Tuesday, October 5, 2021

AP COVID Hospitality Bulletin Asia Pacific - October 2021

Anchi LIU

Sustainability matters.

Ban on single-use plastic, waste reduction, and locally sourced ingredients are all sustainability initiatives , but sustainable tourism goes way beyond. Concerns include current and future economic, socio-cultural, and environmental impacts to visitors, industry, the environment, and local communities.

The slowdown of international travel in Asia Pacific presents opportunities for authorities and the industry to redesign strategies for sustainable tourism development for the coming reopening, and here are some positive initiatives in the region.

1. Boracay, Philippines

In 2018, Boracay, a popular destination in Philippines, completely shut down for tourists for 6 months to recover from overtourism- various casino projects were put on hold since then. With plans for the economy to rebuild after the pandemic, the authorities now have an eye on Boracay’s potential as an integrated resort development, announcements were made that casinos are allowed to come back to the island.

Very quickly concerns  from local business and environmentalists were raised. The recently approved creation of Boracay Island Development Authority (“BIDA”) may help find the balance for a sustainable future of the destination. BIDA will ensure the sustainable development in Boracay planned and executed with the goal to “improve the quality of life of the present and future generations.” The future development of Boracay is intended to become self-sustaining from its natural resources aided by foreign investments to generate benefits for the local economy and communities under BIDA’s supervisions.

2. Cambodia

Looking forward to welcoming international visitors again, sustainable tourism is emerging across Cambodia. Cambodia Sustainable Landscape and Ecotourism Project (“CSLEP”), a nation-wide initiative financed by The World Bank in 2019, is going to help the country develop its sustainable tourism and comprehensive ecosystem. Cardamom Mountains, the largest mainland rainforest in Southeast Asia, is the pioneer in sustainable tourism, and CSLEP would facilitate the preservation of the natural resources and giveback to local communities.

Steung Areng Valley, a village in the Cardamom Mountains, is a successful example of sustainable tourism in Cambodia. The project started from the wildlife protection from deforestation and poaching and has become the livelihood for local communities and a showcase for the preservation of nature and local culture. Although the business is affected by the pandemic, domestic travelers are gradually embracing the ideas of sustainable tourism and visitors are returning to the valley.

3. Japan

Japan, as a mature travel market, also sees a chance to rethink their approaches for future tourism development during the pandemic. Earlier in 2021, the Japan Sustainable Tourism Standard for Destinations (“JSTS-D”) was recognized by Global Sustainable Tourism Council (“GSTC”) to align sustainable tourism in Japan with international standards. With abundant natural resources and cultural heritage, Japan has various options of sustainable tourism across the country.

Kyoto, the ancient capital of Japan, is one destination well-known for its sustainable tourism development. Different sustainable approaches can be found in this city destination, from locally and responsibly sourced ingredients on the dining table to the embrace of the seasons and nature. Authentic experiences in the Kyoto countryside offer visitors additional dimensions of sustainability, such as farm-to-table dining.

What’s Next?

In the long run, sustainable tourism would become more than a niche market as more authorities and business operators see it as opportunities for future development as international travel resumes. Additionally, hospitality organizations will double down on their commitment on sustainable development due to their ESG obligations and after all - we only have one Earth. AP firmly believes that existing and future tourism projects must fully embody sustainable principles, not only for a competitive advantage but to stay relevant in the long run.

Transactions that matter.

Source: AP Research

1. D-cube City Sheraton Hotel, Seoul

  • JR AMC, Seoul-based real estate investment company is closing the sales of D-cube City Sheraton Hotel, part of mixed-use complex in Seoul, at USD113.8 million, around USD423,000 per room key. Rumor has it the buyer is a real estate investment firm from Singapore who has signed MOU with the hotel to sell the facility few months ago.
  • D-cube City is connected to Sindorim Station, the transportation hub in west Seoul, and one of the busiest train stations in the region. The mixed-use complex is comprised of office, hotel, and retail. Opened in 2011, D-cube City is selected as winners of Urban Land Institute Global Awards for Excellence in 2013, and the integrated landscape design is pioneering in the city back at the time. Sold unencumbered amid the current market downtown the future of the hotel operation is uncertain.

2. CDL’s Divestment of Sincere Property

  • Singapore-based CDL (City Developments Limited) announced its exit of investment in Sincere Property Group in September after its initial investment in 2019. This divestment is an avoidance of Sincere Property Group’s collapse, which was sued for bankruptcy in a regional court in March 2021. The shares were sold to Sure Spread Limited at USD1.0 in consideration of CDL’s loss of SGD76 million (USD56million) as the end of 2020.
  • The divestment includes 90 properties in total, including five hotels; Zhengzhou New CBD Hotel, Shama Changfeng Shanghai, Sincere Hilton Hotel Chengdu, Chongqing Yong Chuan Hotel, and Jiangbei Doubletree by Hilton Chongqing. Four of the hotels are already in operations, the proposed luxury hotel in Zhengzhou is yet to be branded and set to open in 2022.
  • The CDL’s other investment in Shenzhen Tech Park would not be affected during the divestment. In February this year, CDL acquired an 84.6% of interest in one of the key stakeholders in the project, Shenzhen Tusincere, and together with stakes acquired previously, it became fully owned subsidiary of CDL after transactions. At this moment, CDL is the largest stakeholder in Shenzhen Tech Park, with an effective interest hand of 65%.

3. Greenland Jiulong Hotel, Shanghai

  • The 320-keyGreenland Jiulong Hotel was sold to Radiance Group at USD133 million from Greenland Group The hotel underwent renovations in 2016 after it first opened in 1997. The hotel is currently operated independently, and the price per key is around USD416,000 considering its superior location in Shanghai, proximate to the North Bund area. Local source suggests that Radiance Group might seek for a hotel management company to take over the operation in the future.
  • The strict regulations from the Mainland Chinese government drives major developers’ reconsideration of their strategies and portfolio management. Greenland Group announced earlier in the annual meeting that four hotels under its portfolio are going to be in the market in response to the regulations posed by the authorities, and Greenland Jiulong Hotel is believed to be one of them.

COVID news that matter.

Ranking based on the percentage of population that is fully vaccinated.

  • Construction of the third runway at Hong Kong International Airport is finally completed after its commencement in 2016 – it is expected to start operations in 2022 to compete with other aviation hubs in the region, although it is still unknown if border controls would be loosened by that time. Meanwhile, Hong Kong now allows quarantine waivers for visitors from Mainland China and Macau, even though quarantine still applies to outbound travelers from Hong Kong to these regions.
  • More countries in Southeast Asia are planning to lift border controls as vaccination rates in the world are rising to hopefully soon reach herd immunity. For example, Thailand, after its pioneering sandbox scheme, announced a 4-phase reopening plan starting from October, including destinations like Krabi and Bangkok. Vietnam plans to welcome vaccinated visitors to Phu Quoc incoming months to boost tourism; and Singapore’s Vaccinated Travel Lane starts this month for qualified visitors from overseas. Other countries, like Malaysia and Indonesia, are also working out plans to open their borders to international travelers in the fourth quarter of 2021!
  • Meanwhile domestic travel in Mainland China continues to gradually recover; during the three-day Mid-Autumn Festival holidays 88.2 million domestic trips were recorded – 87.2% of the figure at the same holiday in 2019.Revenue generated reached RMB$37.2 billion, roughly 78.6% of 2019’s revenues. For domestic travelers, several amusement parks, including the newly opened Universal Studios Beijing, are popular destinations, and local cultural tourism is a growing trend promoted by the authorities.
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