Operation Strategy of Hotel Developers with Fundraising from Real Estate Investment Trusts: Case Studies of Dusit Thani Laguna Phuket, Grande Centre Point Hotel Ratchadamri, and Sri Panwa Hotel

Abstract

The hotel business's main income comes from renting out rooms, which is a small but consistent income with a long payback period compared to the investment. Raising funds through REIT is therefore another option for the hotel business in Thailand that can create a stream of income for operators in exchange for sharing operating profits with unitholders. This article aims to study the concept of bringing hotels into fundraising through REIT, hotel characteristics, and operating strategies of hotels that raise funds through REIT. The case studies include 3 hotels that raised funds through the Trust in Bangkok and Phuket.

The study found that, first the key concept of entrepreneurs in bringing hotels to raise funds through REIT is to view REIT as a form of financial instrument that can help adjust the financial structure and asset structure for maximum benefit and pay returns to investors similar to borrowing capital. The operator can also buy assets back when the trust come to an end of maintaining ownership of the assets. Second, the characteristics of hotels raised by the trust can be divided into 2 issues: (1) the hotel must have legal characteristics. and regulations and (2) The hotel must have good operating results. Third, the operation strategy of hotel include 4 areas: finance, management, materials equipment, and personnel. The hotel management should focus on strategies that generate good operating results of the hotel, which can be divided into 2 areas, finance and management, in order to achieve a good growth rate of operating results for the REIT and ultimately result in the payment of returns to investors with a growth rate.

This research shows entrepreneurs' ideas in bringing hotels to raise funds through REIT, operational strategies of hotels that raise funds through trust funds and physical characteristics of hotels in different locations. These results can guide hotel operators to develop hotel projects that aim to raise funds by the REIT. These results can also help general investors to have a better understanding of the fundraising format.