AP COVID Hospitality Bulletin Asia Pacific - January 2022
Transactions that matter.
1. Hotel Sav, Hong Kong
- Boston-based fund manager, AEW Capital Management, teamed up with Hong Kong-based developer, Crystal Investment, to acquire Hotel Sav from Hong Kong listed Chuang’s Consortium. The 388-room hotel with two floors of retail space located in Kowloon changed hands for HKD 1.65 billion (USD 210 million), or HKD 4.25 million (USD 540,000) per key. The value implies a 1.9% premium over the valued price at the end of November 2021.
- The hotel is surrounded by residential buildings and close to three MTR stations and university campuses. Due to the travel restrictions and quarantine arrangements in Hong Kong, the hotel launched several initiatives, such as co-living, staycation, and long-stay, to stay in business earlier in 2021. As of the end of September 2021, the average occupancy rate reached 61% for 6 months, while the year-to-date average citywide occupancy rate through September 2021 is around 60%.
- The hotel is likely to undergo a redevelopment after the completion of the sale. The seller agreed to name change of the hotel in the future, and the current tenants of commercial space were also in discussion with the buyer to terminate their leases. Considering the proximity to university campuses and MTR stations, the property has great potential for conversion to student housing or extended-stay for young professionals.
2. MINT Hotel and Retail Portfolio, Thailand
- Minor International Public Company Limited (MINT) and Abu Dhabi Fund for Development (ADFD) formed a joint venture to hold a portfolio of 4 hotels and 1 retail mall across Thailand. ADFD would hold 40% of the stakes in each asset owned by MINT, and the aggregated selling price was USD 104.8 million. The four hotel assets in this portfolio include Anantara Riverside Bangkok Resort, Avani+ Riverside Bangkok Hotel, Anantara Layan Phuket Resort, and Four Seasons Resort Koh Samui. After the transaction, all assets would remain under the current management and operations, and the cashflow would further stabilize MINT’s liquidity.
- Founded in 1971, ADFD is an autonomous institution backed by the government of Abu Dhabi, and it aims to provide assistance to developing countries for better economic development. Previous tourism-related investments of ADFD include hotels in Egypt and airport project in Maldives. This investment marks the entry of ADFD to Thailand, and it also implies the potential of the country’s tourism development after the pandemic.
3. Dafam Hotel Portfolio, Indonesia
- Indonesia-based Artotel Group (AG) announced a majority-stake takeover of Dafam Hotel Management (DHM) which operates 24 hotels in Indonesia with a total of 2,507 rooms. While details of the transaction were not disclosed, AG expanded its portfolio to 50 hotels with more than 5,000 rooms in Indonesia. Additionally, AG forms strategic partnership with Singapore-based Far East Hospitality to support its development across Southeast Asia.
- Earlier in 2021, AG took over the Indonesian master franchise of Kyriad, a hotel brand created by French Louvre Hotels Group (owned by JinJiang), which included 11 properties. At the same year, AG announced the completion of Series B round of financing from Indies Capital Partners, a Southeast Asian alternative asset manager, and Benson Capital, a creative industry-focused investor, at an undisclosed amount for upcoming expansion across Southeast Asia.
COVID news that matter.
- The government of Thailand announced to temporarily suspend the registration of re-entry travel arrangement, Test & Go, just 7 weeks after the initial launch. The spread of Omicron variant in Southeast Asia forced the government to reconsider their ambitious reopening plans, but about 200,000 registered travelers are still eligible for the quarantine-free travel to Thailand. The pioneering quarantine-free travel arrangement, Phuket Sandbox, stays unaffected despite the new announcement.
- The re-entry program starting from November boosted the number of international arrivals to reach the highest monthly number of arrivals for the year at over 91,000 travelers. The majority of the travelers originated from Europe at 57%, followed by East Asia (18%) and Americas (11%). Although the number is 3.5 times higher than October, it is still a 97% decline from the comparable figure in 2019. The stronger recovery is likely to set in once travelers from East Asia, especially China, are ready to travel abroad again.
- The reopening of Bali, on the other hand, received little attention and effects since October. The island’s airport reopened to international flights in October, but there were only domestic flights mainly from Jakarta operating at that time. Moreover, the suspension of tourist visa, 10-day mandatory quarantine and a few COVID tests made travelers look for better holiday destinations in Southeast Asia. Between January and October 2021, CNN reported that only 45 international travelers arrived in Bali, and the number was confirmed by local statistics bureau.
- The double-digit number of international tourist contrasts with the growing number of domestic tourists from the capital and other parts of Indonesia. By mid-December, average number of daily visitor in Bali were about 13,000 on weekends, but the occupancy rate of hotel was only around 35%. The sluggish reopening of Bali also urged local community to work toward a more sustainable future, including waste management and agro-food entrepreneurship.
Hong Kong SAR
- The flagship carrier, Cathay Pacific, announced the cancellation of some international flights starting from late December 2021 in response to the tighter quarantine schedule for air crews ordered by the local government. Moreover, long-haul flights, both cargo and passenger, are all canceled until early January 2022 to cope with the spread of Omicron variant in the city. While Hong Kong rolled out its vaccination program in February 2021, the fully vaccinated population is still less than 70%, which is far lower than other countries in Asia Pacific. Worst of all, the uncertain situation and local Omicron cases halt the ongoing discussion with Mainland China for a border reopening.
- While air travel is not ideal under the pandemic, cruise holidays are gaining popularity in Hong Kong. The cruise operators reported that the 3-day package during the new year sold out despite a maximum occupancy of only 50-75%, and they also saw the trends of enquiries from corporate and groups as the alternatives for social functions.
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