Minor International Public Company Limited (MINT) Earnings Call Transcript & Summary

Good morning, and welcome to Minor International's 2023 Year End Results Analyst Meeting. It is our pleasure to have Mr. Dillipraj Rajakarier, our Group CEO of Minor International and CEO of Minor Hotels, alongside with Mr. Chaiyapat Paitoon, Group CFO of Minor International to have them here with us today. [Operator Instructions] And now I would like to pass over to Khun Dillip for the presentation.

Hi. Good morning, everyone, and thank you for attending the analyst presentation in spite of the Chinese New Year. So I would like to wish all our Chinese guests, a Happy Chinese New Year as well. On that note, just going through the agenda item for today. I would like to cover quarter 4 of 2023 results, which we just announced, Minor Hotels, Minor Food and then Minor International, the corporate information. And also just quickly touching based on expansion of our strategy as well for the next 3 years. So moving on. So this is actually the first page was like one of our hotels, which we just opened which is in Ras Al Khaimah. This hotel here is the Avani Palazzo in Milan, which we just rebranded and -- renovated and rebranded. So moving on to our performance recap, I think as everyone has seen our numbers. For quarter 4 '23 MINT closed at its record high with a core net profit of THB 2.5 billion, which is a 77% year-on-year increase on a like-for-like basis. And also the growth profitability was mainly attributed to all our business units. So just our focus this year -- our key focus this year is threefold. One is to make sure that we have the growth, which is a sustainable growth in terms of what we have announced, like adding at least another 1,000 restaurants and adding at least another 200 to 300 -- 250 hotels in the next 3 years. The second one is mainly focusing on our debt leverage. And you will hear from me with regards to our strategy in terms of how we're going to achieve that and reducing our debt over a period of time. And the third one is, we do have a strong pipeline and moving more -- as we have a strong pipeline, moving more and more into management contracts and also the franchising business, which is taking us down the pathway of an asset-light model as well. Whilst we continue to invest in assets where we feel the return on invested capital will be high compared to our cost of capital in the coming years. So here, the first slide here is just to highlight our core revenues actually increased by 22% year-on-year, both in the hotels and the restaurants and the core and -- the core profit has also more than tripled year-on-year as far as -- it has also exceeded 2019 pre-pandemic levels, both on a pre- and post-IFRS -- TFRS. So here, you see on the top chart, core revenues increased by 22%. Minor Hotels about THB 7 billion, NHH about THB 17 billion, Minor Food about THB 3.5 billion and then Minor Lifestyle, a slight drop. And then that shows an increase of -- up to THB 153 billion. In terms of revenue, mainly Minor Hotels is contributing 79% of the revenue and Minor Food contributing about 20% and Lifestyle about just under 1%. In terms of net profit, as I said, we're showing a 253% year-on-year increase up to THB 7.132 billion, which -- which has been a record year ever. As we all know, in -- sorry, in 2019, we had a THB 7 billion profit, and that was including some of the assets before we did the asset rotation in 2020, 2021 and 2022. So in spite of some of the asset rotations, we managed to achieve a net profit which is higher than 2019. Again, Minor Hotels contributing 69% of that, Minor Food contributing 29% and Minor Lifestyle contributing about 2% of the net profit growth. We then move on to quarter 4 of 2023 year-on-year performance recap. So as you can see, the top line revenues actually grew by 9% and net profit grew by 5%. But on a like-for-like basis, as we all know, net profit grew by 77% on a like-for-like basis. Because last year, quarter 1, we did have some of the benefits of some rent rebates, which we got for the whole year, which was accounted for as it is part of our core revenue, but that really helped us in our numbers last year, which we didn't have this year because all our hotels were back to full opening and full swing in terms of our revenues. And therefore, we -- there was no benefit of that. But on a like-for-like basis, we show that the rates -- the substantial growth in rates of about 11% and 77% in terms of profit on a like-for-like basis. This was pretty much attributed mainly towards the strong demand for tourism rebound coming back in all sectors, including our food as well together with -- on the profit side, together with our continued focus and strategy in terms of cost management and improvement in spite of inflation, in spite of interest rate hikes, in spite of cost of labor, cost of goods and all those, we managed to swim against the wave in those areas. Moving on. Major developments, as I said. So some of the key highlights. We had the Avani Frankfurt City Hotel, which opened in Germany, marking the first launch of the Avani brand in Germany, because we do have Avani's in Europe. The first one was in Portugal. Then we also have the Tivoli Tenerife Hotel, which was opened in Spain. We have Minor Hotels making its debut into Paris, which is a key city with NH and NH Collection. So in some of the best locations in Paris. So the first one was NH Paris Gare de l’Est, which is right opposite the Gare de l’Est station. The second one was NH Opera Paradise, which is very close proximity to the Opera building. And the third one is NH Paris Beauchamp in Champs-Elysees, which also has been rebranded as well. And then we have also NH Collection in Helsinki, was opened in Finland in 2024, the first quarter -- in the first quarter. We also have Anantara, making another debut in a new country, which is in Vienna, which opened in the first quarter of 2024. We also opened Anantara Mina Al Arab in Ras Al Khaimah in the UAE. We then opened an NH Collection in Frankfurt, the Spin Tower, which was opened in Germany, combining the office space with a high-end hotel as well. In terms of brand upgrades, the NH was rebranded to Avani in Bogota in Colombia. We added 5 units on a Q-on-Q in Samui and Khao Lak in terms of our AVC or Anantara Vacation Club inventory pool. We successfully opened the second Wolseley in London, which is called the London Wolseley City, and this would be the ninth restaurant under the Wolseley Hospitality Group, which opened its doors in the heart of London in November 2023 and has had a very strong ramp-up during the festive and we continue to see a strong demand in the Wolseley in the city as well. On the Minor Food side, in Thailand, we continue with product innovation. We continue with seasonal menus. We continue to premiumize our food as well and helping to engage our customers in a much more exciting market condition as well. Dairy Queen actually launched some of the new concepts like, for example, the Ovaltine Volcano, which has been a huge success in Thailand, the Crispy Brownie, the Thai Tea and some of the other broader brands as you can see, which has also helped us to increase our average spend per docket as well. We have started to reenergize and revitalize some of our new store formats to make sure that the revenue per square meter is maximized. Swensen's launched its first-ever experimental pop-up store, which offers 101 flavors of ice cream, which also enhanced the brand's ice cream reputation as well. In Singapore, for the first time, The Pizza Company will make its debut into Singapore, opening the first franchise restaurant in mid-2024 this year. In Vietnam, we've also -- with the first international franchise market since Minor Food acquired the trademark rights to Sizzler, we will open the first international franchise restaurant, which will also help with our further expansion plan and will add Coffee Club to the franchise in the same year as well. So these are some of the major developments which took place in the last quarter and also in the first quarter of this year. Moving on Minor Hotels. If I quickly jump into Minor Hotels, in terms of its financial highlights, we saw a strong year-on-year growth of 25% which was driven across all the business segments in the hotels and the mixed-use units. Our core profit outpaced our revenue growth, surging by about 445%, mainly driven by higher flow-through from room rates, increasing our total revenue and also effective cost management as well. So our revenues increased by 25% on the -- ['22 ] to 23% year-on-year. EBITDA increased by 32%, and net profit increased by 445% with our net profit margin actually going from 0.9% to 4.1%. If you look at the revenue charge -- the revenue change year-on-year, our owned and leased hotels grew revenues by 28%. Management letting rights, it comes from a high base because last year was quite high. It grew -- still grew by 1%. Managed Hotels grew by 5%. Mixed-use grew by 35%. If you look at our performance snapshot by geography. Thailand grew by 66% -- 65%. So Thailand has come back quite strong as we all saw in our numbers. And Europe and the Americas coming from a high base still grew by 26%. Australia and New Zealand grew by 1%, and Maldives and the Middle East actually dropped by about 6%. And the Middle East, as you know, like -- we are asset-light, we only -- we manage hotels in the Middle East. Moving on. In terms of Minor's portfolio. With regards to owned and leased hotels, the portfolio actually demonstrated a 30% growth in system-wide revenue, RevPar or revenue per available room in 2023. Our hotels in Europe and Lat Am, as well as Thailand saw a strong led recovery year-on-year which actually was mainly due to -- driven by increased travel activities and tourism and also our ability in terms of driving our room rates as well. So here, you can see that the ADR increase has been the key -- the key driver. We increased the ADR almost 39% or 40% by -- from 2019. And from last year, we continue to increase our ADR by 15%, which led to a RevPar increase of 31% compared to 2019 and 30% year-on-year compared to 2022. Moving on to owned and leased hotels in Europe and the Americas. In 2023, RevPar of our owned and leased hotels in Europe and Lat Am grew by 26% and 23% from pre-COVID levels, which actually is measured in the same currency, which is Euros. The average occupancy also improved from a strong travel demand whilst Minor Hotels continued to drive higher room rate. So our focus has always been driving higher room rates mainly because to offset some of the cost increases, whether it's inflation, whether it's cost of goods, whether it's cost of labor or interest rates as well. So compared to pre-pandemic levels, Italy also saw the strongest RevPar improvement, which followed by Benelux, Spain, LatAm and Central Europe. So in terms of statistics, our occupancies grew by 8% year-on-year. Our ADR grew by 13% year-on-year and 30% compared to pre-pandemic levels in 2019. And our RevPar as a result, grew by 23% compared to 2019 and 26% year-on-year compared to last -- compared to 2022. The organic RevPar growth in terms of percentage, as you can see, Spain was 21% up, 26% Italy, Benelux was 34%, Central Europe 28% and Lat Am at 24%. Some of the key highlights, as we all know, Spain has become a very -- 1 of the top 3 tourism hubs in globally today. We saw strong solid performance in spite of low season actually, in our key markets, which is in Madrid, Barcelona and Valencia. Italy also continuing to perform strongly in the gateway cities, especially in Rome and Milan. Benelux, actually we had accelerated growth in Amsterdam, in Brussels and also the conference cities compared to the secondary cities. So Amsterdam also, as we all know, we did rebrand the NH Collection into Anantara in Amsterdam, which is the Krasnapolsky. Central Europe had good performance, both key and the secondary cities as well such as Hamburg, Munich, Dusseldorf and Frankfurt. Germany is coming back. Germany was quite soft in the early quarters, but I think the latter quarters, Germany is coming back quite strong as well, which is quite nice to see. Lat Am set a stronger performance, especially in Mexico and Argentina as well. Moving down to Asia and focusing on Thailand. So in 2023, our owned hotels in Thailand, we experienced a very strong growth and recovery in RevPar, surging by about 61% year-on-year, surpassing our 2019 levels by 10%. The increased -- the gradual increase in air capacity actually has helped and also Minor's ability to upsell and yield rooms and rate has been key drivers as well. So in December, our RevPar actually exceeded pre-pandemic levels by 43%. Occupancy rate surpassed 2019 for the first time. So here, looking at occupancy ADR and RevPar as I explained before, we have an 18% growth on occupancy year-on-year, slightly down on 2019. but December, we surpassed pre-pandemic levels in terms of occupancy. In terms of rate, we are 28% up on 2019 and we were 17% up year-on-year, which resulted in a RevPar of 10% growth on 2019 and 61% growth year-on-year. So our Bangkok hotels actually RevPar surged by about 60% year-on-year. And also, we outperformed 2019 by 4%. Looking at Thailand provinces, the hotels achieved a remarkable 61% RevPar growth surpassing 2019 by 14%. Key destinations such as Phuket, Pattaya, Chiang Rai, Samui, Chiang Mai saw a very strong business rebound in the year. Moving on to our hotels in the Maldives. So the return to traditional seasonality partially accounted for a 21% decline in 2023 in RevPar in U.S. dollar terms, which was 5% below 2019. However, despite some competitive pressures and ADR, the ADR remains 16% above pre-COVID level. So in spite of the demand softening a little bit in the Maldives in the last quarter of last year, we did not drop our rates. So we actually increased our rates from 2019. And due to seasonality, like we -- and some of the office, we were slightly down on last year ADR number as well. We see that Maldives this year is starting to rebound, and we see the demand in February and March looking quite strong. So we are quite optimistic about Maldives, the rebound as well after the slow pickup in last year -- in the last quarter. Moving on to our Asset-Light business. Minor's asset-light business includes management letting rights, which is a model which we use in Australia and predominantly driven by the Oaks brand in Australia and New Zealand. And then we also have the Managed Hotels on your right-hand side as well. So looking at MLR or what we call Management Letting Rights, our RevPar actually increased by 3% in Australian dollars in local currency and 36% compared to 2019 in terms of local currency. If you look at Managed Hotels, Managed Hotels increased by 6% year-on-year with a slight drop of 1% compared to 2019. But -- sorry, in terms of number of rooms. But if you look at RevPar, RevPar actually increased by 10% compared to 2019 and 11% compared to last year, year-on-year. The next one is sharing pipeline -- so moving on. Okay. So this is where we talk about our strategy in terms of the first -- when I started off highlighting our key 3 priorities. So one is to make sure we have a strong pipeline, which is more driven on an asset-light basis. And also like -- which will help us to deleverage and reduce our debt over the next 3 years. So on that, if you see the top end, the top half you see 5 hotels with 738 rooms this year opening in Bali, in Italy and also the Avani in Amsterdam. And then next year, you only see 7 hotels which are owned and leased opening in Portugal, in Sydney in Australia, NH Collection makes its first debut into Australia and NH Hotels opening also in Australia and Africa, we could continue to expand Africa, which is the Warangi Park and -- and also Rwanda mainly because of the gorillas. And then -- so therefore, we have 12 hotels, 1,200 -- 1,300 rooms coming from the owned and leased model. And we have almost 70 hotels with about close to 11,500 rooms coming from, what I call, Management Letting Rights or Managed Hotels, which is predominantly all asset light. So here, you see the Anantara's, but it's a fairly good mix opening in China, opening in Colombia, opening in Seychelles, opening in Vietnam, opening in Europe, opening in Africa and also opening in the Middle East as well. So it's a fairly good mix bag in terms of a balanced portfolio opening globally in most countries under the different brands, whether it's Anantara, Avani, Tivoli, Oaks, NH Collection, NH nhow and others. So we have about 70 hotels in our pipeline, which will open in the next 2 years. And then we have 81 hotels which we signed, we have about 40-plus hotels under negotiation, and we have more than 100 hotels which are reaching potential contract staging in terms of our pipeline moving forward. And hence, the reason we believe and we are quite confident that we can get to 200 to 250 hotels opening in the next 3 years. Moving on to our Mixed-Use business. As you can see, the Mixed-Use business actually grew 35% year-on-year, mainly attributable to we also increased our timeshare the average price per point with a higher number of points sold. And additionally, The Wolseley Group improved its performance on a like-for-like basis, which was mainly also due to increased customers and also the addition of the new restaurants, which we did last year. The residential revenue also increased from a successful sale of the residential villas under the mixed-use development -- under the mixed-use segment. So today, on the residential projects, as you can see, we have Anantara Chiang Mai, we have Anantara Desaru and Anantara -- sorry, and Park Silom, which is the office complex, which is open. In the pipeline, we have Anantara Ubud Residences opening this year. We have Kiara Reserve Residences also opening -- launching in 2026, and we have Four Seasons Samui Residence launching also in 2026. On the right-hand side, you will see that the Anantara Vacation Club grew its membership by 6%. So we now have almost 18,300 members divided into those countries like China predominantly accounting for 42% of the total membership. And then we have Hong Kong, Singapore, Malaysia, Thailand, and others, which are Europe and other countries accounting for about 22%. So therefore -- and then when we look at the inventory, today, we have Queenstown, we have Bali. We have Sanya, Samui, Phuket, Bangkok, Chiang Mai and Khao Lak, which is about 322 units under the timeshare. By 2026, we're hoping to increase that to 420 units. That brings me to the end of Minor Hotels. And moving on to Minor Food, the overall revenue from restaurants saw a 13% year-on-year growth, fueled across all the hubs and a rise in profit contribution from our joint ventures as well. And through -- as we continue to improve our efficiency, effective cost management in terms of supply chain, in Thailand and China and also effective CapEx or trying to minimize our CapEx and we look at some of the concepts and the space resulting in lower depreciation costs, and that actually contributed to our core profit, which surged by a remarkable 127% year-on-year growth. So when you look at Minor Food, 13% growth on revenue, a 24% growth in EBITDA and 127% growth on year-on-year in terms of net profit and 100% growth in terms of net profit margin, going from 3.3% to 6.6%. So it's -- Minor Food has rebound very strong. And 2024, we continue to see the same trend in terms of slow sales increasing and our profits for this year will surpass 2023. The growth, as you can see, the total system sales grew by 10% on a year-on-year. And also the number of outlets also grew. Same-store also grew by 3.4% in terms of growth. And total system sales actually increased by 10.8%, supported by positive growth across all the hubs. And same-store sales also grew by 3% year-on-year, reflecting our success in terms of adopting some of the new marketing strategies and food concepts, boosting our sales numbers. Moving on to Thailand, the hub in Thailand. So Thailand Hub actually reported a total system sales growth of 12.6% year-on-year in 2023, driven by a 2.4% in same-store sales together with outlet expansion. So we continue to see the rise in customer traffic and also the dine-in business coming back post-COVID because during COVID we completely lost the dining business and we see that coming back quite strongly. And also the new product developments and some of those strategies in terms of sales initiatives has also helped with the dining sales -- increased in dining sales, resulting in a higher average spend per ticket. So here, as you can see, the total system sales grew by 13% and system sales grew by 4.9%. Like here, some of the things to highlight is like I think Dairy Queen was one of a good example to embark on a new growth trajectory with a new product -- with new product ranges, including Sundaes, including Ovaltine -- the Volcano Ovaltine, the Crispy Brownie and Thai Tea Slushy, which actually targeted like the kids in terms of premium offerings as well. Swensen's, we launched a limited time offering of fried chicken ice-cream, which became highly viral in Thailand, whilst the traditional Mango, Durian and Coconut ice cream also reached its record high level sales as well. Moving on to our next hub, which is China and Australia. So China on the left-hand side. So China total system sales and system sales grew by 17.7% or 18% respectively. The removal of COVID-19 restrictions in the country in the year led to a rebound in dine-in traffic and the reopening of the closed stores during the previous year's lockdown, further accelerated the growth in total system sales. Australia also saw an improvement in sales performance with system sales growth of 4% year-on-year and total systems sales was slightly lower, growing 1.1% as a result of lower number of outlets. If you look at China, you can see the statistics. China Hub successfully captured most of the demand recovery, resulting in a positive same-store sales growth. China hub remains positive and remains profitable as well. And whilst it benefits from lower raw material costs and also like what we did in our cost initiatives as well. So Australia revenue was boosted from increase in our roast-bean sales following the addition of our new roasting capacity, which we added in Melbourne as well. Our strategic focus was on drawing customer visits through new store design, media advertising and new coffee blend and menu innovation has helped to further drive our sales up as well. That brings me to the end of the food group. And then moving on to MINT or Minor International and Corporate Information. We continue to look at our CapEx and balance sheet -- and strengthening our balance sheet. So post-COVID investment, CapEx is returned to the usual THB 8 billion to THB 10 billion or THB 8 billion to THB 13 billion per annum from 2024 to 2026. Our focus is return on invested capital, as I said before, above 10%. And therefore, any CapEx funds, which gets allocated to growth or rebranding or repositioning will yield a much higher yield compared to where we are today. So the higher CapEx in 2024 is mainly due to repositioning of assets and also upgrades, which will help us to command much higher room rates as we have demonstrated in 2023 and also, we have a new hotel opening and some of the new hotel opening in 2024, where we have invested, like, for example, in Bali, in Ubud, we will open the hotel this year at the beginning of the third quarter. This hotel was put on ice during COVID because we actually wanted to preserve cash and reduce debt. And even though the hotel was 80% complete, we had to stop construction. And we have -- we have now rebegin construction, and we should complete this in the next 6 months and be able to launch the hotel in quarter 3, including the residences as well. So those are some of the big ticket items in terms of CapEx spend. In terms of leverage, I'm glad to report that our leverage is now 1x - 1.01x, and this is net interest-bearing debt to equity. Our focus, as we all know, our debt covenant threshold is 1.75x, our internal policy is 1.3x, and we are at 1x. This excludes our perps. Our focus is to bring down our total debt, including perps to the 1.7x or the 1.6x level in the coming years. Our back-up financing, if you look, cash on hand as at the end of 2023, was about THB 14 billion with unutilized credit facilities of almost THB 39 billion. Moving on. Just touching based on like how -- like the way I started the presentation, our 3 main key priorities for the next 3 years. So the first one is, as I said, is to ensure that we have a strong pipeline. We drive our gearing down on debt down including our perps, and the third one is also to expand our hotels, both on organic and inorganic in the next 3 years. which will actually -- our target is to achieve 8% to 10% in terms of revenue growth, 15% to 20% in terms of profit, net income and to achieve more than 10% return on invested capital as well as a result of our 3 key priorities, which we stated before. Hotels, the plan is to go from 530-odd hotels in 2023 to 780-plus hotels by 2026. Food outlets to grow from 2,645 to 3,700, adding almost about 1,000 food outlets globally. And this will also help us to reduce our leverage, which we -- in 2023, it was 1.01x to 0.8x. And our focus also on net EBITDA -- sorry, net debt-to-EBITDA of 4.7x (sic) [ 4.87x ] to bring it down to 4.3x. I have to also state that this doesn't include any of the asset rotation or asset recycling plans which we have, which will further reduce these numbers in terms of leverage ratios moving forward. And that's been 1 of our 3 key priorities in terms of cash management, in terms of gearing and asset rotation as well. As a result, we will continue to focus on our leverage and bring our leverage down and also bring the net to EBITDA down over the next 3 years from 4.87x to 4.3x. The next one is, so the 3-year strategy from 2023 to 2026. So as we said it before, one is to drive organic growth and drive pipeline. The second one is active deleverage plan. And the third one is the expansion through asset-light business model and continue to expand the portfolio as both on the asset-light and also on the franchising model as well. So if you look at Minor Hotels, in terms of rebranding initiatives, we have more than 30 hotels which will be upgraded to a higher-tier brand which will enable us to achieve a higher rate and a higher ROIC. We are looking at cross-brand growth to reach on every brand. We are working on a branding strategy as well in terms of portfolio expansion. Asset-light will also secure -- asset-light and franchising will secure a solid pipeline of the hotel management contracts. Moving our channels more into direct hotel bookings will also enhance our websites and booking platforms for a better customer experience and access as we continue to focus and continue to do so. And segment diversification in terms of attracting a much wider customer base, also implementing our cross-selling strategies as well. Our loyalty program has also enabled us to increase our stays with GHA DISCOVERY dollars and also the NH+ programs. A higher revenue flow-through which maximizes on TRevPar or what we call total revenue per available room, optimizing on CapEx and leveraging on scale and efficiency as well as deleveraging to enhance our earnings power -- earnings growth power. On the Minor Food side, which is on the right-hand side, we continue to expand in terms of brand value enhancements, looking at store contributions per square meter, looking at new concepts, looking at launching into new countries as well. Concept expansion, as I spoke before, broadening our presence across the brands with new brands and additional franchising opportunities. We just also announced our entry into Indonesia with our brand with Dairy Queen as well, which will help us to further accelerate in a new country, one of the brands and further expand and grow as well. Customer acquisition and expanding beyond traditional shopping malls is also one of our key priorities. And membership sales, we've been focusing on membership sales which will help us to boost loyalty, repeat sales through our membership programs. And the last one is about diverse format launch in terms of introducing new store concept with a quicker payback because, again, we're focusing on ROIC and a quick payback as well and of course, on the operational efficiency side, we continue to focus on costs and also support functions as well. So that's pretty much brings me to the end of the presentation. Thanks very much for your time, and happy to open the floor in terms of Q&As.

The first question is on NH Hotels. NH Hotels has seen cost rising faster than revenue since first quarter. Was that to imply that 2024 would be likely to see similar trends?

Well, I think NH Hotels we saw most of the cost increases have been controlled. And therefore, we see that the ADR increases within Europe has been quite strong which actually nets off some -- most of the cost increases as well. We don't see the trend continuing as we see energy prices actually starting to stabilize and drop. Cost of goods and inflation starting to stabilize and drop. And therefore, we don't see the same trend continuing into 2024.

Can you explain the benefit from the release of basket lease liability then lower the lease expense in the fourth quarter of 2022.

So we've got the benefit of -- in the fourth quarter of '20 -- we got the benefit in '22. So -- this was mainly due to we could pull some of the -- during COVID, some of the new basket releases were negotiated, and we were able to finalize them in the last quarter of last year, which also actually helped us with our P&L, and you see the impact on the P&L. The business recovery now is back to normal or above pre-COVID level. And therefore, we don't see these benefits -- we continue to get these benefits in the coming years as we are now back to full operational level.

Next is the question on QSR business. The QSR business revenue was up about 1% Q-on-Q in the fourth quarter. What's the reason behind that?

So I think if you look at the different brands, it was mainly driven by softness in China. And then also, our BreadTalk business gained the joint venture in China as well, where we have quite a big exposure. We did see a slowness in the market, in the QSR business in this country. But Thailand continued to show a strong growth in spite of China as well.

This is on the operating stats in the first quarter. How is the operating data tracking in the first quarter?

First quarter, like I gave you our targets for the first -- for the next 3 years. Our Q1 actually is showing ahead of target, including Europe, because Europe is predominantly, as we all know, Q1 and Q4 is the low season. But I think in Q1, Europe has come out quite strong. January, we just closed January ahead of budget. which is way ahead of 2023 as well, which is a strong indication that the trend will continue. And what we have on our books today is higher than what we had on our books in 2023 in spite of 2023 being a strong year as well.

Next on the debt. What is our action plan for reducing our [ DE ] to 0.8 by this year?

So based on the earnings today, and based on our earnings for this year and based on cash flows and also controlling CapEX and repaying like we have the Warrant 9, which gets exercised, that will further reduce our debt levels and help us to pay down some of the most -- some of the expensive debts, thereby bringing the DE down to 0.8x from 1.01x. And this to an extent, excludes some of the asset rotation plans which we have as another strategy to -- if we have to further reduce, we can start to further reduce our debt as well.

The next is the question behind the SG&A expense that is very low in the fourth quarter of 2023. The reason behind that.

So from an SG&A perspective, I think we -- the controlling of costs has been one of our key focus and also driving efficiency has been one of our key focus as well. And that has actually led to some of the SG&A costs coming down year-on-year. We are now starting to invest on the digital side more. So you will see this year, some of the costs as we continue to invest in terms of AI and also digital marketing and social media, we have quite a few tools coming in terms of AI. In terms of our customer experience, CRM, customer relationship management, using some of these tools and that will then further -- not only further increase our top line, but also further reduce and help us to be a bit more efficient on the cost side as well.

The next question is on the realized -- unrealized FX item loss in the fourth quarter. What kind of derivative instruments have caused the impact on the unrealized gain and loss in the loss items in the fourth quarter of 2023?

So I think in terms of ForEx volatility, like we see the ForEx volatility over the year and over the years as well, like it's been up and down and therefore, this year, we do -- we had the accounting -- there's an accounting loss, which is not a cash item actually because it's a noncash item, which is a ForEx. It's a book entry. And it is on derivative instruments that we have and some of our -- the positioning in terms of hedging as well. So therefore, that's what caused that.

The next question is on the RevPar growth. What are the RevPar growth targets for our hotel portfolio in 2024?

So we continue to look at RevPar targets of double digits, which will be predominantly driven by ADR because we see that the elasticity of demand and the price. And as we have demonstrated in 2023, where we have predominantly driven ADR up by high 20s or 25% to 30% growth in terms of ADRs like Europe grew by 25%, Thailand grew by more than 30%. And therefore, we focus -- our focus will be on RevPar in terms of rate. And therefore, that rate growth will also further enhance our profitability because everything flows down to the bottom line in terms of rate growth. So our RevPar growth would be the high teens. That's what we are targeting for 2024 and based on what we have on our books at the moment.

Next is the question on the demand, whether we have seen room demand during the EURO football that will be held in June and July this year.

EURO?

EURO football.

Yes. Well, I think it's not just football, which is trying -- driving our demand. Yes, in certain countries, I was in Spain a few months -- a few -- 2 weeks ago and the opening of the Bernabeu Stadium in Madrid is going to drive a huge amount of demand into our hotels. And just to give you an example, the stadium used to have about 30 events a year. That has been increased to about 80 events a year, so that will help us a lot. So of course, the football, there's the EURO 2024 in Berlin, where we have 8 hotels under NH and NH Collection, which will also help and we have about 52 hotels in Germany, which will be able to capture the demand in terms of the EURO '24 in Berlin as well.

Next one is on the hedging for our electricity in Europe. Please update.

So in terms of hedging in 2024, gas prices are hedged about 90% and electricity is hedged about 80%, and we continue to see the drop in terms of pricing over the months, which is also helping us as well. And not just Europe but also rest of the world as well, which is -- which helps a lot.

Next one is on our plan to repay our THB 11 billion current portion of debenture that we'll be maturing in 2024.

So our plan to repay, yes, I think there won't be any more -- it's not with the issuance of perpetual bonds, just to be very, very clear. And it's mainly looking at also like we will have a dividend payment to our shareholders. We did pay an interim dividend last year -- and we will -- which is about THB 0.25. We are -- we believe that we will have another -- we will have a stronger dividend payment this year based on last year's numbers, which has been very strong. And therefore, there will be cash used for that as well. But I think for us, in terms of using the cash, we -- the uses of cash will be less compared to -- and also the earnings -- the growth in earnings will also help us to drive that cash flow up and make it much more stronger as well.

The next one is on debt repayments. What are the absolute amount of debt repayment that we can expect in 2024, 2025 and then in 2026?

So just to give you an idea, I think if you look at our debt -- interest-bearing debt in THB 1 billion, like in 2021 -- sorry, 2020, we were THB 136 billion. In 2022, we dropped to THB 120 billion. In 2023, we've dropped to THB 100 billion. And our target in 2024 is to drop to about [ THB 90 billion ]. And this excludes any of the asset rotations or any of the other plans we have in terms of reducing our debt further.

Due to our limited time, this concludes our analyst meeting for the annual results of 2023. If you have any further questions, please feel free to contact our IR team at any time. And then we are more than happy to answer all the questions that you may have.

And again, wish all our customers and also our shareholders and analysts another -- Happy Chinese New Year. And thank you for your time and look forward to the next -- the first Q -- announcing the first Q -- a stronger first Q as well with -- at the next analyst meeting. So thank you all, and thanks very much for your time.