key markets for Europe. Again, this is a joint venture on an asset-light basis, to get up to about 50 hotels over the next decade. This is something which we have signed. We are also looking at, we have expanded the Tivoli brand, which we are showing here.
We have done in Peru, in South America, we have opened our first nhow property, because nhow has been predominantly based in Europe, as we made an entryway into South America as well. Also, the first Anantara Kafue River Tented safari camp will open next year in Zambia. This will open in Q2 of 2026. Again, on an asset-light basis, so there is no investment from our side. The last one is we continue to strengthen our footprint in Australia. Again, this iconic hotel, which will be the Avani Mooloolaba hotel, which is the first fully serviced Avani hotel, which will also open in Australia next year. Also, we have plans to open in Auckland as well. Again, these are management contracts. We will also open the first two NH Hotels in Australia early next year under a management contract, under lease, which will also open in Q1 next year.
Let us expand our expertise also on the cruising. What we built on Luang Prabang, with Mekong Kingdoms and also Loy Krathong here in Asia. We are also looking at extending that partnership outside Thailand, and outside Asia to manage more of those. Here, these are some of the highlights, which we would like to share with the audience in terms of driving growth for the future. Turning on to food, so that was on the hotel side, and turning on to the food. This quarter, we have also built up the momentum in terms of our global franchising business. Building up a platform to take the Minor Food Group to become a much more of a global platform as well. As I shared during the last analyst meeting, we opened the first The Coffee Club in Nairobi, in Africa. Again, it is a franchise.
The sales performance has exceeded the expectation, and the plan is for them to open more of The Coffee Club now and start rolling on to more The Coffee Club in Kenya. Sizzler in Japan is also expanding, adding new outlets, adding another outlet in Tokyo. I just came from Tokyo. Sizzler brand is expanding quite well, so they go from 10% - 11%, but their plan is to now start rolling out the Sizzler brand across Japan as well. In Thailand, our brands such as Bonchon, Dairy Queen, GAGA, Swensen's, they continue their expansion, bringing our total outlets now from 1,804 stores in 2024, to now 1,870 stores by year-end. In Indonesia, we expect to reach about 71 stores by the end of this year. That was just from starting with 33 stores last year. Most of them being GAGA and Dairy Queen.
Our performance in Indonesia actually has given us confidence to introduce more brands into the country. We are also looking at launching Poulet, which is a French casual dining brand from Singapore, into Indonesia as well. Indonesia is a fairly sophisticated market, and it is a strong growth market as well. We would capitalize on that as well. The next one is to talk a little bit more about achieving growth through brand extension and also new brands. Beyond brand expansion, we have also created new brands to capture more opportunities as well. On the hotel side, following the launch of our four new brands, which we launched in the second quarter, we are now preparing to open our first managed hotel under the Colbert Collection in Dubai, which you just saw in the video. This hotel will be our 26th hotel in the Middle East.
The Middle East is becoming a very strong market for us, with over 26 hotels, and the pipeline looking very strong as well. It will be a full conversion of the Dukes The Palm Dubai Hotel, which has been under managed, and we are taking over the management as well. That will be rebranded as the Colbert Collection. It will be called the Dukes. The concept is pretty much inspired. The Colbert Collection, as you know, was inspired by the restaurant in London, which we acquired in 2018 under The Wolseley Hospitality Group. We had nine restaurants, and one of the restaurants is called the Colbert Collection, which resonates really well with international travelers, and the restaurant does really well with international travelers as well. We have now taken that brand as a hotel brand, as a collection, and launched it in the Middle East.
Sizzler has also launched the Sandwich Society, which is extending the offering with premium grab-and-go sandwich concept. I am sure if any of you visit the Sizzler, you can also now have a grab-and-go in Sizzler, which is a sandwich as well, to take out. This actually leverages the Sizzler, the brand equity. It brings additional increase in sales, whilst the CapEx is very, very small because we are utilizing the existing Sizzler store, adding this new concept. We have also introduced another one called Hey Gusto. Hey Gusto is our Italian homemade dining concept, which allows us to reach customer segments that The Pizza Company doesn't really capture. Hey Gusto is another Italian concept, but not specializing a little bit more than the pizza concept, which The Pizza Company has.
In China, we have another brand, Lao Wang Zhu Guao, a brand which is based on meat over rice concept. This was launched to, again, expand our rapid growth on the asset-light concept in China as well. Lastly, the lifestyle brand is also expanding. After the successful launch of our two Pop Mart flagship stores in Thailand, in Bangkok, we've also opened a Pop Land, a mini theme park running for two months from 11th of November . I'm sure all of you know about the Pop Mart, the incredible demand, and how it resonates with every age group across the world. That has been a big success for us on the lifestyle side. It also brings together with the Pop Mart, the retail as well, which is under the Pop Land landscape. We're also bringing new brands into Thailand.
The first one under the lifestyle is called Sunnies, which is from the Philippines, again, offering what we call trendy eyewear. Eyewear and cosmetics, flasks, and targeting more on the young gen. Again, we've opened our first store, which has exceeded what we actually targeted, which is a good sign. It's at the Dusit Central Park, the mall, which has been a success as well. We've also welcomed Villeroy & Boch, which, as you know, is a 277-year-old German luxury tableware and home decor brand, with new stores to open in Bangkok and Phuket. Moving on to enhancing shareholder value through what we call being agile and also driving shareholder returns. On the shareholder value, we remain fully focused on long-term creation of shareholder wealth through being agile and also being disciplined on capital allocation.
As I said before, the capital allocation will reduce quite significantly as we move into asset-light. This quarter, as you know, we've also completed the official delisting of Minor Hotels Europe and Americas. Now this allows us greater flexibility for future asset allocation. Also, it will help us a lot in terms of including the formation of the REIT, which we are planning to launch next year. This, again, gives Minor full flexibility to manage this portfolio and also crystallize some of the synergies which we've always promised our shareholders as well. These initiatives will balance and reinforce our commitment on growth and also increasing our returns to the shareholders as well. Moving on to some of the strategic highlights.
Looking ahead, for our three to five year, the growth outlook, 2018-2028, we are still on track in terms of targeting a global portfolio of about 850 hotels signed and open, and about 4,000 restaurants. That's our target, which we are on track. By 2030, to get to about 1,000 hotels, and 4,500 restaurants. We are on track, and we will explain to you as to how this is happening as well. This expansion will be driven by asset light into new markets, and deeper penetration across high- growth regions as well. As we explained before, we're looking at India, new market, we're looking at Japan as a new market, which is also we've signed. We're looking at Egypt as a new market. We're looking at U.S. as a new market, where we will have two hotels coming up under management as well.
On the food side, we are looking at the new market, which is Philippines, further expansion in China, and other expansion, taking our Thai brands from Thailand to outside Thailand as well. The next one is on the financial focus. In terms of targets, our three-year CAGR, we are looking at the revenue growth of high single digit per annum. The profit growth, we are still on target to maintain the 15%-20% CAGR growth on an annual basis. This will be achieved also with the reduction of debt, and interest costs as well, because our interest costs will come down in the coming years with the launch of our REIT, as we mentioned before. Also looking at a possible spin-off of the Minor Food Group as well for next year.
That will help us to reduce our debt in Minor, and therefore, it will also help us to achieve our 15%-20% annual compounded CAGR growth on the profits as well. Our ROIC is still targeted at 12%. This year, we will also meet our target, which we are close to, about 11%. Our net debt to equity on the balance sheet side, in quarter three 2025, as we just released our numbers, it was 0.9x. For the full year, we are looking at 0.8x - 0.9x. But the biggest movement will come next year when we will start to reduce debt. The net debt to EBITDA, this year to date, we were at 4.7x. For the full year, we are targeting about 4.5x - 4.6x, so it is slowly coming down. Expanding our hotel portfolio.
This is pretty much, you can see the concentration between asset- light and asset- heavy. In 2025, we have 66% of our portfolio, which is on owned assets. This includes assets which we own, assets under joint venture. We only have 34% under asset light. But 2028, in the next three years, our asset- heavy portion will squeeze down to 49%, but the asset- light portion balloons to 51%. So it is going more asset- light, as you can see. This takes us today, as I mentioned before, about 630 hotels, which we have opened and signed, to 850 hotels, which will be opened and signed by 2028. You can see where the geographical spread of these assets as well.
Of course, Asia, Middle East, the Americas, Spain, Italy, Oceania, Benelux, and Central Europe will be quite heavy in terms of on the hotels which we own and manage, because of the acquisition of NH Hotel as well. On the segment, you can see in 2028, we will have 21% of our hotels under the luxury segments, 33% under the premium, and select will be 46%. As we see, the mid segment is starting to balloon, and that is where the value addition will be. We will be more focused on the premium segment also. In the next few years, as you can see, we are rebalancing our hotel portfolio, both on the business model, which is asset-heavy to asset-light, and also geographies by diversifying some of the geographies as well.
From a brand standpoint, our luxury and premium brands, which are Anantara, Tivoli, and Avani, will grow faster given the rising brand recognition in the multiple regions. The next slide actually talks a little bit about the Minor expansion, the pipeline. How are we going to get to the 850 hotels by 2028? Today we have 630 hotels, which are open and signed, as I said. Under the asset pipeline today, we have about 230 hotels, which are under negotiation and HMAs or LOIs signed. The key regions we are focusing based on what we have today is the U.S., is the Americas, North Africa, the Caribbean, Europe, Middle East, and Asia. Then we have equity and JV, again, which are in selected countries like Singapore. We signed Avani last year, with Kajima as a JV, with Minor taking 25% of the equity.
Japan, as you know, we have signed a partnership agreement with Royal Holdings Co, Ltd to get to about 50 hotels in the next 10 years in Japan, Spain, Italy, Portugal, Australia, and Africa, where we will continue to grow as well. This will take us to the 850 hotels under open and signed by 2028 together with on the asset-light side. As you can see, our pipeline remains predominantly heavy on asset-light, with more than 230 hotels under negotiation, including both signed and LOIs we have signed as well. Our focus is to drive both fee income and also brand equity as well. In the U.S., we have signed our first Anantara with branded residences under a management in Miami, which will open in 2030, the first hotel with residences. We will also launch our first The Wolseley Hotels in New York next year. That is a rebrand.
We do not have to wait for a greenfield development. This is a rebrand, where the owners will renovate the hotel early next year, and we will launch our first The Wolseley Hotels in New York. The first NH Collection is also being launched into Malta, which, again, is another European city, as a management contract. Also in India, we are expanding with Anantara's and Avani properties, where we have signed hotels in Coorg. This year, we will open two Avani hotels in Lonavala. We already have one hotel in Jaipur, which is the Anantara. We will open two more Avanis in India, and also Avani, the Avani+ Sunray Beach Visakhapatnam Resort in Visakhapatnam. We are getting a very strong following in the Indian market for our brand. Hopefully, in the coming years, we will be able to accelerate the growth on our brands as well.
The next one is to show the year-on-year, the ADR uplift through some of the renovations we are doing in Thailand. I am sorry about the noise factor here today. It is not to show you that we are renovating, but we are renovating this hotel. We have a big buyout from the 1st of December. We are speeding up the renovation of this hotel. This room is being done. We are doing half the hotel this year. We are relaunching the hotel to a very high standard as an Anantara. We are doing some of the public spaces, and once the festive finishes in December, we will start to renovate the other half.
By June next year, we will have a brand-new, fully renovated hotel as a flagship brand here in Bangkok, where we can compete, and we will compete with some of the other luxury brands, including our neighbors, where we own The St. Regis and also The Ritz-Carlton also, which opens here in Thailand. We will be able to elevate our standard and compete with the other brands as well. Also in Thailand, this is Anantara Siam. Anantara Golden Triangle, we completed the renovations there. Here we always look at the ROIC and also the payback. We have significantly improved our rates. Our rates in Golden Triangle have gone up by more than 20%. This is coming from a high base. Anantara Siam, we are hoping to get a rate increase of over 40% once the renovation is done.
We have the Anantara in Hua Hin, which is one of our oldest hotels, which has also gone through a full refurb, including pools, restaurants, rooms, everything. There, we are looking at a rate increase of anything from 20%-50%, as Anantara as well. This will elevate our brand, it will elevate our top line, and also our income streams as well. Then we have Anantara Layan, where we continue to expand and invest in residential, which has been highly successful, as you know. Phase one and phase two, we sold it at a 20%-30% premium to the market. There, we are also completing our renovation as well for the hotel side. On the residential side, we continue now with phase three and phase four of the residential business there.
We see a strong sales momentum on the asset value, on the real estate business as well. Here, as I said before, for Phuket at Layan, the Kiara Reserve is what we call it. 19 out of the 46 units have already been sold. The revenue recognition of this will take place in 2026, once we transfer the title deeds. There is a new super luxury project in Phuket, which is an investment where in Layan, in Phuket, we have more than 500 rai of land with our JV partners in Kajima. We will start to sweat or crystallize the value of that land through doing super luxury villas and condominiums, and also retail in the future. This is a long-term project, where we acquire the land on a phased basis. We convert them to luxury villas and condominiums.
We sell them, then we go to the next phase. Then we do the next phase. We are also building the first marina as well in Layan, in Phuket as well. That is where our investments will go in, which will have a very strong payback, but also really elevate the brand as well. The projects will follow more of a capital-efficient, doing it phase- by- phase, so that we do not take the risk of doing everything at the same time. We are doing it on a phase-by-phase basis. We did phase one, we sold. We did phase two, we have sold. Now we are doing phase three, and once the sale is complete, we will do phase four and phase five. The next one is about on the food side.
We continue to expand our food with asset-light growth, because our food business has been a lot on the asset-light basis anyway, with strong cash flows. Here, if you look at 2025, we have 50% we own and 50% we franchise. By 2028, we will move to 56% franchise and 44% owned. Again, on the food side as well, the brands are getting a lot of traction. We will start to franchise our food brands more. By 2025, we have 2,836 outlets, as you see, predominantly in Thailand, China, Australia, Singapore, and now gone into Indonesia and other countries. By 2028, is to get to more than 4,000 restaurants or 4,114 outlets. Again, diversifying much more into other countries as well.
As you see, Indonesia is becoming a strategic focus as well on the food side for us, and other countries as well, including Africa, as I said before. Thailand will go from 76% of our outlets in Thailand to 69% in Thailand. It doesn't mean we're going to reduce Thailand. Thailand will continue to expand, but we will expand much faster outside Thailand on an asset-light basis of franchising our brands. That is the shift on the food side, where we can scale much faster, because food on the restaurant side, we can scale much faster and open much faster because it's restaurants. It's very low capital intensity because we keep reducing our CapEx on the food side in terms of creating these new brands.
This year, we've created quite a few brands, like I explained before, including The Steak & More, which is a brand which is doing really well for us in Thailand. The next one on the Minor Food is to strengthen our existing brands. We talk about menu innovation. We have innovated our products and also our value offerings as well. We're doing it with a combination of entering into new markets or penetrating some of the new markets as well. The innovation is a major drive for us, where we have seen that the brands are becoming much more creative, much more relevant today. If you look at The Pizza Company today and The Pizza Company five years ago, it's very different. If you look at The Steak & More as a new brand, the performance is very strong on a same-store sales growth basis as well.
The MPSA is sometimes higher than some of our other brands on The Steak & More, because it's much more volume driven. It really works for us here in Thailand. It's a great concept as well. GAGA is expanded into what we call the new non-dairy range. GAGA has added a non-dairy range as well. Therefore, it helps for us to expand our customer focus with people who have dairy allergy as well. Bonchon has also broadened its menu by going beyond fried chicken. As you know, Bonchon started as a fried chicken brand, but today it's becoming much more family-friendly as a casual Korean dining brand, which is again, helping us to drive dine-in sales into Bonchon as well. Swensen's has successfully lifted the foot traffic through value campaigns.
I'm sure you've been to Swensen's, including some of the new items, which are like the THB 69, the Magical Bingsu, and also the Waffle Wonderland, which has resonated really well with the consumers in a soft spending environment today. Because whether we like it or not, we know in Thailand, the spending has come down. Therefore, we're now trying to see how we can maximize the sales through lower spending, which is happening at the moment, but with lower pricing, offering new products. Burger King again has benefited from a lifestyle-driven marketing like we have a major collaboration with a global anime franchise, the Naruto, which has actually boosted the average ticket sales and the overall sales as well. We are also scaling market penetration in Thailand and Indonesia as part of our core brand strengthening as well.
In Thailand today, we operate in 77 provinces, giving us a quite a nice nationwide reach on our core brands. We continue to expand into our secondary provinces as well, with opening Dairy Queen as a standalone brand as well. We've opened quite a few Dairy Queens and also GAGA, entering into markets even up to the south, like Hat Yai, Saraburi as well. The Steak & More is also extending the key cities, such as Chonburi, Chiang Mai, and also Khon Kaen. Indonesia remains important, with the growth engine. Our presence has been led by GAGA and also Dairy Queen, and it has now reached 57 stores, and we are on track to exceed 70 stores by end of this year, by year-end. We're also actively promoting opportunities to introduce additional brands, including Sanook Kitchen. It's a Singapore brand. The Steak & More, and also The Pizza Company as well.
This one is to show the value creation under study. As I mentioned before, we are exploring, number one is the hospitality REIT to launch IPO. Number two is to look at exploring Minor Food IPO. These are two of the major big initiatives which we are exploring and will be launched next year in order to reduce our debt, in order to create much more growth opportunities through asset-light as well and put less pressure on our balance sheet and also driving much more in terms of net income as well, which will also help us to drive our EPS, because our focus is to drive earnings per share over the coming years for our shareholders as well. The potential of the hospitality REIT IPO and the consideration of Minor Food, is to unlock the value of the two businesses.
As we know, today, Minor Food is part of Minor International, which is not getting its true intrinsic value. By doing the IPO, we strongly believe that Minor Food will be able to command a much higher multiple and a value as well. Unlocking the value, which will help us to strengthen our balance sheet, in the coming years. These two initiatives will provide the market with clear visibility into the value of our underlying business, which should be supported by improving our trading multiple for Minor as well. The cash proceeds generated will be used to reduce debt. The waterfall is to reduce debt, which will enhance liquidity, financial flexibility, and also the overall capital efficiency as well. We're looking at reducing debt.
We're looking at maybe deploying some of the monies into expansion like, some of the real estate developments we are doing here in Thailand, which has a larger return on capital as well. And then helping us to shape our balance sheet much stronger than what it is now, for the next year and the years to come. So the other option is reducing debt, increasing our growth, and also the possibility of maybe a share buyback. The share buyback, as you know, today our share price is way undervalued. And I think we believe that our share price, where it should be, and where it is today, the valuation is quite low. Again, we are exploring options in these three to see how best we can manage our capital structure as well. Moving on to the numbers now.
I'm sure you've seen our nine-month year-on-year performance, the recap. On the revenue side, our reported revenues have gone up by 3% on a constant Forex basis, because we've had some Forex headwinds. But on a normal basis, it's about - 1%. The nine months on the core business, on core revenues, the revenues have gone up by 2% on a constant Forex and a - 2% on an actual basis. Minor Hotels contributed 80% of the total revenues, and Minor Food contributed 20% of the total revenues. This translating into profit. Our reported profit, on a constant Forex, has grown by 49% and 47% on a year-on-year basis. Because last year, as you know, we had some headwinds on the Forex. This year, our Forex, it's been very strong.
But excluding that, on a core basis, if I look at core on net profit, we've grown 14% and 13%. As I said, our target is 15%-20%. At the moment, we're a little bit short. We're about 13%, and hopefully we will catch up by year-end to moving into about 14%, or maybe close to 15%. So that's where we are for the nine months of the year. This is in spite of all the headwinds we've had globally and also in Thailand, which also affects the food group, and the Minor Food Group in China has also been affected as well because of what's happening in China. The food group has been quite soft, as you know, in China, which has actually impacted us.
And the hotels, and a little bit on the food, like here in Thailand, and also on the globally, with the headwinds we've had. But in spite of that, MINT has been able to produce a 13% CAGR on a year-on-year basis, a nd the numbers are getting quite large now. By year-end, we're quite confident that we will target to about a 14%-15% annual CAGR growth. Next year, it should be better once we realign our capital structure through the two big initiatives, which I explained to you before, about the food IPO and also the hotel REIT as well. Again, the core revenue is THB 121.7 billion. And looking at core net profit, we achieved THB 6.2 billion, which is a 14% on a constant Forex basis and 13% on a like-for-like basis. Moving on to the nine-month performance. Here you can see how we've achieved it.
I know people are quite concerned about the global economy, and also what is going to happen next year. So far, yes, we have had those headwinds. I think there are challenging times. But we have taken a lot of steps, like, for example, if you look at Thailand, the Chinese arrivals dropped by far. We hope it will improve now, especially now there is some pressures between Japan and China, and I hope we will see more Chinese coming in, at least for the Chinese New Year next year, because now we are going into the high season with the European season, which is the festive. Then the Chinese New Year will pick up in January and February. I hope that our revenues will go up at that time for sure.
In Europe and LATAM, our RevPAR has grown by 4%, in spite of the headwinds we have had. In Thailand, our RevPAR has been almost flat, or 1% growth. In the Maldives, it is a 21% growth year-on-year. So Maldives is continuing to be quite strong. And the management letting rates in Australia is flat, our RevPAR. And our managed hotels has dropped a little bit on the Thai baht on the RevPAR side as well. So that is on the RevPAR side, and when you look at the net profit for the nine months on the hotel performance. But what I would like to point out is that we benchmark our performance with our concept. So our Thailand hotels perform on RevPAR growth, reflecting a stronger pricing power and the high-spending travelers and our effective dynamic rate management system.
In Thailand, we are still much stronger than the other hospitality players. In the Maldives, our portfolio maintained, as I said, exceptionally high growth, strong growth, with our RevPAR surging on a U.S. dollar basis by 21%. We also have, by a higher occupancy and rates demand, which is coming mainly from Russia, from Europe, China, U.A.E., Australia, and Brazil. So those are the markets which have driven the Maldives' performance. Our performance in Australia has been stable, as I said before, which has been in the second quarter. The corporate demand is now starting to pick up, and we see that the new events which are being introduced in Australia, like the musical events and also the sporting events, will start to boost the leisure performance next year. The managed hotels, the main reason it dropped 4%, is mainly because of the Forex translation.
Despite that, our core profit rose by 18% year-on-year on a constant Forex, with the net margin expanding to 4.4% from 3.8%. So on the hotel side, we have seen the core profits has been expanding by 18% on a constant Forex basis. So on the hotel side, we have managed to keep the growth above the 15%-20% target. Moving on to the food side. We see that Minor Food achieved a nine-month growth revenue, increasing by 4% on a constant Forex basis. The growth was mainly driven by store expansion in Singapore and a higher coffee roasting revenues in Australia. In Thailand, our total system sales for the nine months grew modestly, through same-store sales, which were actually impacted by weaker mall traffic, especially early this year, after the earthquake, and also the softer consumer sentiment as well.
On a positive note, Thailand's same-store sales grew in the third quarter, turning into a positive territory, as a result of some of the new menu innovations and strong value offerings. We also maintained our competitiveness, outperforming other key competitors in Thailand on a comparable same-store basis as well. In spite of some of the headwinds we are facing, we are performing much better than our concept, both on the hotel side and the food side, both in Thailand and also outside Thailand as well. When I look at our European portfolio, European portfolio has been very strong compared to its concept as well. The next page is talking about our balanced CapEx growth for how do we balance our CapEx growth.
In 2025, our CapEx, on the hotel side is about THB 6 billion spent, but these are regenerative CapEx, or CapEx where the money goes into real estate, where it will then be crystallized by selling the real estate or the residences. On the food side, we are hoping our budget is about THB 1 billion. On the hotel side, it is about THB 6 billion, and others, it is about THB 1 billion, which is lifestyle and others as well. This is our latest CapEx update, where we have actually pressured down the CapEx as to what is happening, like trying to preserve cash. In addition to this THB 8 billion, as we all know, the tender offer, the listing of MHEA, we also allocated cash for that as well, which is another THB 4 billion. The priorities on CapEx, which remains on projects driving high return, as I explained.
On the hotel side, with renovations, rebrandings, which is uplifting our ADR, as we have seen, and also doing residential, converting the land into residences and selling those residences, where we have had a proven track record over the last few years, where we still have a strong demand for Thailand as well. Then we have a selective restaurant expansion where we usually see a payback on the restaurant side of about one to two years, or one to three years, the maximum. On the capital structure management for financial resilience, here you can see our interest expenses for the first nine months has decreased by 19% year-on-year, arising from debt reduction, and also lowering funding costs as well. We managed to lower our funding costs as well.
The latter, the lowering of the funding cost, because of the active capital management and the company's improved credit profile. Interest-bearing debt increased to THB 95.5 billion from, decreased to THB 95.5 billion from THB 99.1 billion in the last quarter. This was m ainly from the early redemption of the EUR 400 million senior secured note and the prepayment of the bank loans, which we settled, reducing our debt there in Europe.
Our net interest-bearing debt to equity and net interest-bearing debt to EBITDA increased slightly in the third quarter to 0.9x and 4.6x. This was mainly triggered by the cash, which we used to delist Minor Hotels Europe and Americas, and also the interim dividend, which we paid to our shareholders. By the year-end, we are looking to get our net interest-bearing debt to equity to come down to the range of about 0.8x-0.9x, and the net EBITDA down to about 4.5x-4.6x. This is mainly supported by the high season coming in quarter four.
We will see an improvement in some of our financial ratios going down, and also the earnings in the high season, or the fourth quarter, going up, where we will get to about a 14%-15% CAGR on our net earnings as well. That brings me to the end of the presentation. I am happy to take any questions if our audience have.
Sorry, keep going. The second one is what?
The second question is, what methodology do you want to use in REIT initiation? Do you want to sell assets from Minor into REIT or sale lease back, or sales of revenue recognition, right? That is my second question. Thank you.
Okay, great. The first question was on the REIT, whether we consolidate or not consolidate. I think we are looking at options. This REIT, as you know, Minor has been looking at this asset recycle since 2018. We have done some asset recycling since 2018. What we are doing is we are setting up, but we are now boosting it by creating a hospitality REIT. On the hospitality REIT, the plan is that we will contribute assets into the hospitality REIT, and then we will IPO it. We have not decided yet whether we consolidate or not consolidate. Again, that is something we are looking at. But at the end of the day, the REIT will benefit by releasing cash into Minor, and using those proceeds to reduce our debt within Minor as well.
Again, we have to review whether we consolidate or not consolidate, because there are some pros and cons in terms of consolidation and non-consolidation. The second one is selling assets into REIT, right? Whether it is a sale and lease back. No. It is a true sale into the REIT, and there is no sale and lease back. It is a true sale into the REIT, which Minor will continue to manage these hotels for the foreseeable future. What we are doing is we are releasing cash. I think the attractiveness of the REIT is that in the future, when we find expansion assets, we can easily contribute those assets into the REIT. Not putting pressure on the Minor balance sheet, but actually contributing those assets into the REIT, and Minor will continue to manage those assets as part of our growth model. Does that answer your question?
Like you said, through sale of assets or the sale right of revenue recognition of the hotel.
Yes. Say, for example, if we decide to consolidate, if Minor owns control of the REIT, then we will consolidate that as part of our earnings, and also the profits as well. But if we decide not to consolidate, then it will be a different accounting treatment as well.
Okay. Let me ask you another question. Could you give me a summary of the company's land profile? Like, how many of the land plots that company own, and how many are leased? I mean, in operating hotels in Europe, especially.
In Europe, when we acquired NH, we had about 385 hotels. Out of which, about 100 hotels are owned under freehold. The balance, 230 are leased, and the balance is managed. When we look at the REIT, we will contribute some of the European assets into the REIT, which will be quite attractive from a REIT perspective as well.
Thank you.
Thanks.
All right. Thank you, Khun Dillip. I have, yeah, actually quite a couple of questions. If I may, continue with the REIT first. Is Minor still planning for middle of this year, since we still don't know the holding portion or the type of assets that we are looking to put in, and even the size, right? Is it still $1.5 billion that we talked about in the past? Could we just get more detail on what we know about the REIT or the decision we've made so far? That's the first question.
Okay, let me answer your first question. In terms of the REIT size, we do have a plan because we have been working on this REIT for about two years in terms of structuring the best way for the REIT. We looked at three modules for the REIT, right, before we did the REIT. We looked at sale and lease back, what would be the best return for our shareholders. We also looked at selling a stake in, whether it is initial shares or selling a stake. The third one was we looked at the REIT, and when we did the exercise in detail, we found that the REIT was the most attractive source of funds. Coming back to the size, we know how many assets we are going to put because we have done that planning process, and we are beyond that.
We are now into structuring of the REIT. We looked at whether we structure the REIT here in Thailand or whether we do it in Singapore. We found that to do the REIT in Singapore was much more attractive, because it has a higher liquidity flow, and also it will attract a much wider investor pool as well. That is done. In terms of the size of the REIT, so size of the assets have been decided, size of the REIT has been decided. It could be anything from THB 1 billion - THB 1.2 billion, THB 1.5 billion. Right? That is the size of the REIT. The last one is we are looking at how much we sell out, whether we sell out 50%, 40%, 60%. That is something, again, once we have more clarity in terms of the yield we will get, then we will decide what portion we will sell.
That will then trigger whether we consolidate or not consolidate. That is where we are. It is fairly advanced. The launch is not this year. The launch is next year, of the REIT. It will be, I think we are looking at Q2 or Q3.
Understood. Thank you for that. Then we are on the point of leverage, right? Can we talk about the target or the new target that you have highlighted now? It shows that leverage pretty much remains stable from before. I understand that you did the NH delisting, they needed cash and cash for the interim dividend. But what is the optimal level that we are thinking of, and when is Minor going to reach that level? Just along that line, what needs to be sacrificed or what needs to happen, before we reach that level?
Okay, great. To do that, there are three drivers we have. The first driver is to ensure that we continue to maintain our earnings so that when we do the REIT or the IPO, the earnings do not drop. We just need to maintain that the earnings growth is there. That is number one. Number two is to look at when we do the REIT or the IPO, in terms of the capital allocation, what is the most attractive, how does it work? Do we reduce debt? Do we do a share buyback, or do we pass it as dividends? Those are the three outcomes. Again, there we are looking at. Because today, when I look at the earnings per share or the growth, we want to make sure that the EPS also continues to grow for our shareholders.
I think it is a balance between earnings per share, reducing our debt, and also maintaining the net profit earnings for the coming years. That is what we are trying to balance to make sure that we do not have a drop in one and a hike in the other one. Because if you have a drop in earnings next year, I think our shareholders. We might have a drop next year, but we will reduce debt. Yes, but then our growth will reduce. It is a balance which we are trying to ensure that we strike the right balance in terms of the capital allocation from the IPO of the food and IPO of the REIT as to how it will go.
Optimal level, there is no.
Optimal level of debt, our debt, the target, including perps, because I consider perps as debt. Including perps, our optimum level, we are looking at about 1.3x, 1.4x.
The last question for now. The management contract seems to be off the pace slightly. You seem to have pushed back the 2027 target to 2028 for the expansion. Just wanted to understand what was the pain point there. Is there any issue in terms of securing those, or what is the reason? We can start there and then follow up.
The main reason is the slowdown, where we've signed these contracts. This year we've opened 19 hotels. We were target to open 30. So we have time. Next year, we are opening 50 hotels. We were targeted to open 75. The year after, our target is 100. But the pace has reduced because of construction costs, with some of our HMAs have gone up. In some countries, the permits have caused some delays. So these are affecting us being open. We just opened one hotel after seven years of construction. So these are well beyond our control.
What we are doing is, now we are looking at our pipeline a little bit more carefully and a little bit more on a realistic basis to say, "Okay, if these delays continue, what will be the impact?" Also, now the new growth engine we are looking at on the hotel side, which we haven't actually factored in fully, is the franchising. So for the first time, we are also starting to go into the franchising business on the hotel side, with all our brands except Anantara. So on the franchising side, I believe that our expansion rate will be much faster, because these are contracts we can sign, which are existing hotels, which we can sign as franchises and launch them pretty much straight away, which we haven't factored in because it's a new thing which we are looking at.
We already have six franchises in Australia, which we manage. We already signed one in Europe, but it will open in two years. But now we're looking at franchises where it will crystallize straight away. We have not factored that in fully in our numbers.
Okay. Can I conclude that it is reasonably outside of your control from the construction side, from other things?
Yes.
Rather than there is an issue with either the brand or your-
No.
-sales team or stuff like that, right? It is outside of the control.
Yeah.
Are you still comfortable that your brand is strong enough to achieve those target, in 2028 and 2029?
Yes.
That is the angle. Okay.
Yeah.
Because one of the questions we tend to get is also, you seem to have done a good track record with JV partners and expanding into new countries using JV, right? You have shown there. The question that investors tend to have is, would that be a better- off model at this stage of the brand? Or is the brand, can you really compete with the likes of the JW Marriott Phuket, the Hilton of the world, or do you have to do a new strategy in terms of offering lower rates or anything like that to be able to compete? I understand that you have previously said that that is not needed at this point, but because it being relatively slower than what you were expecting, that is the train of thought a lot of investors have.
Yeah. It is a fair question. See, when Minor, on the hotel side, when we started, we started as asset manager. We own the Four Seasons, all the four Four Seasons. We own the four Marriotts in Thailand, and then we had three Anantaras, and then we had a hotel in Vietnam. We started to build a brand. Anantara brand was launched in 2000. The brand is only 25 years old. But today, Anantara brand is being listed as number eight as a luxury brand in the world. This is a huge credibility for the brand. Number two is that, when we launched our brand, we had to invest money in our brand at that time, and we opened most of our hotels under asset light. We owned all the hotels because we had to gain that scale.
From that, we then moved to joint ventures, because with the success there, we managed to get into joint ventures outside Thailand. We went into Maldives, we went into Africa, and places like that. So we passed that stage. Today we are at a stage where with 600 hotels, with each of the brands, and we only have 12 brands, and out of the 12, only eight are fully launched. We had the four new brands we launched only last year. So out of the eight brands, we have close to about 600 hotels. Those brands are now gaining scale in terms of management contracts. Like the pipeline I showed here is all management contracts, where we are not looking at joint ventures, or we are not looking at investing anymore.
So therefore, we've got into that stage where our brands have built a lot of equity with owners. When I explained to you about the Dukes in Dubai, it's a conversion from another brand to our brand under the new brand, which is the Colbert Collection. This owner, this is his eighth hotel with us. All the eight hotels are under management contracts. Therefore, it shows the confidence from the owners on the brand and also the performance as well, because they see our performance. So I think we are at that stage where we've gained a lot of traction and really get to that last stage in terms of now launching franchise. If we tried to launch five years ago the franchise, I don't think we would have taken off.
But I think today we are in a place with the distribution and everything we have, the loyalty program, the distribution we have, we're able to really perform. Sometimes better than some of the bigger brands, because I compare, for example, NH Hotels in Europe with all the other listed companies in Europe, with Accor, with Marriott, and all those things. On a per-key basis, our profits are quite good, much stronger. So our earnings are good. What we don't want to do is to take a short-term view where we sign three years, five years management contract, no top-line fees, and only bottom-line fees. That's a short-term view, which I don't think Minor will ever do. I think we're building a business which needs to be sustainable for the next 20, 30 years. So there, yes, we do lose hotels to some of the big brands.
But today, I think when you look at most owners, they're moving from the big brands to the smaller brands because they want something different. I don't think because the larger brands are becoming cookie- cutter ,and the new generation, or the millennials are looking for experience, looking for new brands, looking for something different. They don't want to wake up in a country and look at the same room which they've looked at. It's the same as Thailand or same as U.S. or whatever. So they want something different. So I think that's why I think the trend is moving. We've seen that. There's a new trend on wellness. There's a new trend on slow travel with the trains, the cruises, everything else, which was never there three, four, five years ago. So with that emerging, and we are in the forefront of that.
We launched our biggest wellness facility in Layan, in Phuket, last year in October, which is doing exceptionally well. So now we are able to roll that into other countries as well. With the Thai hospitality, we can bring that expertise outside. So I truly believe that we are in a very strong position. When I look at the 600 + hotels with 80,000 rooms, if I look at global brands, we are number 12. Eliminating some of the brands, which are like, say, if you take Jin Jiang or if you take Huazhu, they are pretty much China- focused. They are bigger than Marriott or almost the size of Marriott, but they are all China- focused. But if I look at the true global brands, we are number 12. So we've gained a lot of traction.
I'll jump back to the back of the queue.
Thanks for the opportunity. I would like to ask about the plan to IPO the food business. What would be the rationale and the strategy there? For example, would you really need capital to grow the unit? Aside from unlocking value for the parent company, Minor Corp, is there any other things that you look at for this strategy?
Okay. The main focus or the main intention on the food group IPO is to really unlock its intrinsic value. Because I think when I look at the food group and the hotel group, food group is part of Minor, but it's getting dragged by the hotel group because hotel group is 80% of the revenues, food group is 20% of the revenues. So we believe that the food group will command a much higher multiple. Also, most of the analysts, when they do the projections in terms of cash flow or discounted cash flow, it's very difficult. Not many people understand our business because it's quite complex. So number one is we are trying to make it easy, or trying to make it simple. Number two is to unlock the true intrinsic value of the food business, where we could command up to 15, 20 times multiple.
I don't know. I'm sure we will. Therefore, then you have a totally separate focus on the food group where we can continue to expand the food group on an asset-light basis because our brands are quite strong now, and use those proceeds, at the parent company level to reduce debt and to use also the funds for expansion, so that we can create the growth story in the coming years.
Just to follow up on that, are you also looking at M&As for food business? In terms of IPO timing, what are you thinking of?
Again, IPO timing for the food business, I think it's under discussion. We're looking at next year, because we need to go through quite a few regulations and stuff. We have to take it to our board. We have to get the board approve, then we have to inform our shareholders. Then we will commence the process. It will take time, then SEC has to approve the timeline as well. I would say the timeline may be next year.
The other question is on the hotel side. Your neighbor competitor are talking about perhaps cutting price for the four-star, five-star asset. Just would like to ask about your strategy in terms of pricing in Bangkok. Thank you.
I think for us, we've always said by reducing rate, occupancy is not going to go up. As you saw, we showed how our rates are growing. You can see we have to grow rates. The reason we have to grow rates is today, the cost has gone up. Cost of labor has gone up. Look at Thailand, we have minimum wage here. Look at Europe, we have the new wage increases in all the countries, including London, where we have restaurants. The cost of wages is going up. The cost of living is going up. The cost of energy has gone up. Therefore, if we start to cut prices, you're racing to the bottom from a profitability perspective.
But as long as we maintain our standards and the service and all those things, our guests, they see the value, and they are willing to pay that price. They are willing to pay the price. If you look at some of the luxury brands, they are not cutting costs to achieve their profits. They are making sure that they keep growing because once you cut the rates, it is very hard to increase the rates in the future. For example, Anantara Siam, we are looking at a rate increase of 40% next year. But because if we do not increase the rate by 40%, I cannot renovate this hotel. So if I do not renovate the hotel, then the services will drop. Our guests will not be happy, and the guests will not pay the rate. So it is a downward spiraling, right?
But if I spend the money, I really truly position this hotel as an Anantara. The guests will pay.
May I ask you about supply hotels, about the supply in hotel business in Europe? Are there any restrictions on buildings, hotels in Europe? Like, in the old town district, in some city or some town in Europe, or can they be built as long as they meet minimum legal requirements?
The good thing is there is restrictions. There is restrictions in all the countries. Spain, Portugal, most countries, and especially today because of over-tourism. You see the problems over-tourism is causing. Therefore, the supply will be restricted. The good thing for us is that we are already in the key locations in these countries. So we have a great advantage where we have a presence in most of the key countries, where there is a restriction for entry for new supply. So that is a benefit for us. So I think we benefit by far in Europe.
Thank you. That is the point why I asked you. Can I ask you another question about this? Like you said, your hotel in Europe is located in some strategic location that maybe there is some restriction to the newcomers. What about the land lease of your hotel? Does landlord raise the rent price a lot, or it is in line with the inflation rate?
The cost of the leases is already agreed. We have structured post-COVID. We structured a fixed and available rate. These are agreed. In some of our hotels, we pay a low fixed rate and a variable rate based on top line. We manage the cost based on that, especially after COVID. We took measures to move from fixed leases to fixed and variable leases. That has helped a lot. These countries, there is also restrictions as to how much the landlords can increase the lease by as well. There is a survey, there is a valuation which will be done, and then based on that, they can increase the rent. Again, this is another issue where, another reason why we cannot reduce rates. We have to keep increasing rates so that we can cover these costs as well.
That is clear answer. Thank you.
Thank you.
Hi, Khun Dillip. Asking about the food business expansion in Indonesia. Do we need to, like, having a concern on the political unrest over there? Do you see any, like, can be a threat for the food business expansion as, because Indonesia will be your one of the key strategic location that you're going to?
Yes, I think, we entered Indonesia last year. We started small. We understand the country because we do have hotels in Indonesia. Now we're starting to expand the food business there. We believe that the political landscape, I think, all the countries have challenges. I think if we can manage the political landscape in Thailand, we can manage political landscape anywhere. Which is good. We learned a lot from Thailand. I think Indonesia, yes, it's a new gateway market, but it's not new for Minor because we already have hotels there, and we are looking at it, not going in a really big way. We're taking steps in a small way. This year, our expansion is to get up to about 100-something, and then next year we will slowly start to increase. It's always step by step, and that's what we're doing.
Yeah. Your next three- years plan won't be changed from now. I mean, even we have seen some political situation-
Yes.
-right now.
Yep.
Okay. Yeah. For the hotel renovation, we have seen the ADR increase 20%-50% that you show in the slide. What about your room revenue? After you have increased the rate, what about the occupancy, and that could affect on the room revenue, how you experience in the room revenue so far?
So I think we're looking at quality of our guests to make sure. Let's say, for example, Anantara Siam Bangkok Hotel, we will increase anything from 20%-40%, right? I showed. In other hotels where we have completed renovation, we are getting those rates. In Samui, The White Lotus effect, we saw a rate increase of 40%. In Anantara, we saw a rate increase of 20%.
But again, if I look at Samui as an example today, the high season today, you cannot get a room now. It's full. I think in spite of some of the pressures we have today in Thailand, with Chinese not coming and some of the other markets, the seasonality business is still very strong. So what we do is during the high season, we make sure we maximize our rates. During the low season, we make sure we maximize the occupancy. That has always been our strategy, because in the low season you cannot charge high rates because then your occupancy is going to drop a lot. So in the low season, we try to maximize the occupancy so that we don't lose money. But in the high season, we maximize our rates because the guests will pay. That's what we do.
What could be the average room revenue increase, on the average? Can we expect 40%, like the same rate that you have increased?
Oh, no. You will not expect a 40%, because the rate growth of 20%-40% is not going to equate because there will be a slight drop in occupancy, for sure. But I think the revenue will increase, but not 40%. The revenue will increase. But the good thing is you will also have other revenues increasing as well, like food and beverage, spa, activities, everything else, because you have a different profile of guests who will come. Like here now, we were showing I think next year we will still command a high single-digit increase in total revenue for the group. But we will still command a 15%-20% increase in net income because it is all flowing to the bottom line.
You expect 70%, I am not sure, 50%, 70% revenue flow through the bottom line. What percentage that mean looking for?
Normally, the way we work is when our revenues are going up, the flow-through should be about 70%. When the revenues are going down, we try and make sure that the flow-through is only 50%. If my revenue has dropped by 100%, my profit will not drop by 100%. It will drop by less than 50%. But if my revenue has gone up by 100%, my profit will go up by 70%.
My last question, can you walk through the completion timeline for the renovation? For, I guess, many locations have been already finished, and some will, like you mentioned, Anantara Siam next year. Yeah.
The only one which will go into next year is this hotel.
Oh, okay.
Hua Hin is finished. Golden Triangle is finished. Layan is finished for December. This one, half will be finished by next week, and the other half will be finished by June next year. Apart from that, Maldives is finished. Most of our renovations have finished. That is one of the reasons, actually, we have dropped our revenue this year because, of course, here, this hotel, only half the hotel is available. In most of our hotels, the revenue has been dropped by some of the renovations we have done.
Okay. Thank you.
Sorry, I have two more follow-ups. The question on Minor Food side, when we talked about IPO and potential cash generation from that, I just want to understand a bit more what is Minor Food's strength. Is it creating new brand? Is it taking brands and then taking it to the next level? Or is it just ability to bring a brand to scale? What would be your definition of Minor Food's strength, and what would be a key area we should focus on when we look into Minor Food?
I think the Minor Food's, the key strengths will be to diversify our brands, because today we are 70% Thailand, 30% international. The main three international hubs today is China, is Australia, and it's Singapore. Sorry. The other countries are so small. Middle East is small, Africa is small, everything. I believe that there is a lot of opportunity for us to grow Minor Food into other countries in a much bigger scale, and leverage. Because Minor Food has a huge amount of operations excellence, is now becoming very innovative. Like you have seen what we have done with The Pizza Company, with Sandwich Society, we introduced with The Steak & More, which also has been introduced. Bonchon, which has been revived from a Korean chicken brand into much more of a family-style brand.
The Pizza Company , we're organizing, or we are launching, or we're test trialing bakery with pizza as well. There's a lot of innovations happening within Minor Food, which has happened this year. We hope to continue that in the coming years, and using that as our operations excellence to expand into new countries and expand the franchise business as well. Because today, The Steak & More, The Steak & More today we have, is all equity-based stores. What we want to do is to convert them into franchises, because The Steak & More is quite profitable. The plan is to create a new brand, convert them into franchise, and then become asset- light. It's doing that spin. Doing that spin overseas will also give us a great benefit, as we have seen in Indonesia. Indonesia has been a great success for us.
I believe that we can replicate the Indonesian success into other countries as well. To go big time into China. For example, in China today, we only have the Riverside Grilled Fish, the brand. But China has the ability for us to introduce Thai. We have an ability to introduce bakery. I think those are the new things that we can introduce. Even in the existing markets where we have existing brands, we can introduce new brands. And where new markets, we can introduce our brands as well, which will work really well. Like Indonesia, we started with Dairy Queen, now we're introducing GAGA. We're going to introduce Pizza, and we'll introduce Bonchon. Australia, we have The Coffee Club today. We are looking at introducing Bonchon in Australia.
These are some of the new initiatives as to how Minor Food will grow to the 4,000 restaurants which we are targeting over the next three years.
One last question from me. You've talked about Pop Mart being a strong part of your lifestyle portfolio. I understand you've said in the past that there's still runway for it to grow, but is that really what Minor is about? Do we really need this as a part of your overall portfolio? Or would it be better off to use that to repay down or deleverage, which is something that everyone's been mainly concerned on?
Yep.
What would be your response to that?
We did look at it, because I think we wanted to gain scale on Pop Mart. I think today, Pop Mart is doing exceptionally well, especially the new store, which we opened in ICONSIAM. It's been a record success as well. See, the thing is, Minor Lifestyle, it's not a core business for us. It's part of the hospitality now. It's part of the hospitality business. In the future, I think we will look at whether we crystallize Minor Pop Mart as well. That was another option we looked at. But I think there is scale to grow, and once we look at that, we will then look at to see whether we can crystallize that as well. But it's all about timing.
Hi. I've got one question on the project in Phuket, the 500 rai of land that you mentioned. Could you please kind of provide more details on that? Because I'm curious, like, how much is the CapEx? How would the project turn out to be? How would you gain revenue from it?
Phuket, the land we have, the 500 rai land we have, is next to the Anantara in Layan. That's a joint venture we have with Kajima. It's a joint venture project. We are doing it on a phase-by-phase basis. It's not like we're going to develop the 500 rai in one go. Out of the 500, we've developed a sizable today. We've done phase two, we've done phase three, we're doing the marina, all that. But there's still quite a significant amount of land left. But we will do it on a phase-by-phase basis. It's not like we're going to inject capital today, and wait for five years for it to crystallize. It's done on a phase-by-phase basis. When we finish phase three, we will acquire the next piece of land, we will do phase four.
When we finish phase four, we will acquire the next piece of land, and we will do phase five. That's how it's been done. It's not like it's in part of our CapEx. This year, as you know, the CapEx is about THB 8 billion, out of THB 860 hotels. Some of that has gone into Layan, where the construction will finish this year, and we will transfer the units next year. Next year, we will see that real estate, unlocking that value of that real estate and selling the real estate. Once we sell that, then we go to the next phase, the phase four and the phase five.
How will those villas and condos being operated? Are we going to hold it as our own hotels, or what are we going to do with it?
No. So what we are doing is we are doing residential, right, in Anantara Layan Phuket Resort. So these residences are sold. Phase one, they can put back into the rental pool. But we have no ownership because we have sold it. We have taken the cash on the sale basis. The owners can put it into the rental pool. Phase three, the condo units, they can buy, but not in the rental pool. Phase four and phase five, we will look at it to see whether it can be in the rental pool or not. So basically, we are getting those units back into the rental pool at no cost, where we will have to share the revenue. Normally, we share 40%, 60%, so 40% goes to the owner, 60% stays with us, the hotel. But don't forget, this whole development is again a JV, so it's not 100% Minor, so it's a JV.
So that reduces our exposure by 50% anyway.
Okay. There's additional question from the analyst who's dialing online. Could you share management's thought process on prioritizing MHEA delisting ahead of accelerating de-leveraging REIT and/or Minor Food IPO?
Could you share-
Why do we prioritize MHEA delisting ahead of deleveraging through REIT or Minor Food IPO?
The main reason we did MHEA, the listing, was because there was an overhang on MHEA. We first owned 94%. We then got to 96% when we did the share buyback two years ago. Today, by doing the delisting, it gives us full flexibility to operate MHEA and really crystallize all the synergies which we can do. For example, we had to do the MHEA, the delisting. Without the delisting, we cannot do the REIT. Now we have these freehold assets in MHEA, where we can now start to inject into the REIT and start to do the IPO of the REIT. If we didn't do the MHEA delisting, that would have been difficult. That's the reason, in terms of the sequence.
Okay. Another question is on the earnings mix. While a lot of the new hotels will be asset- light, how will earnings mix change between asset- light versus owned and leased hotels?
From an EBITDA perspective, I think the fee-based income, including management fees, today accounts for about 30% of our EBITDA today. But I think we expect that 30% to ramp up to 50% by going into asset light and getting that fee income. That's how the shift will be.
The next question is about food. What explains the weakness in food segment EBITDA margins? How should we be thinking about the margins for food segment?
On the food side, I think we were quite clear because we've had some headwinds on the food side. China this year has been quite bad, has been soft. So of course, that has decreased our EBITDA margin. Some of our joint ventures, even here, haven't performed the way compared to prior years. So that has had an impact on our EBITDA margin as well because of the Thai consumer sentiment on the food side, which has really driven that down. And then also we've had some cost increases on the food side, whether it's labor, minimum wage, the costs have gone up. But also in Australia, the coffee bean prices have gone up, which has actually put pressure on The Coffee Club as well. I think these are some of the broader levers which has actually led to the margin drop on the food side.
I think the rest of the questions are on Minor Food IPO, which you already addressed. Is there any other question from the floor? Okay, yes. Nam.
Just a follow- up question on the EBITDA mix. Is that 50% mix targeted by 2028?
No. Today, 30% of our total
EBIT.
income, EBITDA, is coming from fees. That will increase. That 30% will increase to 50%.
By 2028?
By 2028.
2028. Just to follow up question on the RevPAR growth in the mid to longer term. What would it be the sustainable growth rates in the RevPAR for Minor that you're targeting?
We always target a high single-digit RevPAR growth, which has to be above inflation and above the costs as well, so that we can continue to increase our earnings.
Yeah. Once the REIT spin-off has completed, I believe that I'm not sure, but is it going to be harder for Minor to make a rate adjustment from the renovation? If so, then the unit code will become quite important to drive the fee-based income, right? Given the number of the managed hotel in the pipeline, what would be the growth rate that you expect to increase per year for the fee-based revenue?
The growth rate in terms of revenue?
Yeah. For the fee-based revenue based on the managed hotel that under your pipeline.
Like we were saying, today 30% of our fees is coming from fee-based income. That will increase to about 50% coming, mainly because of adding more hotels into the management pipeline or asset light. That will continue to increase in the coming years, after post 2028 as well.
Given that Minor will become more asset light, more managed hotel under your portfolio, is that a high single-digit growth for the RevPAR still maintained?
Yes.
Okay. Alongside with the unit growth, the overall top line growth will still be high single digits?
High single digits, yes.
That is all for me.
Okay. If there are no more questions, I really like to thank all our shareholders and also the analysts and our investors as well. I really hope I thank you for your support, and, based on our share price today, I think Minor will be one of the best investments to crystallize for this year based on what's going to happen for us next year as well. I really hope we can have more support from our shareholders, and we'll continue to deliver the best we have done in the prior years, and continue to do so in the coming years as well. Thank you all. Thank you