AP Hospitality Bulletin Asia Pacific - August 2023
Transactions that matter
- ParkRoyal on Kitchener, Singapore
- Pan Pacific Hotel Group, the hospitality arm of UOL Group, announced the sale of the 542-key Parkroyal on Kitchener Road in Little India to Midtown Properties, a subsidiary of Worldwide Hotels. The property sold for SGD 525 million (USD 389 million) or SGD 968,635 (USD 716,790) per key, at a 24 percent premium to its book value of SGD 423 million as of end-2022.
- Located in proximity to metro stations, there are two food and beverage outlets, five function rooms, one ballroom, an outdoor pool, and recreational facilities. With a value of SGD 83 million on UOL’s books, the seller expected to record a gain of SGD 446.2 million from the disposal.
- Midtown Properties currently operates a number of mid-scale properties across Singapore, including Hotel 81 and V Hotel. While the hotel did not release a statement regarding the transaction, the hotel is likely to be managed under brands outside the existing portfolios of Midtown Properties.
- The Novotel and ibis Melbourne Central Hotel, Australia
- Shortly after the acquisition of ParkRoyal on Kitchener, Worldwide Hotels announced another hotel acquisition in Australia, the 472-key Novotel and ibis Melbourne Central Hotel for AUD 170 million (USD 114 million) or AUD 360,200 (USD 241,300) per key from Well Smart Investment Holdings. Completed in 2018, the high-rise complex is under the management of Accor, including 259 rooms Ibis on the lower floors and another 213 rooms on the upper floors under Novotel.
- Within a short walking distance of the shopping precinct in Melbourne, the hotel complex has two restaurants, a bar, conference and meeting spaces, as well as recreational facilities. It is reported that the buyer plans to keep the management under Accor after the completion of the transaction.
- The property was sold at a 5.6% discount to its asking price when it was first put on the market in March 2022. In the past five years, Worldwide Hotels has actively invested in the Australian hotel market, including the acquisition of the ibis Styles hotel in Brisbane and the Holiday Inn Perth. In view of the strong recovery of hotel performance in Melbourne, the transaction suggests the confidence of investors in the long-term outlook. However, a strong pipeline will put this thesis to the test.
- Amari Havodda, Maldives
- Minor International Public Company (MINT) teamed up with its financial partner, Abu Dhabi Fund for Development (ADFD), to acquire the 120-unit Amari Havodda Maldives. Located on Gaafu Dhaalu Atoll, southern Maldives, the hotel was sold for USD 60 million, or approximately USD 500,000 per unit. Offering a mix of beach villas and overwater villas, the hotel provides a total of 10 food and beverage outlets and a wide range of recreational facilities.
- Amari Havodda will be added to MINT’s existing portfolio of six resorts across Maldives, and it reopens as NH Collection Maldives as the first resort property under NH Collection outside urban destinations.
- Daiwa Portfolio, Japan
- A consortium formed by Singapore’s SC Capital Partners (SCCP) with Goldman Sachs Asset Management and the Abu Dhabi Investment Authority (ADIA) has acquired a portfolio of 27 hotels across Japan. The portfolio, which comprises 7,124 rooms, was sold by Daiwa House Industry for USD 900 million, and Japan Hotel REIT Advisors (JHRA), which is majority owned by SCCP, will focus on asset management with expertise in the local hotel market.
- The majority of the hotels in the portfolio are resort hotels located in tourism destinations across Japan. Currently managed under Daiwa’s hotel brands, including Royal Hotels & Resorts, the properties will be rebranded under Mercure and Grand Mercure under Accor. Through the partnership with Accor, the properties are expected to capture both domestic and international demand amid the tourism recovery in Japan. The rebranding is expected to be completed by the first half of 2024, doubling Accor’s presence in the country. Accor hopes to similarly boost its membership base in the market.
- Japan Resort Portfolio
- Invincible Investment Corporation (INV) made a strategic move to acquire a total of six resorts across Japan, including Okinawa (Ishigaki Island), Nagano, Okayama, Aomori, Chiba, and Akita, for JPY 57.2 billion (USD 400 million) from affiliates of Fortress Investment Group. These properties boast an average appraisal NOI yield of 5.9% and projected NOI yields of 6.0%, and it is expected to see continuous revenue growth and further stabilize INV’s portfolio.
- Among the six properties, the 398-key Fusaki Beach Resort Hotel & Villas has the highest value on a per key basis at USD 707,700. The property is the flagship hotel, with three connecting infinity pools and the largest indoor pool on Ishigaki Island. Another hotel, Tateshina Grand Hotel Takinoyu, is located in Nagano with renowned hot springs in Japan.
- Hong Kong-based Far East Consortium (FEC) is marketing a pair of newly built Ritz-Carlton hotels in Melbourne and Perth with a combined 462 rooms. The 205-room Ritz-Carlton Perth opened two years ago, and the 257-key Ritz-Carlton Melbourne opened its doors in March. The intended sale is for capital recycling, which is aligned with the group strategy.
- Destination Resort is looking for buyers for its portfolio of eight resorts across Thailand, including the 243-key Radisson Resort in Hua Hin, the 224-key Holiday Inn Resort Karon Beach, and the 256-key Holiday Inn Resort Surin Beach in Phuket. All properties are freehold and located at prime destinations in Thailand, which is regsitering an ongoing tourism recovery in 2023.
News that Matter
- Boosted by a weak Yen, there were around 2 million foreign visitors to Japan in June, approximately 72% of the comparable figure in 2019. Aside from the key feeders in East Asia, several markets showed stronger demand than 2019, including Singapore, the Philippines, Vietnam, the U.S., and Australia. The largest feeder market in 2019, China, showed slow recovery due to limited direct flights from major cities, and the total number of visitors from China was only at 24% of pre-pandemic levels. An announcement on August 10 indicated that China would allow outbound tour groups to Japan to be organized again.
- As more tourists flock to Japan, hotels and transportation industries faced worsening labor shortages. While hotels are registering record occupancy levels and room rates, some have decided to raise the room rate to keep occupancy down. The transportation industry across Japan also saw the surging demand of foreign tourists in major cities, and local trains and taxis were not able to cope with the increasing demands. The Kyoto government decided to abolish the one-day bus pass by March 2024 in the hope of alleviating overcrowding on buses for local users.
- Macau welcomed more than 2.2 million visitors in June, 52% of whom were overnight visitors. Boosted by visitors from Greater China, tourism in Macau recovered quickly after the return of Chinese travelers. Approximately two-thirds of visitors were from Mainland China in June, followed by Hong Kong SAR (27.2%) and Taiwan (1.9%). The year-to-date June data also indicates the recovery of Macau’s visitor arrivals, recording 57% of comparable figures in 2019.
- With the growing number of tourists, hotel performance also increased drastically. In June, all hotels registered an average occupancy rate of 89% with an average room rate of MOP 1,305. The monthly RevPAR was at 97% of the figures in 2019, showing robust demand from the gaming side and tourists after the pandemic.
- In the first half of 2023, Vietnam welcomed over 5.5 million overseas visitors, including 975,000 in June. South Korea, China, Taiwan, and the U.S. were the largest feeder markets to Vietnam, and it is expected to draw more overseas visitors once the new visa policy takes effect on August 15. The new visa policy will allow overseas visitors to stay longer in the country; visitors with an electronic visa are able to stay in the country for up to 90 days.
- While the absolute number of overseas visitors lags behind other countries in Southeast Asia, the monthly figure reached approximately 82% of the levels in 2019, showing strong demand for tourism in Vietnam. At the same time, June is also the peak season for domestic tourism. There were roughly 13.5 million domestic tourists, including 9 million overnight stays. According to local news, total tourism revenue in the first half of 2023 is estimated at VND 343.1 trillion (USD 144.6 billion).
Recovery in Key Markets
In June, various destinations in Asia Pacific showed strong recovery, including the increasing number of Chinese travellers.
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