Minor Hotels Plans Nearly 1,000 Hotels in 5 Years

21.11.2024 - 16:57 / skift.com / Josh Corder

Thai hospitality firm Minor International has set its sights on reaching nearly 1,000 hotels in the next five years – almost double its existing portfolio.

“In the next two, three years, or five years, we want to get close to 1,000 hotels,” said Minor International Group CEO Dillip Rajakarier at the Skift Global Forum East in Dubai on Wednesday.

To get there, Minor will use a real estate investment trust, known as a ‘REIT’, into which it will transfer ownership of certain assets. It will then sell shares in the REIT to investors.

“The reason [for the REIT] is that the company has evolved a lot, and creating a REIT, will help us with two things,” said Rajakarier. “One is our debt. We’ve had debt because we acquired NH Hotels in 2018 [for $2.9 billion] and we went through Covid. The other [reason] is growth. The funds will reduce our debt, then we will use the proceeds to help us with our next stage of growth.”

Minor’s chairman Bill Heinecke said on Bloomberg Tuesday that the it could help cut debt in half.

Minor currently has 560 hotels. A third are owned by Minor, another third are managed, and another third are leased, mainly those in Europe. Larger hotel companies like Accor, Hilton and Marriott operate on an asset-light model where the vast majority are managed and very few are owned by the companies themselves.

Minor has another 173 projects under negotiation, including 58 in China and Southeast Asia, 52 in Europe and Latin America, 41 in the Middle East and Africa, and 22 in Australia and New Zealand.

Rajakarier said Minor wants to stay an “owning company.”

“Even if you do a REIT, we will hold at least 55% to make sure we own those assets. The upside you get on your equity return is much higher than a management fee you’d get from hotels. It’s the revenue upside, the asset appreciation. Being an owning company, we will still own the REIT as well.”

“The strategy has a clear plan. We know our growth areas. We’re focusing on how to leverage our relationships. We’re not a management company, we’re an owning company. We own hotels, unlike the others who manage hotels and really believe in fees. We don’t. We have an owner’s mindset and that makes us different.”

Minor’s hotel growth has been rapid. 15 years ago, it had just a dozen properties. It wants to become the next Marriott, but it does want to be the best in the field.

Rajakarier said: “We are the small M. We are not the big Ms of the world, and we don’t aspire to be. It’s not about planting flags and cannibalizing revenue streams. When your owners spend millions of dollars investing, it’s about making sure you are in key, strategic locations. Your brands have to match with the experiences you deliver, and our brands are very segmented.”

Rajak