University Plans Major Hotel in Bangkok

Chulalongkorn University will build a 30-storey parking and hotel building costing Bt1.8 billion in Bangkok's Siam Square area and plans to seek a joint investor next year for the hotel part of the development.

"The university will invest Bt800 million on the parking floors and next year we will open bidding for a joint developer for the hotel part, which should require an investment of Bt1 billion," said the university's vice president, Assoc Prof Boonsom Lerdhirunwong.

To be located next to Novotel Siam, the building will have commercial areas on its first three floors. Parking lots will be provided from the fourth to the 10th floors and the 11th floor will house mechanical equipment. The 12th to 30th floors are expected to house the hotel.

After all lease contracts with 45 tenants occupying the property expire at the end of this year, Chulalongkorn plans to open bidding for a contractor to build the first 11 floors next January, for completion in 2010.

Design of the upper hotel portion will be finalised jointly with the private investor, although Plan Architect is presently contracted to supply its preliminary design.

The project is believed to be part of the university's plan to maximise benefits from its properties.

Boonsom said the university would also turn its three-rai Centre Point area into a "digital city", selling all kinds of new-technology gadgets. The project will cost Bt289 million. Construction will begin in February and will be complete in eight months.

While announcing its money-making property developments yesterday, the university also accepted a deposit of Bt2.5 billion from MBK to renew its land lease for the MBK shopping complex. The new lease, which will begin in 2010, will cover a period of 20 years and will generate a total of Bt25.38 billion for Chulalongkorn.

The university's president, Prof Suchada Kiranandana, said MBK's deposit would be used to develop human resources and facilities within the university according to a five-year plan. All faculties had already finalised projects under the plan.

At a total of more than Bt25 billion, the return from MBK's renewed lease is much higher than about Bt3 billion the university earned from the original 30-year contract. The lease fee was set according to an independent appraisal report.

Suchada said the fee was not too high, given the university's need to invest the revenue for development. She said annual budgets allocated to the university were not enough to cover fixed expenses such as salaries and infrastructure development.

MBK's chairman Banterng Tantivit admitted that the higher lease fee meant that the contribution to his company's total revenue from Bangkok's landmark shopping centre would fall.

However, MBK owns the Pathumwan Princess Hotel in Bangkok as well as two hotels and a resort in Ranong and Krabi provinces and is constructing another resort on Koh Samui. It also has a stake in Bangkok's Dusit Thani Hotel.

Banterng said the company's hotel and resort business contributed 18 per cent of the company's income, and this was expected to increase to 25 per cent within five years. This would help to offset the diminished revenue from the shopping mall.

Currently, the MBK shopping mall contributes 30 per cent of the company's revenue, the second- highest proportion after its Mah Boon Krong rice, which generates 35 per cent. Its golf club and housing development business contributes 5 per cent.

He said the company was preparing a 10-year plan to improve the shopping complex as well as its Pathumwan Princess Hotel. The renovation work is expected to start next year and will cost between Bt1.2 billion and Bt2 billion.