Aug. 10, 2009--Tanayong Plc will invest 2.3 billion baht to build five boutique hotels in support of a strategy to build up assets with long-term revenue potential.

The five hotels will be managed by Absolute Hotel Services Co, an affiliate partly held by Tanayong.

Each hotel will have no more than 80 rooms under the four-star U brand, which targets the business and leisure sectors.

The first hotel to be built will be a 72-room hotel in Khao Yai for an investment of 500 million baht. Construction is scheduled to start next year. A 300-million-baht 54-room hotel in Kanchanaburi, and a 70-room property at Phuket's Kamala beach, worth 500 million baht, are planned for 2011.

Two other projects costing a total of 1 billion baht are planned for Bangkok, but their details have yet to be finalised.

Tanayong has already developed the U Hotel Chiang Mai to test the market.

Suthum Siritipsakorn, Tanayong's deputy managing director, said the company's master plan centres on developing boutique hotels, as the industry can generate both short- and long-term revenues.

This will help support the plans of the Bangkok Mass Transit System -- owned by Tanayong executives Keeree and Kavin Kanjanapas -- to enter the hotel business.

BTS recently revealed plans to build three hotels along the skytrain route.

"We see potential to grow the hotel business because we are confident in Thai tourism," he said. "Thailand has various products like food, culture and history. Yes, tourism has sharply dropped, but I believe it will recover when the economic situation recovers."

Tanayong will focus on investing in small hotels because they have lower risks compared to larger properties with more than 300 rooms.

Investing in a large hotel is very costly and risky, said Mr Suthum. The registration process is time-consuming and this affects cost management and operations.

"Operating small or boutique hotels is less risky. You can open small hotels in many locations as it's easy to find land plots especially in downtown," he said.

Absolute Hotel Services will also offer consultancy and management services to other clients. The company is now expanding its business in Vietnam and says it has many deals under negotiation.

Absolute Hotel Services was established in 2007 with paid-up capital of 8 million baht. Today, the company manages U Hotel Chiang Mai.

Tanayong shares closed on the Stock Exchange of Thailand at 51 satang, unchanged, in trade worth 2.6 million baht.

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