Bualuang Securities sees hotel stocks recovering on a value-led basis, with earnings stronger than tourist arrivals

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Bualuang Securities said second-quarter 2026 results for the tourism sector were stronger than the soft tourist arrival numbers suggested, with combined core profit rising 3% year on year to 7.76 billion baht and mostly beating expectations. For the third quarter of 2026, it expects combined core profit to still grow 3% year on year. Although the headline figure looks modest because of the large profit bases at Airports of Thailand and Minor International, which are expected to grow only 4% and 1% year on year respectively, the recovery in hotel stocks is clearer. It expects The Erawan Group to rise 28% year on year, while Asset World Corp and Central Plaza Hotel are each expected to rise 10% year on year. Leading indicators in the third quarter so far support that picture. July revenue per available room rose 26% year on year for Asset World Corp, 8% for Central Plaza Hotel, about 5% for The Erawan Group and 4% for Minor International. Asset World Corp also has booked room revenue for the second half of 2026 that is 30% higher than a year earlier, while The Erawan Group's August bookings improved from the previous month. Overseas, Maldives tourist arrivals swung from a 2% year-on-year decline in July to an 11% year-on-year increase in August, which is positive for Central Plaza Hotel, while the recovery is spreading more broadly across Northeast Asia and long-haul markets. Bualuang Securities maintained its 2026 foreign tourist arrival forecast at 31.9 million, down 3.3% year on year, after the first half of 2026 came in at 16.2 million, down 3.2% year on year. That means the second half of 2026 would need to fall about 3.3% year on year, which is still in line with the forecast. If second-half 2026 arrivals are flat year on year, there is a chance the full-year figure could be revised up to about 32.4 million, down 1.6% year on year. It kept its 2027 forecast at 34.0 million, up 6.6% year on year. The key point is that this recovery is more value-led than volume-led. Average spending per tourist rose 7% year on year in the first quarter of 2026 and 15% year on year in the second quarter of 2026 to 52,918 baht per person, helped by longer stays and a higher share of higher-spending long-haul tourists. That means tourism revenue and hotel profits have a chance to recover faster than tourist numbers alone would suggest. Bualuang Securities maintained an overweight rating on the tourism sector and selected Asset World Corp, Central Plaza Hotel and The Erawan Group, in that order. Asset World Corp stands out for its MICE booking momentum and asset injections into a REIT to recycle capital. Central Plaza Hotel is supported simultaneously by renovated Thai hotels, Maldives and Dubai hotels gradually raising occupancy, and improving food business margins. The Erawan Group is a recovery play on revenue per available room and HOP INN expansion, with potential upside from a future business separation. Airports of Thailand is not among the report's three top picks, but it has the most pronounced earnings inflection point, with 2027 core profit expected to grow 59% year on year from the full-year recognition of the passenger service charge.

Impact on assets 5

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