Nai Lert Group seeing worst losses since World War II
After gaining profits last year, the company is preparing to go in the red for 2020 and 2021
The spread of the coronavirus has one of the oldest hospitality businesses in Thailand, Nai Lert Group, facing its biggest setback in its 135-year history, but the group pledges to plough ahead with a mixed-use and office project with greater caution.
“The pandemic has seen the greatest devastation to our family business, with no other crises coming close, except World War II when Nai Lert Park was hit by 26 bombs,” said Naphaporn Bodiratanangkura, managing director at Sampatilert, a subsidiary of Nai Lert Group.
After gaining profits last year, the company is preparing to face consecutive losses in 2020 and 2021 as the negative signs already showed with 70% revenue dip, mainly attributed to lack of catering services which made up 40% of the total income.
Even though lockdown relaxation allows people to hold events and ceremonies, but the scale were minimised due to social distancing rules.
“Nai Lert Park can host a 2,000-person event prior to the pandemic, but now the maximum capacity is about 200 persons, not only because of the rule of four square metres of space per person. Guests are also worried about mass gatherings,” she said.
Ms Naphaporn said in the second half of this year, even though advanced booking has hit 40% of revised target, travel restrictions still pose as a threat as wedding couples choosing Nai Lert Park are mostly foreigners residing in Thailand.
But when their relatives and friends cannot cross the borders, ceremonies are being postponed or delayed.
She said apart from keeping the business alive, the group preserved all jobs for 250 employees by cutting salaries and branching out new business unit, Nai Lert Express, to let employees in four restaurants and two catering services have recurring incomes.
“We’ve started food delivery from our restaurants and introducing new home-made products, Thai chili pastes, from family recipe. Luckily, 60% of our guests are repeaters we can promote the new services to them right away,” she said.
Nai Lert Group made headlines in 2016 when it subdivided 15 rai of land and buildings in the Nai Lert Park on Wireless Road and sold it to Bangkok Dusit Medical Services Plc (BDMS) at 10.8 billion baht, but still possess a vast majority of land in that prime location.
While many developers put investment on hold, Ms Naphaporn, the fourth generation of Nai Lert, said the group will not stop any projects but have to find the right time for launching.
“We cannot freeze the investment. If everybody did, the overall economy will be stuck, and it could be a disaster,” she said.
Of the remaining 20 rai, the group will use around 3 rai for a mixed-use project, Aman Nai Lert Bangkok, combining luxury hotel and branded residence under the management of Aman brand.
But investment budget may soar to 4 billion baht, up from 3 billion baht planned before the pandemic as there’re many new elements to add into structure, such as split type air-conditioning systems with PM2.5 dust protection, to cope with new demand for hygienic accommodation.
It also has to redesign floor plan to increase more space of each unit which will be new requirement in physical distancing living, while number of unit for hotel and residences will not exceed 100 units each.
She said the group also plans to build a 30-storey office building with rentable area around 20,000 square metre on Sukhumvit 62/1 which will equip with green concept and contactless technologies. The company will secure potential tenants before kicking start the construction.
“Our family has seven rai next to Hua Hin beach ready for development. We’re ambitious to grow our hotel portfolios around Thailand in plots we already have, but timing is extremely important for any decision-making now,” Ms Naphaporn said.