What sectors is the Minor Group of Companies active in?

HEINECKE: Our company is made up of 3 main sectors. One is retail, where we have such brands as GAP, Esprit, and various other consumer brands. We have our restaurants, which is the food and beverage division, where we have about 1,800 restaurants directly and indirectly around the world. We do have a few in Europe through an investment with S&P, the second largest food and beverage operator in Thailand. We also have our own substantial presence in places such as Australia, where we are one of the largest coffee restaurant operators. Our presence in the Australian market is superior to that of Starbucks, which is quite an achievement. Lastly, the third element of our operations is the hotel and hospitality. MINT is a hotel owner, operator and investor with a portfolio of 41 hotels and 39 serviced suites under the Anantara, Avani, Oaks, Elewana, Marriott, Four Seasons, St. Regis, and Minor International brands in Thailand, Australia, New Zealand, the Maldives, Vietnam, Tanzania, Kenya, the Middle East, Indonesia, China, and of course Sri Lanka. Indirectly, we have investments in aircraft charters, along with another partner, and we operate a fleet of 4 jets that we use regularly for our business. In spite of what everyone else says, there is no aircraft on our balance sheet. The study that I saw recently out of the US, and I am sure it was put together by one of the larger manufacture of aircraft, stated that the fastest growing companies were those who used private jets. For us, it would be impossible to cover all the territory that we cover without using our jets, both for our senior executives as well as for myself. In today’s market you have to act fast on an opportunity and also managing business on multiple continents still requires an on the ground approach from myself and the senior Executive team under the leadership of Minor Hotel Group CEO, Dillip Rajakarier.

What new initiatives within Thailand’s tourism sector are you currently involved in? What is your growth and expansion plan for Anantara?

HEINECKE: We have several new initiatives that we are undertaking in Thailand. One is in Phuket, which will be a mixed residential/hotel development. We also have two more projects in Bangkok which are quite substantial for us and we are looking forward to announcing one shortly. The growth of Anantara, our key brand, is set to be very rapid. We have 20 properties at the moment and expect to have 50 open or in the pipeline by 2015. In addition, just a year ago, we launched AVANI Hotels & Resorts which was created to compliment Anantara and which already boasts 2 hotels in Sri Lanka and a third coming in Malaysia in 2013. I’m sure we will see opportunities in Thailand over the coming years for AVANI also.

Are you looking at outright ownership of the upcoming Anantara properties or at a management role?

HEINECKE: The properties that we are developing are both ownership and management. Some are management only, especially in markets where we may not be comfortable with the real estate. So, for example, in China and the Middle East, most are predominantly management model; whereas in the Indian Ocean, the Maldives, and Sri Lanka, we are almost all equity. Its about finding the right fit for each country and of course finding the right partner in the host country, one that shares the same values and business principles as Minor.

What regions contribute the most to your tourism division’s bottom line?

HEINECKE: In our experience, we have been focusing between Africa and Australia. Today, about 35% of our EBITDA comes out of Australia and we expect to bring our international sector up to about 50% of our EBITDA by 2016.

In what ways have recent global events, such as the crises in America and Europe, changed the landscape for business?

HEINECKE: I think the landscape is changing rapidly with what is happening in Europe and the US. Both Europe and the US are key markets for us and we need to factor the local business environment into the way we do business today. Fortunately, being based in Asia, as we are, and focusing primarily on an area that goes from Africa to Australia, we are seeing the tremendous input that the Asian market is having on those economic zones. Today, China has become the largest tourism supplier to the Maldives, replacing the European market. This is really interesting, as the European numbers have not actually declined. It has rather been the case of the Asian numbers growing and this is what we are seeing throughout most of our markets. Thus, we have not fully felt the impact of the crises, because most of our destinations, with the exception of perhaps Africa, which is highly priced and mainly attracting Americans and Europeans, are great value for money. As a result of that, we are competing with destinations like London, Paris, and other markets around the world, which are losing out because people are tending not to choose Europe but instead opting for the greater value for money markets.

How does catering to a growing Chinese tourism market differ from catering to more traditional markets?

HEINECKE: Catering to the new Chinese market is interesting, but it is not necessarily a low cost market. We find that the Maldives is a very popular destination for honeymoons, or young couples. We are getting an average room night that approaches $1,000 or more. Thus, we are finding that it is not a low cost market. The Maldives has virtually no low cost carriers that fly in. They have a number of flights coming in from China, and generally, they are not inexpensive trips. So we are finding that you really have to be ready for your Chinese customers. In the old days, menus and room service directories would be in Japanese, because Japan used to represent probably the biggest Asian travelling market, and almost everywhere in the world you would go, you would find a Japanese room service directory. Today, you should expect to see a Chinese room service directory and you should expect to see Chinese Guest Relations Officer to be able to assist our guests because the English language will not be as prevalent yet with the Chinese market as it is for the European market.

Thailand has often been portrayed as prone to political and natural crises by the media. What is the reality of the situation on the ground?

HEINECKE: I think the Thai market is very misunderstood. It is perceived as being politically unstable and because of last year floods, it is also perceived as flooding easily. Just recently we saw the terrible tragedy that hurricane Sandy wreaked on New York city and the flooding in England, yet we don’t consider New York or the UK dangerous places to visit as there ‘might’ be another hurricane or flood. Today, political instability and natural disasters happen in nearly every country to one degree or another. I think the important thing is to understand Thailand more for what it is, than for how it is represented. Unfortunately, my greatest problem is usually the sensationalism that takes place in the press and we need to clear up these misconceptions. During the floods, Bangkok was never flooded, yet we lost virtually all of our bookings because a few images taken at one local airport, which was under water, and everybody visualized that to mean that the international airport was flooded, which it never did. Also, the red shirt incident that we had in Thailand caused a perception that Thailand was unsafe. This not only destroyed Bangkok tourism, but it destroyed the whole country, because people would not transit through Bangkok. They did not want to go to Phuket because it is still in Thailand. Frankly, the thing that keeps me up at night is what are we going to see in the media the next day, because that has such a huge impact on our business. Thailand has had 8% real GDP growth, for the compounded last 10 years, through all of the crises that we have seen, whether it be floods, red shirts, yellow shirts, airport closures, and what not. Sometimes this is perceived to be the most unstable time for Thailand, but actually those are the times for the greatest opportunities. We have always found that these events always presented more opportunities than problems.

What impact did this so called instability have on your investments in Thailand?

HEINECKE: We did not stop any investments during this period of perceived political instability. One of our landmark projects was the St. Regis that went up during that period. We made no sales at the time, as you can imagine. Construction stopped for a few months while the red shirts closed the area, but we quickly returned to normal and we never delayed or hesitated over the whole project. Although we are relying very heavily on growth that is coming from international markets outside of Thailand, we are not reducing our Thai investment capacities. We have so much more free cash to invest this time, that we are going further and further. It is unusual, but if you look at a company like ours, which has about 40% of its revenue coming from offshore, the fact of the matter is that we have been almost 100% financed by Thai Banks, Thai bonds, and other facilities we have.

What is your macroeconomic outlook for Thailand? Which indicators are showing the most positive trends and which remain challenges?

HEINECKE: I am very bullish on the growth prospects for Thailand, mainly because of the ASEAN opportunity and the fact that we have about 2/3 of the population of the world within an 8 hour flying time of Thailand, if I have my numbers right. Indicators that I find encouraging are related to what we are seeing coming out of ASEAN and China especially. That is really what is driving a large part of the growth. Things are a bit sensitive on what is coming from Europe and the US and the impact that this may bring.

How successful has Thailand been at creating wealth for the general population?

HEINECKE: I have only been here for 50 years, but I can tell you that the wealth creation has been very rapid and we have seen tremendous growth. I think Myanmar and Thailand had almost exactly the same GDP in 1962. You only need to look at Myanmar today and at Thailand today to understand what has happened. We had similar figures with Sri Lanka in 1985. Sri Lanka and Thailand each had about 600,000 tourists a year. Today, Thailand is approaching, I think, 20 million and Sri Lanka will welcome about one million. The war is over and Sri Lanka is growing rapidly. We ourselves are putting a lot of investment in Sri Lanka. But that is what happens when you have stability and growth in a country.