AP COVID Hospitality Bulletin Asia Pacific - June 2022

Transactions that matter.

1. Grand City Hotel Sai Wan & Bay Bridge Lifestyle Retreat, Hong Kong

• Hong Kong-based Weave Living partnered up with US-fund manager Angelo Gordon to take over the Grand City Hotel in Sai Wan from Hong Kong-listed Magnificent Hotel Investments. The 214-key property changed hands at HKD 900 million (USD 115 million) or HKD 4.2 million (USD 537,000) per key. As the third acquisition of Weave Living in 2022, the property would be repurposed to a co-living property and is expected to open in Q3 2023.
• Strategically located in Sai Wan with a short distance from Central and Hong Kong University, Grand City Hotel opened its doors in 2015 with one F&B outlet and several parking spaces; the property has been temporarily converted as a designated quarantine facility since February 2022. The property was valued at HKD 770 million at the end of December 2021, and the seller expects to have a cash inflow of HKD 530 million from the transaction. Approximately 20% of the cashflow generated would be used for the operation of the group, and the rest would be the reserve fund for upcoming acquisitions.
• Soon after the sale of Grand City Hotel, Magnificent Hotel Investments announced its acquisition of the 435-unit Bay Bridge Lifestyle Retreat at HKD 1.42 billion (USD 181 million) or HKD 3.26 million (USD 416,000) per key from Tang’s Living Group. Tang’s Living Group took over the property in 2017 from Gaw Capital at HKD 1.68 billion 2017 (who bought it from Hang Lung in 2012 for HKD 1 billion) and put it for sale at the asking price of HKD 2.38 billion in 2020. The property will cease its operation when the transaction completes in October of 2022; the buyer has not disclosed any new plans for the property yet.
• Located in Tsuen Wan, Bay Bridge Lifestyle Retreat provides full facilities and amenities, and is currently operating as a designated quarantine facility since March 2022. Prior to the changes, the property was partially renovated and renamed as Commune, which converted 48 rooms to co-living space offering 192 beds in 2017, while the rest was operated as serviced apartments.

2. Hilton Sydney, Australia

• The 587-key Hilton Sydney was sold to Baring Private Equity from Bright Ruby Resources for AUD 530 million (USD 365 million) or AUD 900,000 (USD 622,000) per key. The sale of Hilton Sydney set the new record for a single hotel transaction in Australia. Sitting in the heart of CBD in Sydney, the hotel was first built in 1974, followed by rebuilding in a major project back in 2005. Despite suffering from the lockdown and decrease in travelers, the hotel underwent a major, AUD 25 million, multi-year renovation of rooms and other amenities.
• The seller, Bright Ruby Resources, acquired the property for AUD 442 million in 2015 from Hilton Worldwide, which was the largest hotel transaction in Australia at that time. Bright Ruby is reported to be backed by Chinese investors, and it also had several real estate investments, including 2 office towers in Sydney. The deal implies the continuous disposal of overseas assets from Chinese investors, and it is reported that several Chinese developers are exiting their ongoing development projects ranging from residences to offices in Australia.

3. Six Senses Fiji

• Six Senses Fiji was sold to Sequitur Resorts after the restructuring, and it will be operated predominantly by local staff under the management of Six Senses. Completed in 2018, the luxury resort has 24 villas on western Malolo Island with great exclusivity and accessibility from the main island, but it was temporarily closed for two years due to COVID-19. The property reopened in April this year after Fiji opened its border in December last year.

Deal Watch

• The sellers of the Hyatt Regency Tokyo are close to a deal according to the local press, and the hotel is likely to be sold to asset manager, KKR, by Japanese developer and transportation giant, Odakyu Electric Railway. Although details of the deal are unclear, the price is speculated at about JPY 100 billion (USD 867 million) for both the hotel and the adjacent office building.
• The newly opened 251-key Sofitel Adelaide is for sale by local developer, Palumbo Group. Opened in November 2021, the hotel is operated by Accor, and it is also the latest luxury hotel in the city after the opening of Intercontinental decades ago. While no details of the sale are disclosed at this stage, it is expected to attract both domestic and overseas investors because of the recovering tourism business in southern Australia.
• The 449-key Rio Hotel in Macau is reportedly to be for sale for MOP 2 billion (USD 247 million) or MOP 4.45 million (USD 550,000) per key together with its casino, according to local media. The hotel is owned and operated by Galaxy Entertainment Group, and it was opened in 2006. The local media also reported that the spa at the hotel, Rio Hotel Macau Sauna Place, has suspended its operation since April due to renovation.

COVID News that matters.

Australia

• Fully opening its border in February, the hotel and tourism industry in Australia is gradually recovering. The latest figure released by the Bureau of Statistics suggests that the number of overseas arrivals increased to 0.58 million in April, around one third of the comparable figure before the pandemic; the top three source markets of short-term visitors are the UK, New Zealand, and India.
• Regional governments across Australia are boosting local tourism through various initiatives. The State Government is planning an AUD 45 million investment to boost tourism in South Australia (SA), including supporting the tourism recovery and investing in a new marketing campaign for tourism in SA. The tourism business is recovering well from losses due to the pandemic as the average hotel occupancy hit 79% in April, the best month since the pandemic.

Japan

• After closing its border to leisure travelers for over two years, Japan announced that it would reopen to tourists from 98 countries and regions but only allowing in the format of package tours starting from June 10. The relaxed restrictions were announced after the success of a trial of smaller group tours with visitors from the US, Australia, Thailand, and Singapore in May. Triple-vaccinated travelers from certain countries would be exempt from the 3-day quarantine with a negative test result upon arrival. Japan would also increase the airports welcoming international flights to seven at the same time, and new destinations include Naha in Okinawa and New Chitose in Hokkaido.
• Despite the closing of borders since 2020, Japan still ranks first in the Travel & Tourism Development Index (TTDI) 2021 by the World Economic Forum. The newly established frameworks were adapted from the previous Travel & Tourism Competitiveness Index, but with a greater focus on the sustainable and resilient development of travel and tourism in one country, and Japan has leading scores thanks to its robust infrastructure and hotels catering to international travelers.

Laos

• Laos, the landlocked nation in Southeast Asia, has finally opened its border to international visitors in early May and electronic visa applications are also available for eligible travelers. The relaxed rules of entry would allow travelers to travel around the country across the nation without limitations on destinations or hotels. Prior to fully reopening, travelers were only allowed in designated “tourism green zones”, including the capital Vientiane and the northern city, Luang Prabang, which reached over 99% of the vaccination rate.
• The reopening of Laos is relatively slow as China, one of their biggest inbound tourism markets, remains tight border controls. However, tour operators from Thailand have returned to evaluate the possibilities of packaged tours to Laos. At the same time, the government is working on developing new travel experiences and destinations across the country. For example, Xing Xou Island, an island community in the middle of the Mekong, is announced for tourism development as the latest cultural heritage in the country.

Reopening status in Asia Pacific

After the announcement of reopening from Japan and Laos, there are only four countries and regions holding strict border control, including China, Hong Kong SAR, Macau SAR, and Taiwan.