Good morning, everyone. Welcome to Minor International analyst meeting for the results in the first quarter that we reported last week. As usual today the agenda will be to recap and then explain our results in the first quarter, what happened in each of our business units, including Minor Hotels, Minor Food, then also corporate information like balance sheet positions, CapEx, and other strategies that we did.
We are going to talk about the outlook for the rest of the year, which still remains very promising. Let's get started with the major highlights first for the first quarter before we deep dive into the first quarter results. I just want to highlight what happened in the first quarter of this year and quarter to date as well. On the hotel side, we continue to keep opening hotels. The cross-brand expansion strategy still ongoing.
This quarter, the past quarter, first quarter, we opened Anantara Palais Hansen Vienna Hotels. This palace, very iconic Hotel in Vienna. It was opening Austria last quarter as well. We also opened Anantara Mina Al Arab Ras Al Khaimah Resort and Anantara Santorini Abu Dhabi Retreat.
Both of them are managed hotels, and they were opened in UAE. Also very prominent, iconic hotels in the Middle East that we're very proud of as well. Next one is the NH in Europe. We opened three in Paris.
This is our first footprint in Paris. We opened NH Paris Gaîté Lilas and then NH Paris Opéra Vaugirard, NH Paris Champs-Élysées They're all managed hotels, and they were opened this past quarter as well. In China, we opened an NH Chengjiang Yuhang, an NH Zhangjiajie , an NH Zhengzhou Jinshui, an Oaks Zhangjiajie , and then an NH Collection Chengdu Yuhang. They all managed contracts.
We try to have different brands penetrated China going forward too. In terms of Australia, we opened two more Oaks under management letting rights business model, including Oaks Rochedale and Oaks Alicia Wellness Retreat, which was opened in Australia. As you can see, we still remain very active in terms of opening different brands in different geographies to make sure that the brand awareness of ours going around the globe.
If you look at our effort to upgrade our brands or strengthen our brands further, the rebrand and repositioning exercise continue as well. We also rebrand in the past quarter, NH Collection into a nhow Frankfurt City Hotel which remain agile in terms of switching brand to optimize our return. Another thing that we're trying to do is strengthen the brand equity and then spread the word of our brand across the globe, through soft power like entertainment.
If you are a member of Netflix, you can see our hotel's feature in one of the top viewing theme in Netflix, Anantara Layan Phuket Resort and Anantara Mai Khao Phuket Villas, a feature in Netflix film, "Mother of the Bride." I hope that you all can check this out. On the food side, for Minor Food, we did the same thing.
We try to uplift our brand and enhance our brand equity. Swensen's brand launched a pop-up Swensen's Durian Town experiential concept store and successfully captured market attention.
As you can see, Swensen's have done many experiential launch which all become successful, either pop-up or permanent menu, just to create some excitement to the market. So is Dairy Queen. Dairy Queen launched its first Dairy Queen lounge in Thailand for a new dine-in experience.
The lounge offers a wider menu tailored for very unique setting, and also strengthen core menu platform for our existing customer as well. We just try to make a different adjust the excitement in the market up. Bonchon also capture new market segments. We come up with a new store format called Chimaek, introducing Korean fried chicken with the beer concept, something that it's a eating style that it's very popular in Korea.
We tried it out here, and then so far it has been well received by the market. On the corporate side, we see a very encouraging uplift from one of the credit rating agency. Fitch Ratings upgraded rating of NH Hotel Group. Now it's Minor Hotels Europe & Americas. The long-term issuer default rating has been lifted up by two notches to BB- from B.
The ratings for its senior secure notes also uplifted to BB+ from BB-, and standalone credit profile has been uplifted to BB- from B+. Now let's go to look at the results. I'm sure everyone has seen the result last week. I just want to reiterate, we report net profit of THB 1.1 billion in first quarter 2024, a dramatic year-on-year turnaround from a loss of THB 976 million last year in the first quarter of last year.
This year we have profit. We report a profit in the first quarter, due to stronger underlying performance across all business units and also because of the favorable foreign exchange movements which help some derivatives. At the core level, we also see remarkable improvement in our core bottom line as well.
Even though we report a loss of THB 352 million, as a result of the low seasonality in Europe, which everyone's aware of. That loss has become much smaller than last year, by 46%. So it amplify the remarkable improvement in our flow-through of revenue to the bottom line, enhanced efficiency and also effective cost management.
If you look at our international presence now, we operate in 63 countries and if you look at contributions, the majority continue to come from international markets, i.e. 75%, and the rest coming from domestic market. Now we're going to deep dive into a little bit more detail into operating stats of each business unit. I will have Khun Namida take the floor.
For Minor Hotels, in the first quarter of 2024, we reported revenue growth of about 17%, and this was due from higher travel demand and also higher average room rates as well. If you can see, all of the business models, including own and lease, management, letting rights, managed hotels, and also our mixed-use business, recorded a positive, strong growth.
Also, across geographies, we have seen all positive growth as well, including Thailand, Europe and the Americas, Australia and New Zealand, and also the Middle East. If you look at the core EBITDA and core net profit, core EBITDA actually grew at a faster rate than revenue. Also, the core loss, although we reported core loss in the quarter, this was because of the typical lowest travel seasonality in Europe. Having said that, this core loss was reduced significantly by 14%.
The core loss was reduced from THB 1.1 billion to THB 968 million. This was because of the enhanced profitability of our hotels across Europe and Thailand. Moving to each business model of own and lease. If you look at number of hotels, in terms of number of hotels, it was flat year-on-year, but increased about 3% compared to the same quarter of 2019.
In terms of RevPAR grew about 21% year-on-year, driven by both occupancy and room rates, led by hotels in Europe, Latin America and Thailand. Comparing with 2019 level, RevPAR exceeded the pre-pandemic level by 35%, mainly because of our successful pricing strategy. Drilling down into each region, our largest contributor is Europe and the Americas.
Our RevPAR for hotels in Europe and the Americas grew about 13% year-on-year because of the improvement in both leisure and corporate segments, and our efforts to raise room rates. The occupancy rate reached 62%, coming up from 59% in the same quarter of last year. Meanwhile, our room rates increased 7% year-on-year and reached €125 per room per night.
If you look at each region, each key cities, Spain show the largest year-on-year RevPAR growth improvement and followed by Benelux, Latin America, Central Europe and Italy. Looking at each region, Spain reported RevPAR growth of about 17% year-on-year, and the key driver was leisure demand, in which we see very strong leisure travels in all key cities and in the secondary cities as well, including Madrid and Barcelona. Secondly, Benelux.
Benelux also reported strong 14% year-on-year RevPAR growth. We saw high growth in terms of corporate travels and corporate demand, especially our hotels that have conference center hotels. Thirdly, Latin America. We saw about 14% increase in RevPAR growth for Latin America, and the corporate travels were the key drivers, especially in Mexico and Colombia.
Fourthly, in Central Europe, we see continuous growth in Central Europe and saw 11% RevPAR growth year-on-year. The main driver is the leisure travels in all important cities like Frankfurt, Hamburg, and Munich. Lastly, Italy continued to report outstanding performance and RevPAR growing by 8%.
Leisure segment was the key contributor for Italy. Moving into Thailand. Thailand has been reporting spectacular performance as well. RevPAR increased about 25%. We saw both occupancy and ADR increasing from a growing number of tourist arrivals. Occupancy rate reached 81%.
Meanwhile, our ADR was beyond THB 9,000 per room per night. Our hotels in both Bangkok and in other Thailand provinces, all key tourist destinations, reported year-on-year RevPAR growth and also exceeding pre-pandemic level. If you look, compared to 2019 level, you would see that our RevPAR outperformed pre-pandemic level by more than 20% already.
If you look at our occupancy rate, it was 81%, was on par with those in 2019 already, although international tourist arrivals to the country in Thailand haven't reached those figures yet. In terms of our room rates, we have outperformed 2019 by 23%. Our next region is the Maldives.
In the first quarter, we reported RevPAR decreased about 10% year-on-year. This was because, however, the abnormality of the high baseline has tapered off, and we saw a rise in both occupancy and room rates in the last month of the quarter, which is in March. We saw RevPAR growth in March turn positive for March and then increasing by 4% year-on-year.
This figure was back to be on par with our pre-pandemic level range already. Having said that, if you compare to 2019, although RevPAR was 5% below pre-pandemic level, our average room rates remained 13% above pre-COVID level.
Next, business models under asset light, which have management letting rights and then management hotels. For management letting rights, our RevPAR grew 6% year-on-year, despite already a very high base of last year.
The strong corporate travel activities, especially in the CBD locations across the country and also because of the high-profile concerts and also the sport events like Formula One Grand Prix in Australia, were the key drivers of the RevPAR growth year-on-year. Compared with 2019 level, our RevPAR of hotels in Australia and New Zealand exceeded the pre-pandemic level by nearly 40%.
For our hotels under management contract, we have been expanding our hotels under management contract continuously, and you can see that in terms of number of rooms, we have expanded about 6% year-on-year and 23% above 2019 level.
In terms of RevPAR was above 2023 and 2019 levels by 23% and 26% respectively because of very strong performance of all hotels in the region, including Europe, Asia, Middle East, and also in the Maldives as well.
This is our pipeline of our hotel. We still remain to target more than 780 hotels at the end of 2026, from 550 hotels currently. In the next three years, we have at least 85 hotels that have already been signed, and we have been formally agreed upon already.
We have more than 45 hotels that are under negotiation and are close to be agreed upon. Of course, we have more than 100 other new potential contracts to be added. If you look at of the total of our hotel expansion, about 85% will be under asset light or under management contract. For the last business model for Minor Hotels is mixed-use business.
Revenue for mixed-use business rose by about 5%, and this was driven by all business models under the mixed use, including Anantara Vacation Club, the The Wolseley Group , or our dining restaurants in the U.K. Plaza and entertainment, also Minor Lifestyle, which helped to offset the lower revenue from residential sales. In terms of current projects and pipeline under residential development, we have currently about four projects that are available for sale.
Those projects are in Thailand and Malaysia. We have two additional projects in the pipeline that will secure our mixed-use revenue going forward, which are Anantara Ubud Bali Residences in Indonesia and Four Seasons Resort Koh Samui in Thailand. In terms of Anantara Vacation Club, we continue to add new members and also increase number of points sold and average price per point.
In the first quarter, we saw about 4% year-on-year increase in terms of number of members. Meanwhile, to accommodate these growing members, that is why we have been adding our inventory in AVC, and it has been increasing by 13% year-on-year in the first quarter. Moving on to Minor Food.
Minor Food, in the first quarter, core restaurant grew about 4% year-on-year. Looking at the graph on the right, you will see that total system sales growth reported at about 3%. This was mainly from network expansion in Thailand, Singapore, and also the consolidation of Sizzler franchise stores following the acquisition of brand trademark.
In terms of EBITDA and net profit, again, like Minor Hotels, they have been growing at a faster pace than revenue. EBITDA growing at 9%, while core net profit grew at 29% to THB 616 million.
This was driven by favorable flow-through for most Thailand brands, robust performance of its manufacturing business, as well as improved performance of our key joint ventures. Effective cost management and higher productivity also helped these impressive achievements. Moving to each hub. First is our Thailand hub which contribute about 60% of the Minor Food's total revenue.
System sales grew about 2% positive from the increase in customer frequency and docket growth of our key brands. Coupled with network expansion, total system sales grew at a faster rate, growing by 7.4%.
In the quarter, all brands aim to drive top line growth by generating repeat sales from loyal customers and also winning over new ones. We have done so many activities during the quarter, and we have highlighted some of the key initiatives that we did.
In the first quarter, our brands of Minor Food in Thailand, we achieved nearly 7 million members for our loyalty programs. This resulted in member sales contribution to about 23% of sales mix from 20% of last year.
Each brand has done many activities and key initiatives. For example, Sizzler, they have launched the new premium menu, like sizzling steak and also a new set menu with a salad bar which resulted in 17% increase in terms of customer counts.
Our Pizza Company which is our core brand, the launch of their revamped dine-in menu has led to a 9% increase in overall dine-in sales. We have also launched the world's first 20-minute delivery guarantee, and more than 95% success rate was achieved for our greater Bangkok area.
Lastly, Dairy Queen. As you can see, in several quarters we have launched many new menus and revamped the brand, in which we were very successful. Again, this quarter, their product innovation, including the premium cakes on Valentine's Day, have been a record sales for the brand.
The sales growth continued to increase by about 12% in the first quarter, despite a very high revenue growth already from last year, which was 30% growth. For China hub, the slowdown of the economic challenges, some store closures and the high baseline of prior year.
If you remember, in 2023, in January at that time, China had just reopened their borders, and they canceled their lockdown. That is why last year in the first quarter, domestic consumption rebounded very strongly. As a result, we saw same store sales and total system sales decline of about 27% and 23%, respectively.
Apart from boosting the sales by highlighting our aquatic farm-to-table proposition, lower price of raw material, effective cost management, resulted in stronger profitability despite lower revenue. In the third quarter last year, at the end of the year, China hub had opened the new brand called Jing Mi Xuan , in which it's in a fish category, target different market segment. We opened that under equity store at the end of last year.
In the first quarter, it was the first time that we launched under franchise business model to expand going forward. Our hub is our Australia hub. The same-store sales and total system sales decreased slightly by about 3% for both because of the delays in store expansion and also lower number of store traffic. Having said that, we try to boost, maintain our sales.
We have launched the new coffee brand across many stores last year already. In the first quarter, we try to roll out those coffee, a new coffee brand, for all stores nationwide in order to strengthen the brand's identity.
In the first quarter, positive news is that NOMAD Coffee Group was recognized as the winner of the Golden Bean World Series Award, in which we expect that this award will help to boost sales volume of our coffee brand going forward. Next will be under corporate information and our business outlook and 3-year strategy. Khun Chaiyapat, our CFO, will be talking about this.
Thank you. Well, in terms of balance sheet strength and capital expenditure. CapEx, not much change from last quarter when I reported to you. CapEx now return to the usual target range of about THB 8 billion-THB 14 billion per annum from 2024 to 2026. The higher CapEx in 2024 was primarily because of the repositioning and renovation exercise that I explained earlier, and also some asset upgrades in order to command higher ADR.
This already happened across the globe, in particular, our major operation in Europe, and across the rest of the world. In terms of funding source for this CapEx, we will get it from stronger cash flow from operating activities as well as cash on hands and the potential asset rotation if need to. We also enhance our financial position by reducing our leverage ratio still.
This is our primary commitment that we report to the investors since the beginning of this year. Our Net Interest-Bearing Debt to Equity comes down further to about 0.98 times, well below the covenant ratio and also well below our internal policy ratio of 1.75 and 1.3 times, respectively. At the end of the first quarter, the company has about THB 14 billion in cash and unutilized credit facility of another THB 36 billion.
We still remain commit to strengthening our balance sheet even further with the commitment which I will explain a little bit more in subsequent slides. The next section, I would like to touch upon business outlook and our strategy to expand horizons. What I mean by expand horizon is to broaden geography, broaden portfolio, the brand, and also the reach to consumer.
If you look at our 2024 growth driver, in various regions, I would highlight only key regions. In Europe and LATAM, we still believe to see a robust leisure demand, which still coming very strongly. We also see the stronger corporate and business B2B on the hotel side as well.
We have seen various corporate booking as well as those who come through the events, congresses, trade fairs. This year we will have world sports competition like Summer Olympics will be held in France, as well as the UEFA European Football Championship, which will take place in Germany, and that's where we all also have our strong footprint to reap such benefit as well.
If you look at the pipeline of high-profile entertainment events and concerts, for example, Taylor Swift or Coldplay and other famous artists that going to go to Europe this year, we would definitely going to get some benefits out of those events, too. Like I said, we continue to repositioning our brands.
Renovations, it's underway for some of the properties in certain locations, and also the upgrade from one brand to another brand with higher category in order to command higher ADR is still ongoing as well. Now let's look at Thailand.
We still see a very, very remarkable increase in international tourist arrivals to Thailand so far. The booking that we see going forward still remains solid. We also see the trend of spending, which is higher than before as well in terms of spending per tourist or spending per customers.
This year, I think the TAT or certain economic agents forecast that the number of international tourist arrivals to Thailand can get on par to 2019 level, almost 40 million people, which has been revised up and up several times after we've seen a lot more tourists coming into Thailand, more than expectation.
More important of all, the spending or the revenue for the entire country has been expected to reach THB 3.5 trillion, higher than THB 3 trillion received in 2019. That's the good sign, and that reflects the promising outlook that we can reap the benefit as we capture more towards high spender as well. In Thailand, we continue to do some renovations, some upgrade, in line with our repositioning strategy worldwide. Thailand is no exception.
We'll do that and we opt to do that in low season for certain locations to reap more benefit from higher ADR. For Thailand in the food side, we continue to come up with very exciting viral campaigns. We hope to have some talk of the town menu or talk of the town gimmick to make our brands continue to be on top of mind our consumers.
We continue to deploy the influential brand ambassadors for some of the brands. Such strategy has been well-received and well-accepted by the market for some of the brands that we did with this strategy last year. We also plan to come up with the exclusive limited time events and offer some of the pop-up stores that we initiated.
For example, Swensen's 101 Flavors pop-up store or some of the events for certain brands that remain permanent, create excitement and eager for consumers to try and seek for our products. We want to upgrade and uplift our membership program to see more of the repeated customers.
That is something that we focus on at this point through membership program, each of our brands. The exciting menus we continue to come up with, Namida already mentioned some of the examples at Swensen's, at Dairy Queen. I would have to highlight that we do this for every single brand that we have in our portfolio as well.
In China, we will continue to introduce some of the new products. We will have a completely new main products platform in addition to just fish platform. We add other platform, like crayfish, for example.
This will be the first time in its history to add a new main product platform in China for us. As for conventional grilled fish platform, we will add more menu and more flavor, which is suitable to the family and to a group, like a multi-generation family with children, with grandparents, a wide variety of flavor to suit them all.
This will increase dine-in experience and frequency, especially in the warmer weather that coming up summer. In Australia, on the hotel side, we see the recovery of international travel demand, and also a strong uplift from MICE or B2B business. We continue to debut some of the brands that we have elsewhere in Australia, like NH Collection, and more of the brand that we already have, like Avani.
On the food side, we tend to focus on a new store format, which can optimize our CapEx or lower our CapEx while producing high return. We piloted that new store format in Brisbane and expected to expand, speed up this renovation, the speed of renovation of our franchise outlets nationwide to support our new coffee club, new branding initiatives.
We try to elevate branding with the new store designs to elevate cafe design ambience. We also have some partnership program with strong partners to uplift our sales. For example, we partner with MasterChef Australia for media engagement as well. That is the growth drivers that we see for 2024. This slide we already show in the last quarter when we report year-end results.
Just to reiterate our strategies and our aspiration. Our strategic objective remain ambitious with a revenue growth of 8%-10% per annum over the next three years. We hope to expand higher margin along the way. That is why we hope to see profit growth bigger than revenue growth, at around 15%-20% per annum.
We are confident that we will see return on invested capital higher than 10% in over the next three years as well. The aspiration to grow hotels are still intact, from 532 hotels to about 780, and more hotels by the year 2026.
For food, we plan to add 1,000 outlets from 2,645 at the end of last year, to more than 3,700 at the end of 2026. Leverage ratio that we keep reiterating. We have a commitment to bring down leverage ratio even further.
We hope to get it down to about 0.8 times in terms of Net Interest-Bearing Debt to Equity by the end of this year. This will also make Net Interest-Bearing Debt to EBITDA come down further to about 4.3 times at the end of this year as well. In terms of our strategy, we have the same six strong pillars. Winning brand portfolio.
We continue to strengthen our brand, so it will be easy for us to expand, for us to grow with cross-brand expansion strategy. Secondly, we would focus on value capture and productivity to increase profitability and increase the return for us. Next, we will look to invest or partnership with strong partners in order to expand our portfolio, especially under asset-light business model that we focus on now.
We have to look for strong partners, or strong hotel owners or franchisee for food everywhere, to optimize our portfolio management. In order to achieve those three strong pillars that I mentioned earlier, we would continue to strengthen our digital and innovation, and we also continue to empower our people and teams.
We will continue to have ESG at heart, doing sustainability strategy alongside our business strategy at the same time for sustainable growth and sustainable profit. Next slide, I guess will be last slide, just to deep dive a little bit more in terms of strategy of expand horizons. We continue to drive organic growth.
We accelerate or remain active in terms of deleveraging. We also continue to expand through asset-light business model. On Minor Hotel side, we have rebrand initiative, or repositioning initiative.
Over 30 hotels in the pipeline to be upgraded to higher tier brands in this year, next year. We continue to expand reach of all the brand in our portfolio. We also venture to new markets, new categories and potential new brands. We do asset-light to secure solid pipeline of hotel management contracts.
On hotel side, we would try to look at optimize the channel to increase profitability. We enhance our brand websites and booking platforms for better customer access. Direct channels will lead to profitability for us, compared with the wholesale agent channel, which we have to pay commission.
In terms of expanding customer base, we try to go beyond conventional customer segments and customer source. We attract a wider customer base with different nationalities, and implement cross-selling strategy as well. A loyalty program under GHA DISCOVERY has proved to be very successful.
After the combine of the two program, between this part of the world and Europe last year, we see a strong traction coming along up until today. We hope to see even much stronger traction going forward. We try to boost the flow-through and margin on the hotel side, optimize the CapEx that we spend in terms of renovation, leverage on scale and efficiency.
Also, like I said earlier, when we deleverage, it would reduce interest burden on our P&L and enhance our earnings growth power. On the food side, we do the same strategy in terms of brand value enhancement.
We continue to increase spending per docket, increase spending per customers. For example, Dairy Queen Premium Sundaes that we introduced has increased spending per docket for us. Just an example, but we do this for every other brands of ours as well.
Concept expansion and cross-brand expansion with new brands, with additional franchising opportunities also happen on the food side as well. In terms of distribution of sales channel, we also try to increase our dine-in and takeaway contributions. Also still optimizing or maximizing profitability that we would get from delivery platform as well.
Customer base, we expand our customer segments beyond the traditional shopping mall locations. We do it in different locations now apart from shopping malls. We try to boost sales through membership and repeated customer by offering new incentives, new programs for our customer to boost repeat customer under the strategy.
We also boost flow through, optimize our CapEx spending with different store format, so we do not have to spend too much CapEx, but still producing handsome return for us and a quick payback period as well.
We also try to boost productivity per space and per store, and that will lead to higher margin profitability. So that is the expand horizon strategies that we are going to implement in the next three years as per our three-year plan. Just want to recap. So that is the end of presentation for this quarter. I think now we will open the floor for Q&A. You can send it online.
You can either raise your hands or just type questions in the chat box. The first question is to update the operational stats for both hotels and Minor Food as well. So, right now we have in April. For example, Europe and Latin America in April, RevPAR continued to grow and increase by 9% year-on-year, and this have been, again, driven by both occupancy and ADR.
ADR increasing by 7%, while occupancy increased by about 3 percentage points. For Thailand, our RevPAR continued to increase as well, increased by about 7% year-on-year. Again, driven by hotels in Bangkok and also up country, seeing very strong recovery in both occupancy rate and also room rates. For total same store sales of Minor Food, for Thailand hub in Thailand, we continue to see positive growth.
We saw about a 2% increase in terms of same-store sales and driven by all of our key brands including Swensen's, Sizzler, Dairy Queen. The second question is about the percentage of the corporate customers. How has the proportion increased or decreased compared to 2019?
If you compare with last year, the percentage of B2B is roughly about. Currently in 2024, we expect B2B to be about half and B2C is about half as well. I think the percentage of this is not much changed from pre-COVID level. During COVID level and right after COVID level, we see substantial B2C coming in before B2B.
The point that we are making is while B2C is still coming in so strongly, B2B now catching up. The volume is higher and higher, but the split or the mix between B2B and B2C expect to get back to be on par with pre-COVID level, which is half.
The question is why expenses like SG&A expenses increase so much in first quarter of the year. Well, it is because business activities, business volumes also increases. We also see revenue, we see EBITDA increases.
We also deploy pricing strategy, for example, ADR maximization strategies to cover these higher expenses. At the end of the day, margins improving at board EBITDA level and also at NPAT level.
We have someone raise their hands. The first one is Wansupit Frijsdag from UBS. Please go ahead.
Can you hear me now?
Jen, please.
I have them. I have two questions. First, on the leveraging. You have talked about deleveraging as one of your key strategies, but in Q1, we really have not seen that. Is there any issue or any difficulties in paying down the debt now, or it is just a matter of timing and we will see in the rest of the year?
Well, the deleveraging that we talk about, it is at the very high level, but we cannot just see it day by day or month on month or quarter on quarter. We will try our best to decrease it. In the first quarter, even though you saw some increase, that increase is primarily from FX movement.
In fact, if you strip out that FX movement, we have some drawdown from our syndication loans. We have to utilize some short-term bank facilities to repay some of the existing bond debt mature. Net, that is supposed to be neutral. In the first quarter, supposed to be flat. Because of the FX, if you look at our debt in THB, it increased very slightly.
Our effort to deleverage still remain, and for the rest of the year, up until the end of the year, we will remain commit with our ratio. If you look at what we mean by deleverage, we also not only reduce the debts, but we also strengthen equity at the same time.
So net, Net Interest-Bearing Debt to Equity is still coming down in the first quarter. Also at the end of the year, Net Interest-Bearing Debt to Equity will also come down. We believe that our debt level at the end of this year, in absolute term, will be lower than the end of last year.
Understood. Thank you for that. My second question is on the bullishness in Europe. We have heard that your guidance on April and May being quite strong, but I just want to get a sense into Q3.
The events that are happening, we do not have that many own and lease exposure in those countries, or in those area where the event is happening. How bullish are management in terms of seeing the demand flowing through to your property or your assets in Q3? Thank you.
We do. Say, for example, the UEFA European Football Championship, which will happen in several cities in Germany. We have some of our hotels there. In Paris, even though we have only three managed hotels, we are still going to get the benefit from management fee anyway. Also, we talk about entertainment events.
We talk about other congress, trade fairs or festivals that we did not mention in this presentation. With that pipeline, as you know, NH Hotel Group has secured the prime location in every gateway cities there is in Europe. No doubt we will get some fair share of those events.
So far what you are seeing on the book is still an improvement year-on-year in Q3, right? Is that a correct statement?
Yes. I think Namida mentioned, if I look at April. April RevPAR, it is almost double-digit growth from last year. I will say up to 10% already, roughly. In May, our RevPAR so far, I look on the book, like booking on the book, it shows that RevPAR is double-digit growth year-on-year already for May.
Okay. Thank you very much.
To add on the UEFA Euro that is happening in Germany, it will happen in 6 cities, Berlin, Munich, Hamburg, Dusseldorf, Stuttgart, and Dortmund. All those 6 cities, we have at least nearly 5,000 hotel rooms in those 6 cities that we will have beneficiary from the event. Next, please go ahead. Puntida Rat, who raised her hand.
Thank you very much. My first question is I would like to understand about your medium to long-term strategy on the hotel business. You mentioned a lot about rebranding and upgrading brand to more luxury hotel. Can you share us your revenue breakdown in term of hotel segments, like five-star, four-star, or three-star? Do you have specific target to increase your proportion of revenue from the luxury hotel? Thank you.
Well, that highlight is just one of our strategy on the hotel side. What we are trying to do is we try to strengthen our brand architecture, customer value proposition, and portfolio management. In order to do so, we have to continue to strengthen our brand. In this case, this is higher ADR or pricing strategy.
In order to continue to see ADR continue to go up, we cannot just rely on demand alone. Even though demand is still coming in so strongly, we would try to do on the supply side that we have as well. What we are trying to do, we try to upgrade the supply of the hotels that we have. Some of the location that we have one brand that we think we can upgrade to another brand that can command high room rates, we will do so.
Not that we are saying that we are going to change every single hotel that we have in our portfolio into a super luxury hotels. No, that is not what we are doing. What we try to selectively see if any brand can upgrade to another brand with different customer proposition in order to uplift room rates.
That is what we are trying to do. In terms of our segmentation, right now we focus from middle, upper middle, which is in say for example, in Avani, and then upscale up to luxury. So that is where we focus on. The breakdown in terms of number of rooms or in terms of market segments by the level of luxury, I do not think we would disclose, but you can see the breakdown by brand in the presentation.
Okay. Thank you. My second question is about food business. Can you share us more about outlook for China because of the mass decrease in the first quarter? Do you see any improvement in the second quarter, please?
Yes. Well, apart from some of the stimulus measures that the government tried to pump prime the economy, which will produce benefit or positive impact for us as well. We would try our best to be agile in terms of adapting our operations to get attention from our customer. We report earlier we do a new market expansion.
We entered into new cities and region to drive growth, and we do create additional franchising opportunity to drive growth as well as what Namida said during presentation. Also we try to have some new product platform, as I said. Apart from fish platform alone, we go into other non-fish platform like crayfish, for example, product to drive customer. And we try to add more menu and flavor, even with the conventional grilled fish that we have.
The new flavor or topping that we add will cater more towards a wider generation of consumer, from children to grandparents, like I said. Not only target to middle market or middle age consumers alone.
Also, we try to build new brand that we already had. Apart from Riverside main product, we built Jing Mi Xuan brand, a small format with low CapEx outlets. We try to expand this new format under a franchise model into smaller cities as well.
Most important of all, we try to do cost management of control cost as much as we can. Luckily, raw material price, like fish, continued to stay very low, and that helped us to being able to maintain profitability even though revenue was suppressed by economic conditions.
Thank you. My first question is a follow-up question regarding your debt. Because in the previous quarter, you always provide information about your debt profile. Is it the same in this quarter, like a quick offer?
Pretty much similar. If you look at our debt, EUR continue to account for the majority of it, 66%, followed by THB which is 27%, and the rest is USD, AUD and others. Split between fixed and float, roughly it is about 56/44.
Since the interest rate in Europe seems to come down, it is expected to come down in the second quarter. Is it safe to say that we should expect reducing interest rate spend in the second half as well?
Yes. We hope so, but in our budget assumptions and in our forecast assumptions, we are still trying to provide some buffer in our assumptions just to make sure and to be conservative. The trend looks like we are going to see EUR rates coming down first before USD and before other currency. If that is the case, we will get some benefit out of it as well.
My last question is about minimum wage in Thailand. Do you have concern or do you have any projection on the impact to your business?
Not really, because I think we already factored that into our budget and our forecast. Besides, the demand that is coming in so strongly today makes us achieve our pricing strategy much better than we expected. ADR will continue to increase.
If you notice, actual ADR increase thus far beat our guideline that we gave you at the beginning of the year, and that will help make up or even surpass the cost increase that we are going to see, including minimum wage increase as well.
Thailand is just one part of the business. We still have other diversification elsewhere. More important of all, when you see ADR maximization strategy everywhere, it helps supersede all the cost increase, inflationary pressure. Hence, you can still see our margin expanding, and we hope to see the same in the rest of the year as well.
Thank you very much.
The next one will be Suwan. Please go ahead.
Hi. Good afternoon. My first question is on the de-leveraging plan. Can you talk a bit more about how you are going to get there in terms of leverage ratio? Is it just from operating cash flow, or what are you looking at in terms of asset divestment?
Well, of course, cash flow from operating activities or earnings that are coming in stronger than anticipated will help. But to get to that level, we might have to look for other strategies. Like I said at the beginning of the year, asset rotations also comes into play if need to. We are looking to see if we can execute that strategy if earnings does not come as we hope for the rest of the year. But it is still on the card as we expected at the very beginning of the year as well.
Got it. Can you also talk a bit more about how you are thinking about M&A?
Well, what we tried to do right after COVID, or during COVID, we tried to optimize our CapEx more efficiently. That is why we resort to asset-light strategy, to preserve liquidity and to get to our leverage commitment.
If there is any opportunity coming to our way, which can produce return and earnings, either over short term or long term, enough to compensate for high interest rate environment at this point, and we get the benefit out of it, we are willing to look at it, too.
We do not completely rule out any opportunity, considering that we have been very opportunistic by nature. We will remain more cautious in this high rate environment, and we will make sure that if there is anything coming to play, it has to produce way higher return to compensate for this shortfall.
Got it. Thank you. That is all from me.
Next question to Sum. Current cost of debt and expect for the interest rate for this year. In the first quarter, cost of debt was about 5.39%. For the whole year in 2024, we expect cost of debt on average will be about 5.5%-5.6% for 2024. The next question will be on the staff expense for NH. Why has it gone up in first quarter?
If you look at NH alone, staff cost increased about 14%-15%, of course, because that is in tandem of the revenue growth, which also increased double digit as well. If you look at the staff cost to revenue in percentage, it was about the same. It was about 39.6% in the first quarter, compared to the first quarter of last year, about 39%.
The question is, when do we expect EBITDA margins to get back to pre-COVID level? Well, in fact, it already reached pre-COVID level since last year, 2023. EBITDA margin, if you look at back in 2019, our EBITDA margins, while we have to use TFRS, is 17.4%. Last year, we already reached that 17.4%.
This year it looks like we are going to beat this level because we are confident we can expand margin further this year. So EBITDA margins already will exceed pre-COVID low this year. Would you elaborate more about NH cost inflation trend? Can it reach single-digit growth from double digit in first quarter? Well, I will explain this on a whole. NH cost inflation happened not only this year, but since last year already.
Most of the cost increase, not only coming from CPI, but coming from labor agreement from certain jurisdiction, which saw a higher payroll cost. More important of all, we have managed, like I said earlier, managed to raise ADR on the back of strong demands and on the back of our uplift supply that we have to command much higher room rates.
So, that beyond compensate for the cost increase. That is why we still see margin expansion and growth at the bottom line level coming in stronger than budget and forecast than from previous year. This question we already answer.
On deleveraging, is there any plan to rationalize asset in 2024? Well, apart from earnings recovery or cash flow operating activities, asset rotation still on the card. We look at it if the earning recovery is not sufficient. What is the deleverage target and net debt reduction?
Well, as I said, we continue to reduce our debt in absolute terms, and at the same time, we will continue to strengthen earning or, and equity base as well. For now, we want to commit to deleverage ratio, like interest-bearing debt to equity of 0.8, which is going to be a result of the debt reduction and equity strengthening. Yeah, so, net interest-bearing debt to equity still committed at 0.8 times.
Please feel free to send us questions via chat, or you can raise your hands. We think that there is no more question. If you have any further questions afterwards, please feel free to contact our IR team, and we are more than happy to take them any time after this. Thank you very much for your time for our first quarter results, and then we looking forward to meeting you next quarter. Thank you.