Good morning, everyone. Thank you for coming here. It is our pleasure to have you guys here for our analyst investor presentation and quarterly meeting for these second quarter results. We have an honor to have our Chairman, William Heinecke, as well as Group CEO, Dillip, to present for us this quarter. Khun Bill will share his vision, his thoughts, and recent development, as well as Dillip will go deep dive into detail on the performance numbers and expansion plan and strategy. We will end with the Q&A session, and please feel free to address any concerns, any clarification that you need from us. After that, our IR team, including myself, will be here to address any detailed numbers or questions that you may have. I would start by welcome Khun Bill. I will hand the floor to Khun Bill to start our meeting and presentation. Thank you.
Before Khun Bill and Dillip start, we would show the video first, to see some of our highlights of our products and services.
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Okay. Thank you, everyone. Hope you enjoyed a little bit of that. We did not have anything on Pop Mart, so we have surrounded you with a few of the Pop Mart, which is our joint venture with Pop Mart, and which the newest store will be opening tomorrow at Iconsiam, the newest Pop Mart store. Anyway, let me begin with a roundup on our second quarter recap. In the second quarter, we delivered solid core profit growth of +11% year-on-year. A like for like on a very high base from last year, in the middle of tremendous external headwinds this year that we have seen globally, really from wars in the Ukraine and India, Pakistan, Israel, not to mention the trade wars. Since our business reports in local currencies are consolidated THB, the movement has had an impact on translation.
That is why we emphasize our performance on a consistent foreign exchange basis to give a clearer view of the true underlying business performance. Our hotels in Europe and the Americas continued to perform well, growing at 4% despite the fading boost from last year's event-driven spike. Last year was an extraordinary year in Europe. We had things like Taylor Swift's concert tour, we had the UEFA European Championship, and that all took place in June, which delivered our highest June ever. In spite of all of that, we still continued to grow. In Thailand, RevPAR was temporarily affected by ongoing renovations at some of our flagship properties. This hotel is also under renovation at this time and will not return to full operation until next year. We also have hotels being renovated in Hua Hin, Phuket.
We have about 11 properties under renovation here in Thailand, so that explains a little bit of the softness in Thailand, not to mention the political implications that we have seen. Additionally, broader regional tensions have not helped, specifically between India and Pakistan, as well as the rising geopolitical concerns in the Middle East. I think our local political situation and the recent Cambodian incident has not helped either. However, on the food side, total system sales were positive by 0.4% from the continued expansion in Singapore and other markets. Minor Food Thailand managed to expand its margin by 233 basis points from the franchise income and corporate cost efficiency. Lastly, interest expenses in the second quarter fell 19% year-on-year, thanks to ongoing deleveraging efforts and more efficient capital structural management contributing to double-digit bottom line growth.
I think we are very proud of what we saw in the second half. We are on track for our full year 2025 profit. I think many people fail to realize that actually our third and fourth quarters are actually our peak quarters for Minor as they have been since we acquired NH Hotel Group. In the first half of this year, we delivered solid core growth of +22% year-on-year on a constant foreign exchange basis, with healthy contributions from both hotels and food. Looking into the second half, we expect to maintain that momentum. In Europe, the third quarter is the peak travel season, and we are seeing strong forward bookings that support continued RevPAR growth for the group. In Thailand, we anticipate a clear recovery in quarter four once our renovated rooms return to inventory coinciding with our peak season here.
We typically see an uplift in ADR of around 20% after we have completed renovations, which will contribute strongly to our margins. Minor Food continues to ramp up its profit trajectory with franchise expansion and product innovation, heading to higher sales across all key markets. Given the high return nature of the food business and the relatively lower capital intensity, we expect to play a larger role in driving return on invested capital in the quarters ahead. On the cost side, we are benefiting from centralized efficiency measures and a lower interest obligation, both of which support margin expansion. Overall, we are not revising our full-year 2025 core profit target. The underlying business remains strong and forward bookings across hotels are tracking well and reinforcing our confidence in hitting the consensus profits that have been laid out of approximately THB 9 billion by the analysts.
We continue to deepen our asset-light strategy by entering high potential markets through management contracts and partnerships. In Japan, we are proud to announce the launch of our first project in the country, the Anantara Karuizawa Retreat, marking a strategic milestone for our portfolio expansion in Northeast Asia. This is the first of several hotels that you will see in Japan. In China and the UAE, we are expanding with new managed properties and prime leisure destinations with Anantara Clear Water Bay Sanya, Avani+ Fujairah, and the takeover of Dukes The Palm Hotel, which will make us one of the largest operators on the trunk of Dubai's Palm. We also signed MOUs to bring Anantara to Egypt's Red Sea. The pace of the new signings is accelerating, thanks to Minor's growing credibility as a global hotel operator and a brand manager.
Our proven track record in delivering performance has made us a trusted partner. With more signings in the pipeline, we are confident of our ability to meet our hotel open targets, which Dillip will talk about over the next few years. On the food side, we have restructured our Art of Baking, selling a partial stake to Europastry, one of the largest frozen pastry and dough-making operations in Spain and in Europe. We will be using that as a springboard to cover all of ASEAN, Southeast Asia, Australia, and Japan. This is a major step that we have taken from our manufacturing division. This partnership boosts our production capability and raises our credentials significantly. Previously, AOB supplied baked goods primarily to local players. Now we are positioned to support and supply international food and beverage chains, not only in Thailand, but throughout the region.
Moving from being really a local vendor to a regional vendor. The deal with Europastry is a clear example of how we are scaling up our food platform by leveraging our global know-how and strengthening our manufacturing base, fueling the future and expanding our global footprint. We continue to grow the brands under our original NH portfolio, which has now surpassed 350 hotels globally. This includes 216 NH Hotels, 106 NH Collection hotels, 20 Tivolis, and 8 nhow properties. I should also mention that we have now added 2 NH properties here in Bangkok, both under management agreements to complement the one NH that we have in Phuket. During this quarter, Minor Hotels expanded footprint with the opening of two new lease properties. Those are the ones that I mentioned, but in Europe.
These are the NH Collection Palermo Palazzo Sitano in Italy and the NH Copenhagen Grand Joanne in Denmark, which really solidifies our presence in Southern and Northern Europe. We also successfully rebranded the NH Marbella and NH Collection Marbella, elevating the hotels in the upper upscale market. This supports the brand's premium perception, and it is already contributing to a strong uplift in our ADR. In Australia, we added two new properties under the Oaks platform, Oaks Lake Crackenback Resort in New South Wales, and Queens Wharf Residences in Queensland, a landmark mixed-use development in Brisbane. All of this demonstrates how well we are executing our balanced expansion strategy, growing through a mix of brand elevation, selective openings, and very asset-light growth in key demand destinations. Scaling our hotels and food with strategic moves.
Let me start with Oaks, a brand that historically operated under a management letting rights, we call it an MLR model, with a strong focus on serviced apartments in Australia and New Zealand. Over the past year, we have transformed Oaks into a full-service lifestyle brand, expanding its offering to include hotels and resorts as well, enabling us to capture a much broader customer base. We are also excited to launch four new hotel brands, which you saw in the last film, each with a distinct character to fill white spaces in our portfolio. The Wolseley Hotels and Residences, a luxury inspired by our iconic The Wolseley restaurant, which has been operating in London for the last 18 years. The Minor Reserve Collection, curated destinations with experiences you will not find anywhere else.
The Colbert Collection, another one of our restaurants in London, which has been inspired by our tremendous popularity in London, will be a premium brand designated and designed to bring people together. One of our other hotels is the iStay, a high-quality select service concept for value-conscious travelers in strategic markets. This evolution enables us to segment a scale and scale across geographies with much stronger brand clarity and guest targeting. On the food side, we continue to grow through an asset-light model, bringing multiple brands into our international markets. In quarter two, we saw new franchise openings for Benihana in Malaysia, GAGA in Laos, and The Coffee Club in Kenya, further reinforcing our global franchising capability. Importantly, GAGA has been a strong engine, delivering exceptional total system sales and same-store sales growth, not only in Thailand but also in Indonesia.
As a result, we made the decision to increase our stake in GAGA to 70%, solidifying our commitment to grow this beverage segment much further all across the region. Minor Food driving innovation. We have really been focused very much on our innovation. Our new brand, the Steak and More, now operates five stores and has shown strong appeal across a wide range of customer segments. It is positioned below Sizzler and able to scale at a much quicker pace than Sizzler. With sales per store exceeding expectations, we expect to accelerate expansion through a mix of equity-owned and franchise-owned. Beyond innovation, we are also rolling out new store formats that enhance reach, profitability, and risk management. Dairy Queen's new modular model brings us closer to customers with extended operating hours, and it is ideal for high-traffic, late-night, and underserved locations.
At the same time, GAGA is evolving into a beverage-led format designed to attract younger, more affluent consumers through a trend-forward offerings and a cool store design. This concept is one of the key drivers in building deeper engagement with Gen Z and also our millennial customers while expanding our footprint in the high-growth specialty beverage segment. We have recently taken Spain, our Minor Hotels Europe & Americas , private. After several years, we took our first stake in NH Hotels at that time, the publicly listed vehicle, and we acquired up to 94%. We have now been successful in gaining approval from the CNMV to delist Minor Hotels Europe & Americas from being a public company, and this will be formally launched with a tender offer, and we hope to obtain all the remaining minority shares, which is expected to conclude within the third quarter. This move is highly strategic.
By delisting Minor Hotels in Europe, we remove listing-related constraints by bypassing listing requirements that sometimes impact our strategy execution. At the same time, we will significantly reduce the recurring administrative and regulatory costs associated with being a listed entity in Spain. We have been operating like that for the last six years at great cost. This structural simplification enhances our flexibility to pursue long-time value creation, including potential reformation, asset rotation, and better alignment of capital across all of our market opportunities. On capital management, another option under consideration, obviously, right now, many Thai companies have looked at the Thai market and recognized that it is tremendously undervalued. We have seen many local companies, including S&P, Thai Union, and others that have launched buybacks.
We are also studying that opportunity because today, even when we delisted NH, we paid a higher price for our remaining shares there than Minor is selling for here in Thailand. We believe Minor International is very highly undervalued, and we will continue to find ways to unlock that value, and if necessary, even consider to enter into a share buyback program. That said, we are still in the process of evaluating all of these opportunities and opportunities that will further enhance Minor International shareholders. But the intent is clear. We want to act in the best interests of our long-term shareholders and reinforce confidence in Minor International's intrinsic value.
One of the hidden assets that we have besides our incredible team of people globally is all of the brands that you see, which list on our balance sheet for zero value, whether it is the NH brand or it is the Anantara brand or The Pizza Company or GAGA or any of these incredible brands that have global appeal, they are listed on our balance sheet for nothing. So please always consider the intrinsic value that Minor International has because it is a consumer-driven brand-owning company. I think with that, maybe I should turn over to Dillip.
Thank you, Bill. Good morning, everyone. It is a pleasure to be here to welcome you to our second quarter 2025 presentation. As we all know, today, Minor International has become a multi-engine growth platform which has three pillars built on it. Hotels, which is anchored in global gateway destinations markets, and also the food, Minor Food, is scaled across high growth consumption markets. We also have the real estate and mixed use, which also underpins our value in terms of enhancing our brand equity, and driving our cash flows. Looking out into 2029, as we have previously disclosed, our long-term growth plan remains firmly back on track. We are targeting 1,000 over hotels and over 4,500 restaurants globally. This excludes some of our partnerships which we have with S&P Syndicate Public Company Limited, with BreadTalk Group. Those are not included in this as part of the growth plan.
The expansion will continue to power the blend of asset-light models in new market entries and also deeper penetration into high growth regions. This is mainly because of the brand equity has been built very strong today, and we have scaled our brands quite strongly. We used to be quite heavy on assets before. We have used that brand equity now to start to grow more into the asset-light model. The strength of our platform, combined with the diversified brand portfolio and strong execution, gives us the confidence in delivering the growth. Importantly, the subsequent slides you will see will provide more visibility in terms of our signed pipeline and the upcoming openings for our restaurants, which reflects our confidence in achieving these targets, both in 2027 and also back to 2029 as well. Looking at the financial targets. Our financial targets demonstrates clearly our purpose and our strategy.
The revenue growth, which is high single digit on a CAGR basis, and the profit growth still continues to grow around 15%-20% annually, with ROIC of more than 12% across the cycle, which includes hotels and food blended together. These are based on revenue drivers, operations excellence, capital discipline, and also the capital structure, which will preserve the flexibility to seize the opportunities whilst we ensure our credit strength for lenders and attractive returns for our shareholders as well. Despite the global uncertainties today, we remain confident in delivering our three-year financial targets, including the high single-digit revenue, 15%-20% profit growth, and the ROIC of about 12%. Our financial discipline continues to drive results as we have demonstrated in the years after COVID, how strongly we bounced back, and also how we have demonstrated in 2023, 2024, and 2025, the first two quarters.
While we approve the delisting of Minor Hotels Europe & Americas may temporarily impact our short-term leverage ratio due to the budget scale set aside for the tender offer, we believe that the strong strategic benefits of simplifying our structure and unlocking the value far exceeds the near-term effect. It is the same as what happened when we acquired Oaks, when we acquired Tivoli, when we acquired NH Hotels. We did rise up and then quickly we did manage to bring it down because we managed to unlock and get the profits, leverage the profits from the acquisitions. Looking at the macro trends, by region, our global footprint will remain as our strategic advantage. The global macro outlook has become more uncertain in recent months, largely due to many issues, whether it is geopolitical tensions, whether it is weather-related issues, some cost pressures, trade wars, and so on.
The level of travel remains resilient in most of the regions. Maybe there has been a shift from long haul to regional travel, but the travel pattern remains still strong. The international arrivals forecast has been adjusted accordingly. That said that Europe continues to stand out with our upward revision in 2025 with arrival forecast compared to just a month ago. A strong single recovery and demand remains strong. Asia, whilst it is revised slightly downwards, mainly due to the geopolitical tensions and the slowdown in the outbound China market, which is predominantly affecting Thailand. In other parts of the region, we are still projected to deliver a double-digit arrival growth alongside with Africa, which also remains as a high potential market. Middle East has seen some impact due to the recent conflicts. The war has had an impact. In certain days, the airports were closed, the airspace was locked down.
I think when we look at the future bookings, it is looking quite strong, especially for Q4. Minor Hotels, the regional strategies. Europe will continue to provide a stable growth. We are expanding into tier one and tier two cities with our asset-light strategy. Also clustering several of our hotels to minimize our cost exposure in these regions. We also see a significant opportunity to scale the Anantara brand visibility in Europe, with more luxury hotels opening plan to elevate the brand international presence. Today, in Anantara, we have about 60 Anantaras today in the total portfolio, open hotels, and about nine of them are in Europe. In North America, we are also exploring a potential opportunity to work with an exclusive partner to expand our brands in the U.S. through a franchise or a management platform. Again, going more into asset-light.
In Latin America, our growth will be selective, focused on more management contracts and franchises in selected capital cities and top-tier leisure destinations. For Asia, our strategy is to leverage our full brand portfolio, especially bringing NH brands into the new markets, where their positioning fits well with the emerging demand. The Middle East remains one of our most promising regions in terms of pipeline, and particularly the management contracts for the Middle East, because the Middle East, all our hotels are under management contracts. We don't own any hotels in the Middle East. We don't own any hotels in China. In Africa, we will continue to grow selectively through luxury offerings with Anantara, Avani, targeting destinations with rising affluence and tourism development support. We will be opening our first Anantara camp in Zambia towards the end of the year. Again, this will be a managed hotel.
Minor Food, the regional strategies. In Thailand, CLMV countries, and India, we're using our full brand portfolio to scale our business across the region. The Pizza Company, Swensen's, Dairy Queen, Sizzler, Bonchon, GAGA, as well as our new brands, are all part of the expansion roadmap. In Indonesia, where our growth momentum has been very strong and the store profitability has been high, which has been demonstrated with our openings there, we are focusing on locations with proven demand and scalable economies, and the same goes for Singapore. We're delaying our equity expansion in China and Australia for now, focusing instead on maximizing performance from our existing stores. In the Middle East, we already operate The Coffee Club. We see an opportunity to deepen our brand presence and expand in Africa. You know, we've opened our first Coffee Club store in Africa, which has been a franchise.
The franchisee, the plan is to open 50 stores in the coming years. This is by introducing also Benihana and Sizzler, which also have a proven track record and an appeal in the similar markets with the customers as well. Expanding our hotel portfolio in strategic geographies and the rebalance as well. Over the next few years, as you can see here, we are reshaping our hotel portfolio with two objectives, increasing our asset light and enhancing our geographic balance as well. On the risk side, about 45% of our hotel portfolio will be asset light by 2027. If you look at our pipeline today, about 80% of our hotels in our pipeline are mainly asset light, either management contracts or franchises. Another risk reduction strategy is how we are migrating our lease risk in our traditional contracts.
For our lease contracts, especially in Europe, we have been proactively renegotiating terms, replacing fixed leases with pure variable lease structures on a basket lease, which will allow us greater flexibility or exit options during market disruptions. We saw what happened in COVID with our exposure in Europe. On that, we're now renegotiating most of our leases to become variable leases instead of fixed leases. From a geographic perspective, it will be much more rebalanced with all of Europe coming together down to about 43%, whilst Asia, Middle East, and Africa will grow meaningfully as well. This will ensure a better regional diversification. From a brand standpoint, the growth will be led by more luxury brands, Anantara, Avani, NH Collection, Tivoli, all of which are seeing stronger brand recognition across the new regions.
The four new brands which we have introduced will add further to fuel our demand. Ultimately, this shift will create a more resilient, global, diversified, and flexible portfolio, which will be better aligned with our asset-light strategy and risk management goals to help us to achieve a better capital efficiency and stronger margins in the coming years. Minor Hotels, the expansion pipeline. Our portfolio continues to scale. As we said before, we are targeting over 850 hotels by 2027, up from 567 today, underpinned by a disciplined and a balanced expansion approach. The majority of this pipeline will be asset-light, with over 60 hotels already signed and in progress, 200+ hotels under negotiation, showing a strong growth momentum and partner confidence with Minor as a global platform. We are also focusing high growth regions, including Asia, which includes Thailand, China, India, and Japan.
In Europe, Spain, Italy, and some of the other countries. Commonwealth States, and the Middle East, Kingdom of Saudi Arabia, we are very strong. Our pipeline is getting quite strong there. We are also looking at hotels in Bahrain, which will also open soon. The Americas, which includes U.S., Turks and Caicos, Mexico, and Belize, where we can scale our high margin fee in generating our business. For equity and JV investments, we have been highly selective, focusing on strategic markets like Singapore. We just did a groundbreaking two days ago in Singapore, for an Avani, which will open in 2029, in partnership with Kajima and also our partner from Abu Dhabi Fund for Development in the Middle East. Minor's exposure is only 25%. We will be managing the hotel, bringing Avani Hotel into Singapore.
We are selective for Singapore, Japan, Spain, Portugal, Australia, and Africa, where we can drive long-term value and also the valuation on assets. The robust pipeline, both signed and under negotiation, will give us a strong visibility to hit our 2027 targets, and our proven track record of execution gives us the confidence to deliver on these targets. The asset-light acceleration for hotels. One of the reasons we are securing more management contracts globally is the strength and flexibility of our brand platforms. In our recent launch of our four new brands, The Wolseley Hotels and Residences, Minor Reserve Collection, the Colbert Collection, and the iStay, we can now offer a comprehensive portfolio that covers all locations and guest segments.
From premium lifestyle brands for younger travelers to high touch luxury experiences for sophisticated guests, we can now match our brands to demand across nearly every single market. Minor has also managed to bring all the brand portfolios under one brand, which was done this year very successfully under Minor Hotels. Under Minor Hotels, we now will have all our brands, which we can leverage our brand strength. Another key differentiator is our proven ability to enhance hotel profitability beyond just RevPAR. We focus on total revenue, which includes not just rooms revenue, but it includes F&B and other revenues. Our owners value how we maximize the asset utilization, monetizing F&B through branded concepts, integrating wellness offerings, and curating experiences, and as an add-on that will increase the guest spend in our hotels.
On the loyalty front, as we all know, we have the Minor DISCOVERY, which continues to gain significant traction. In the first half alone, the total hotel revenues related to the loyalty reached about THB 1.5 billion, which is up by 17% year-on-year. The Global Hotel Alliance [GHA] portfolio has also expanded to 48 new properties in the first half, increasing the accessibility and coverage. Finally, our Minor Hotels global booking platform continues to perform strongly, gaining share from third parties and delivering a higher margin with direct bookings from our own properties, and further enhancing the owner returns and also brand control as well. On the residential pipeline, our mixed-use residential project demonstrates our ability to monetize in prime locations and achieve premium sales. We are scaling our branded residential platform across high-demand destinations through strategic partnerships and phased development.
For example, our joint venture with Kajima, a company in Japan, a long-standing and trusted partner, has successfully delivered the Avadina Hills project in Phuket, which has now been completely sold out. We are now expanding with Kiara Reserve, a new development that includes both luxury villas and condominiums with already strong sales on the books. To build this momentum with JV between Minor International and Kajima, also has secured a large adjacent land bank of more than 500 rai, or close to 90 hectares, with more than 5x the size of Avadina, and this site will be developed in phases over the coming years, featuring ultra-luxury villas and condominiums, a world-class marina in Phuket, a high-end retail and entertainment venue as well.
The project will follow a capital-efficient model, which is doing it on a phase-by-phase basis, allowing us to manage our CapEx efficiently and align the land drawdown in terms of acquiring the land with the market demand. This pipeline not only enhances the brand visibility and maximizes the asset potential, but will also provide a steady cash flow and sustainable profit growth year after year for the next decade. It's a very large project. On the food expansion with asset-light growth. Similar to the hotel strategy, Minor Food will continue to scale with asset-light approach at the core of our business expansion, and looking at it outside Thailand as well. By 2027, we expect to operate over 4,000 outlets from only we have 2,659 today. A clear indication of our confidence in our brand portfolio and the operating model of the food group.
From a business model perspective, we are shifting from a 50/50 split, more towards a franchise-led mix, with franchise stores expected to account for 56% of our network by 2027, and also diversifying more internationally as well. This shift is intentional. It allows us to scale faster, lower capital intensity, and enable stronger returns for both us and our partners. The food business remains high margin, high growth engine that will also complement our hotels as well. Geographically, Thailand remains the backbone, but its share will reduce on the food group as international markets will scale faster, especially Indonesia and India, which are emerging as high-growth priority markets where Indonesia, we already have a strong footprint, which is growing much faster than expected. India, also, we are stepping into India, introducing our brands as well.
In both countries, we are seeing strong demand across several brands and highly attractive store economics as well. These markets will account for 10% of our store base by 2027, up from 2% today. We will continue to build our presence in Singapore with our equity expansion and Australia through franchising as well. In China, our expansion will be a bit more cautious, but will resume as soon as the domestic consumption sentiment recovers. The asset-light acceleration for Minor Food. The strategy is to keep the margin strong, accelerate geographic reach, and also provide a steady cash flow with our own food equity brands. Just like the hotel brands, brand equity and the portfolio diversity are very crucial for the food expansion strategy.
With a wide range of concepts today on the food group, from pizzas to burgers, to steaks, to fried chicken, ice cream, and beverages, we are able to serve for different locations and different consumer profiles in different geographies as well. Thanks to our proven track record, we are seeing strong interest both in our existing and our new franchises. Many of them are asking us to take on additional brands to expand their territories as well. That opens up new opportunities for us to scale up our business on the food group as well. In Thailand, we are the benchmark operator, not just in size, but in speed of innovation, execution, capability, and operations excellence. If you order The Pizza Company from 1112, I'm sure you'll get your pizza now today in 20 minutes.
No one else can do it in Thailand, so our end-to-end supply chain, nationwide logistics coverage, and talent development perform, which gives us an edge ensuring consistent quality and services across thousands of our outlets. Our scale advantage and expertise also mean lower CapEx per store, highly efficient cost structures, and a faster payback to our franchises. This is under the new model. We are more focusing on quick payback to our franchises. If our franchises are successful, our store count will start to increase quite fast. Ultimately, this will translate into high profitability and attractive returns, making Minor Food one of the most compelling F&B franchise platforms in the region. Not sure how many of you have tried our new concept, which is called the Steak and More, which is gaining a lot of demand.
The MPSA of Steak and More is quite high compared to some of our other brands as well. It's expanding quite fast, which we will expand initially in Thailand quite fast, and then roll it out outside as well. The next slide is to talk about the future of Minor Food. As we are entering the second half of the year and beyond, with strong store expansion momentum, particularly in new markets like Indonesia and India, through our innovative formats. In Indonesia, we are positioning the market as a key growth engine using low CapEx, high return model, led by both Dairy Queen and GAGA. Our current base of 48 stores today in Indonesia has shown strong performance, and we are targeting to reach 80 stores by the end of this year.
In India, we are preparing to launch our new sweet-focused brand later this year, along with the rollout of additional Sanook Kitchen, a Thai restaurant brand, bringing more variety and depth to one of the world's largest consumer markets. On the domestic franchising front, we are seeing a strong partner demand for multiple brands, espe cially for Bonchon and GAGA, with a combined target of nearly 40 franchise stores by end of this year. The achievements are underpinned by our R&D capabilities, our market strength, and also our brand equity and robust operations and training platform, enabling us to achieve attractive returns for our franchisees. With scalable models, a diversified portfolio, and a trusted partner ecosystem, Minor Food is well-positioned to drive sustainable high growth across South Asia and beyond, catering to today's customer needs. Looking at the first half performance recap.
First half, we delivered resilient results despite the uneven market recoveries. In the first half of 2025, Minor delivered core revenue of THB 80.1 billion, which represents a 3% increase year-on-year on a constant Forex basis. However, due to the appreciation of the THB , especially against the EUR and the USD the AUD , the core revenues declined by 3%, which was an impact of the Forex translation. Looking at core net profit, we achieved THB 3.5 billion, which is a 22% growth on a constant Forex basis, a solid performance despite some of the external headwinds we are facing today. We remain confident in our ability to meet our full year expectation through our disciplined execution of portfolio balance for Q3 and Q4. As Khun Bill already mentioned, Q3 and Q4 will be our highest quarters.
Q3 highest for Europe and Q4 will be highest for rest of the world. Going into the first half of hotel performance. The hotel business, we saw a solid operational improvement in the first half of the year with the RevPAR increasing across most of the key markets on a constant Forex basis. Europe and the Americas posted a 6% growth in EUR in terms of RevPAR, driven by strong leisure demand and corporate travel. Importantly, we benchmark against the listed peers in Europe. Our hotels in Europe and America showed the highest RevPAR growth in the first half and also outperformed most of our peers, both in EBITDA margin and EBITDA growth, which reflects our strength of our brands and the portfolio and the local execution.
Thailand also we grew by 4% RevPAR despite some of the renovations and disruptions we've had this year because we're using that time to renovate and almost about 10 of our hotels are under renovation today. When they come back in Q4, we will see the strong growth starting from Q4 onto the next year as well. The Maldives continued to outperform, delivering a 23% RevPAR growth in U.S. dollars, benefiting from a stronger long-haul luxury travel and our experiential offering as well. As you know, in the Maldives today we have nine hotels, most under management, some under ownership as well. While our management licensing rights business in Australia did see a RevPAR decline of 3% in the first half, the trend has improved in the second quarter with a positive growth, as the corporate segment will more than offset the lower leisure demand.
Compared to our peers, our business in Australia achieved the highest RevPAR, signaling the gain in the market share. The managed hotels dipped by 6% due to the effects from forex translation and the impact of the new hotel openings that are still in the ramp-up stage. On a financial basis, the core revenues grew by 3% year-on-year on a constant forex, but the THB appreciation caused a negative 3% reported revenue drop. Even so, the core net profit grows by 34% on a constant forex basis, with the net margin expanding to 3.5% from 2.7%, driven by a stronger contribution from Thailand, Europe, and the residential sales. On the food side, Minor Food delivered the first half core revenue increasing by 3% year-on-year on a constant forex basis, supported by our ability to drive both top and bottom line.
Growth was driven by improved contributions from Singapore and Australia, especially through our contract roasting business, which is called Nomad in Australia. In Thailand, the coding system sales grew modestly. Though same-store sales were impacted by weaker mall foot traffic in April, following the March earthquake, along with softer consumer sentiment. We still outperform the other key competitors in Thailand on a comparable same-store sales growth. This shows the underscoring of the strength of our innovation and the efficient execution on the food group. On the bottom line, the core net profit grew by 4% on a constant forex basis to THB 1.25 billion , maintaining a healthy net margin of almost 8%, which was above last year. The food business remains solid earnings contributor, as it also has a high ROIC profile and a strong franchise network and a lower CapEx intensity.
Next one is we talk about balance sheet CapEx and the strength of our balance sheet. Our balance sheet foundation has been our strategic strength. In line with our long-standing commitment to financial discipline, we continue to review and reprioritize our CapEx to focus on high return and strategic investments. As you can see, in 2025, our CapEx has been revised down by 10% from its original plan to THB 10 billion . We allocated approximately THB 2.5 billion-THB 3 billion for the tender offer relating to Minor Hotels Europe & Americas , the delisting in Europe. Whilst this creates a short-term capital commitment, in the long term, the benefits of the structure and the simplification and the value unlock will outweigh the impact.
With a revised CapEx plan, we continue to prioritize our projects that drive clear returns, including hotel renovations and rebrandings to significantly uplift our ADR in key city locations and resorts with high margin residential developments where we can already see the demand and the visible sales pipeline, and selective restaurant expansion for the food group, particularly on the franchise model, where we see the payback as short as one to three years in key markets. The next one is we talk about our healthy capital structure. Our capital structure remains healthy and well with both internal and external limits. As of June, our net interest-bearing debt to equity stands at THB 0.82, which is comfortably below our internal ceiling at 1.3 x, and the covenant threshold, as you know, it was 1.75x. So we're well below our covenant threshold.
Net debt to EBITDA is currently at 4 x, and we are guiding towards. Sorry, net debt to EBITDA is currently 4.6x as at half year. We are guiding towards a range of 4x to 4.2x by the end of this year. So net debt to EBITDA will come down to about 4.1 or 4.2. As mentioned earlier, we are setting aside approximately THB 2.5 billion to THB 3 billion for the tender offer to delist Minor Hotels Europe & Americas . Together with the forex translation effects, this will slightly increase our leverage.
By the end of the year compared to our original forecast. It is a strategic move for us to take out the overhang on our share price. During the second half of the year, we will continue to reduce the outstanding debt further. With easing of the benchmark rates and improving the credit profile, we expect our cost of funds to continue to trend down, creating an additional upside in the second half of the year and beyond. Our interest rate expenses already declined by 17% year-on-year in the first half, reflecting both lower debt levels and improved cost of funding. That brings us to the end of the presentation, and we will be more than happy to take any Q&As based on this.
Thank you for the presentation. I have two sets of questions. First is on how you use your money, essentially. You said you talked about considering buybacks, which is a surprise to us, given that Minor International has been a company looking to grow more than, I would not say not caring about total shareholder returns, but more in terms of expansion. So I was just wondering why did that come about? Also, does this derail your deleveraging strategy? How much money are we looking at or anything like that? Also, the implication of this, does this mean we are happy with the brand portfolio we have, or are we not going to acquire any more brand at this point in time? Or, yeah, the direction in terms of the portfolio we have on both the hotel and the food side? Yeah, so that is the first group of questions.
Thank you.
I think the share buyback is only something that is being considered right now because of the extremely low price that we see Minor trading at. I should point out that many of our acquisitions that we have made over the years were all bought at under nine times or certainly well under 10x EBITDA. We have generally sold a number of assets at 20x EBITDA or above. My concern lies with the fact that today, the EBITDA for Minor International is over THB 1 billion, but our market cap is hovering around THB 4 billion. That means only 4x EBITDA. It is incredibly low for a company that is this strong with this many brands.
I guess my view is that if the market does not recognize it pretty quickly, our money is probably better spent buying our own shares than it is trying to buy other people's at 9x, 10x EBITDA. Even to buy out the remaining shareholders of NH Hotel Group, we must pay a much higher price, and that is strategically very important and beneficial to us. We would never compromise not having sufficient funds to also execute good acquisitions. We are constantly looking at ways to deploy shareholders' money. We have done that with things like the purchase of GAGA, and now recently we increased our stake in GAGA because of the success that we see it having.
But honestly, speaking as a major shareholder, it is alarming to me that the price is so low, and I have to attribute a lot of that to the loss of foreign investors in Thailand, to the current political climate, and the fact that many companies, including companies that we own significant share in, like S&P, have started buying back their own shares. It does not mean to derail any thoughts on acquisition or continuing to grow or satisfaction with our current portfolio. We think we have a very strong portfolio, but we are always interested to expand it, whether it be in hotels or food. This is just something that I am sharing with you, which is under consideration. As you can see, many Thai companies are facing the same situation, that their shares are very strongly undervalued by the market today.
With the loss of foreign investors in the Thai market, this is of concern to us. But no decision has been taken on this yet. All shareholders will be duly informed if a decision is taken.
And just to follow up on that. So you have your three- to five-year expansion plan, especially on the hotel side. Is that only based on the brand that we have today, or are we still looking to add more brands down the road to get to that 1,000 hotel?
All of the projections that you see today are based on what we have today, the brands that we have. We just added four new brands, as we shared with you. I think those are sufficient to more than exceed our current projections that we've given in this three- to five-year plan. But again, it doesn't exclude the fact that we might well acquire other brands or assets during this time. But those would be accretive to the current plan. They're not necessary to achieve the plans, either in food or in hotels.
And then my last question is on the food side. So we talked a lot about expanding into Indonesia and India. Indonesia, you have some presence there, but generally it's a new market. And I understand that the performance in China is not a result of us specifically, but because of the market as well. But going into a new market is quite risky, and we have seen in the past several years that it hasn't been the easiest for us. So what makes us so confident that we can go into these markets and do it successfully as well?
I think Indonesia is one of the largest markets in ASEAN today. We already acquired Dairy Queen, which we know very well. And Dairy Queen, we have a lot of experience with it in Thailand. It had been operating for about 10 years, but at a very, very high price. The price of a Blizzard, which we pay THB 25 for or whatever, was selling there for about THB 100. It was far too expensive to get the volume of sales that it is. So we bought out the company, we lowered the prices, and we've shown dramatic growth on Dairy Queen. In addition, we brought GAGA to Indonesia, and that's been an enormous success because it's priced very similar in terms of attracting the Gen Z in Indonesia and located in many cases next to a DQ outlet.
We really minimized the tests and we expect. We have achieved already 50 stores in Indonesia of Dairy Queen and GAGA, and we expect to more than double that this year. To give you an idea, we have started this year, and I think the numbers that I saw were that we already made a profit this year, but the profit was very small. The most interesting thing, the profit in June on an annualized basis was exceedingly high. In the second quarter we already saw the results, and I expect to see that continue. We are looking very aggressively at expanding GAGA, not only in Thailand but even in our neighboring countries. You are going to see a major run-up on that.
Just a last follow-up question on that is that how do you view your food portfolio brand? How is the recognition in Asian market or in the regional market that you can maybe bring in other brands down the road? Thank you.
We are very strong. Take, for example, Vietnam. We have over 100 The Pizza Company there. We also have other brands there from our Thai Express, Poulet, Sizzler. We are quite well seen and positioned there to continue to grow and add more brands to that. The same thing in Cambodia where we have nearly 100 The Pizza Company, Swensen's, and other brands. We are also poised to grow there and probably introduce some of our brands. Steak and More will now be introduced for franchising, and we would expect to see that coming out. Bonchon has now recently been added because we own the Thailand rights to Bonchon. We are consistently focused on this. It is very interesting because what we are doing now is focusing on franchising more so than our equity. In a market like Indonesia, at the moment it is all equity because it is so profitable.
It is a very low capital structure. Most of our brands can get a payback on their investment in between one and three years, maximum. The majority would be one to one and a half years. This is where our focus is. It is a rapid payback even when we make an equity investment.
In the meantime, we have a question from online audience.
Okay.
Can you elaborate more about hotel under lease and de-risk lease?
Which one? The hotel-
Under leases.
Under lease and de-risk lease.
Okay, Dillip, maybe.
I think, yes. As we know, when we acquired NH Hotel Group, the model was much more skewed towards a highly lease-operated hotel model. Out of the 380 hotels we acquired, about 240 of them were under leases. What we have done is post-COVID, we have managed to shift some of the fixed-term leases into variable-term leases as well, which is a smaller minimum with a variable on revenue as well, which reduces our exposure going forward. It is also related more towards a revenue-driven model. The new leases we are signing, we are not signing long-term leases anymore. We are signing leases with a basket, which will reduce our risk quite extensively because we do not have to carry the lease liability of 20 years or 25 years of owning this asset. So we sign with the two-year lease basket, which is at our option whether to replenish or not.
That gives us a greater flexibility in terms of the exposure of a liability on our balance sheet. So that is the shift from how we are trying to de-risk our leases as well.
Question there.
If I recall, I think Minor considered opening a REIT by this year or next year or sometime. Has there been any update on that so far?
That is on track. We are on track to Because we've done a lot of the legwork because of the It's not easy to, because in terms of launching the REIT, the structuring of the REIT, it takes a lot of time, and then the debating whether between Thailand and Singapore. We've done most of the structuring work with a target to launch the REIT by end of Q1 next year. That's still on target.
Okay. I understand you have renovations going on in your Thai hotels. Is this going to end by the third and fourth quarter of this year, or will it continue on into next year as well?
Some will continue into next year, but most of them will end for us to take advantage of the high season. Say, for example, here, the first phase will end by end of November. We will be able to take, because we have some strong bookings in December, so we will be able to benefit from that. The others will be the same. We will benefit from the high season. The plan is to have most of the hotels done, ready for the high season.
My last question is about Maldives. From what I understand, it has been quite a competitive market. There is always quite a big supply of hotels there. According to Minor International, what is the situation like in Maldives in the sense of how are the occ rates, the ADRs? What is the trend this year compared to last year?
I think, the trend last year was negatively impacted because of the issues Maldives had with India, which was one of their biggest markets, because China was not traveling a lot. This year, that has been resolved, and we saw quite a strong uptick in our rates, especially our rates for the Maldives was up compared to last year. We do operate nine hotels today in the Maldives, so we are one of the biggest operators today. We are able to leverage our platform, including working with some of the strong DMC or the business partners as well, being able to leverage our platform and our relationship, and driving that demand as well. Our focus in the Maldives has always been driving that rate. Today, we are beating some of our competitors as well.
Our rate positioning is one of the We are in the top two, which gives us enough confidence. We are actually gaining market share in the Maldives. Maldives has been very strong for us. I think the growth in the second quarter was a 17% growth on a like-for-like basis, which is quite strong.
Thank you.
I have a question on the debt reduction. I understand that you have early repaid EUR 400 million debt in July 2nd. You also have mentioned that you will allocate around THB 2 billion-THB 3 billion related to the tender offer. The net impact between these two sections, we still can expect around 100 decline in the euro. Any further debt reduction that we can expect in the second half apart from these two transactions?
I think, because of our strong performance in Europe, we had a EUR 400 million bond which we retired in July. We managed to reduce that to EUR 200 million. We did not issue a bond because we know that the rates will come down in the future, so we didn't want to lock ourselves. We issued a term loan of EUR 200, and then we repaid EUR 200 from our own cash flow, which is from internal cash flows. The tender offer is going to be, as you rightly mentioned, we will have to increase our leverage a little bit to pay for that in September, by the end of September. But I think net-net overall, for the group, our debt levels continue to reduce. We have reduced our CapEx to rebalance to make sure that we're not going to increase our leverage.
It will go up slightly by the end of this year because of the tender offer. But the tender offer is much more strategic for us. It takes out the overhang on our share price. It enables us to better synergize the group like we have done in the old days with Oaks Hotels in Australia, which we acquired in 2011, which is now 100% owned by Minor. We've done that. We're doing the same thing now with NH Hotels as well.
Just a follow-up question to clarify. We can expect the decline in the interest rate more from the lower call offering instead of the major reduction in the outstanding debt by the end of this year, right?
Yes. The interest costs for the first half has come down by 17%, as we said before, and that will continue the trend for the second half as well.
Thank you.
Another question online. Can you walk us through a timeline for opening of hotels by number of keys across the next three years?
In 2025, we are looking at about over 40+ hotels opening this year. Last year, we opened over 35 hotels for Minor. This year, in terms of the number of keys, it is going to be about 6,500 keys, which is 80% of that will be asset light. It is all mainly driven by management contracts. 2026 is going to be over about 20 hotels, which will contribute to close to about 3,000 keys. 90% will be asset light. 2027 will be another based on what we have today, because we have not factored in any of the rebrandings which we have in the pipeline. We only factor in on the signed management contracts. Over 20+ hotels in 2029, over about 3,500 keys, with about 90% of that will be asset light.
The follow-up question on that is how should we think about the flow-through to P&L? It would be great if you could walk us through some metrics, like revenue per 1,000 keys and stabilized margins.
We continue to see, in spite of the external pressures we have, we continue to see the EBITDA margins improving. I think on a net earnings, with our cost of debt coming down, we will also continue to see the net earnings, the margins growing as well. Both on the food side, which contributes a higher margin, as we all know, because of the asset-light model and also a lower CapEx model. On the hotel side, again, we monitor our margins on a quarterly basis, which has been growing. For this year, our margins have grown over last year as well.
Just one quick follow-up from me. Could you just walk us through the detail on how Minor will benefit from the delisting of NH? What are the key benefit areas? Because we understand that you said that you remove some regulatory burdens and stuff like that, but can you translate that into either numbers or anything that we can get a clearer picture on? Thank you.
So just to give you an oversight in terms of what we are looking at. Number one is, yes, it does take out the regulatory burdens, which is hanging on us. Number two is it gives us more flexibility. For example, with the launch of the REIT, our REIT component or the REIT basket includes some of our European assets as well, European-Asian assets. So we have quite a nice mixed bag of assets, which will be quite attractive. That helps us as well because we do not have to go through any regulatory issues, and it will allow us the flexibility to launch our REIT next year. So it has always been planned, and the steps have been done, and that is the reason, like for REIT as well, we pushed it to Q1 of next year.
We initially, the target was to do it by this year, but because of the CNMV thing, we pushed it to Q1 next year, but it is on track. Then the third is on the cash flow side. So we will be able to use the cash, sweeping off cash will be much more efficient because we can easily sweep cash between the regions and also reduce our forex exposure as well by paying down some of the EUR debt for us here. So those are some of the larger benefits. In addition to some of the other synergies we see by combining the platform. For example, today, Minor Hotels is all under one platform, including our hotels in Europe.
They are able to manage some of our brands, like Anantara, Avani and all those things, which was initially under a license agreement because we had two public companies, and we had to be careful from a transparency perspective and all those things. But in the future, when that all becomes one, it reduces a lot of the administration burden, and also for us to be able to better expand in Europe, that helps us a lot.
I have one more question on the asset light acceleration plan. I think the scaling up the plan and also centralize the loyalty program sound very excited. But could you share us more color and elaborate more what are the key competitive advantage of Minor Group against other global hotel chains who also have a multi-brand portfolio and quite a strong loyalty brand as well?
Yeah, sure. I think one of our key USPs is our brands are quite unique. Say, for example, if you take the ultra-luxury brand, which is Anantara today, which is gaining a lot of momentum and growing quite well in the key markets. The USP there is focusing not just on hotel rooms, but focusing on guest experiences. So we provide a localized experience, which brings the indigenous culture and architecture into the hotel. We also provide the F&B experience through various of our F&B outlets and the acquisitions we've done in the past years, like whether it's The Wolseley, the restaurants, or whether it's the Benihana, or whether it's the SEEN, the Beach Club or the SEEN Rooftop and everything else. We are now also going one step ahead in terms of our spa and wellness.
Focusing more on the spa and wellness side, and doing what we call the longevity hub, partnering with some of the world-class players and launching our own brand. Like say, for example, if you go to Layan in Phuket, we have one of the state-of-the-art wellness experiences you can have in Phuket today compared to people going to Europe or people going to Philippines or other countries. We offer a world-class experience here as well. So, we bring all those experiences together, which really helps us with our brands, to reposition the brands. A good example is when you look at the Anantaras today, where, let's say, if you look at Phuket, the brand itself has been able to achieve a much higher price on the residential.
People pay a premium for the brand, for the service, for the brand, for the experience, and everything else. And we are able to attract high net worth individuals in terms of selling our residences, which has been very, very successful and has been sold out as well. So these are some of the USPs. And today, when you look at the larger hotel players, they are not hotel players anymore. Marriott is not a hotel player anymore. Marriott is all about a marketing company. They're more focusing on Marriott Bonvoy. And Marriott, if you look at Marriott, 80% of their hotels in the U.S. is not managed by Marriott, it's managed by white label companies. Right? So that you lose the essence of being a true hospitality hotel operator. Same thing with the other bigger guys, like whether it's Hilton, whether it's Hyatt, whether it's IHG.
They're more focused on asset light, they're more focused on their fees and everything else. Whereas we are much more focused on really delivering the guest experience to the guest and also delivering a high return to the guest as well. So we are today seeing. We have seen a lot of the rebrandings happening. For example, we rebranded a hotel in Austria from a Kempinski to an Anantara. We rebranded a hotel from Hilton to an NH Collection in Africa. We've rebranded two hotels here into NH Collections, The Boulevard and also The Ashok, which used to be a Radisson. Why, I think, more of the owners are coming to us because of the owner mindset, which Minor has had all the way. We have the owner mindset, and we think different. And also our hotels are not cookie cutter.
Each of our hotels are very different. Like you see Anantara Siam and you go to Samui, our hotels are different. You go to Phuket, it is different. You go to Maldives, it is very different. That is the USP we have. The other one is the strength of our people and strength of our brand, which makes it much more powerful as well. Of course, the loyalty program, the Minor DISCOVERY, makes it much more flexible and much more agile, because today, under the Minor DISCOVERY program, you can actually go and stay in 42 of our different hotels today. You do not have to stay. You earn in dollars, you do not earn points, so you do not have to calculate as to how many points you have to burn.
Your wallet is in dollars, and you can earn and burn your wallet in all our 42 hotels, from Anantaras to Avani to NH Collections to Elewana Collection to Kempinski, Marco Polo, Capella, Pan Pacific, all these other brands, which gives us a greater flexibility as a customer or as a guest compared to with Marriott, you can only stay in Marriott Bonvoy hotels. With Hilton, you can only stay with the Hilton Honors. So those are things, it is all about providing the flexibility, it is all about having the best people who are driving your brands and also providing a unique guest experience in most of our hotels as well.
Thank you. That is very comprehensive.
Thank you.
Any more questions? Well, the team's going to still be here to address any other detail question on numbers and everything. But if no more question for Khun Bill and Dillip, I would like to wrap up today's presentation. Thank you very much, everybody, for being here. I hope this sheds some light on you on our recent development and future strategy as well as the potential growth and the growth profile we're still committed with the same commitment that we had. So thank you very much, and see you next quarter. Thank you.
Thank you.