AP Hospitality Bulletin Asia Pacific - December 2023

Transactions that matter.

1. Hotel G, Singapore

• Ascott, the lodging unit under CapitaLand is reported to be in due diligence to acquire the 308-key Hotel G from Gaw Capital at around S$230 million ($171.5 million) or $557,000 per key, approximately 28% less than its initial asking price in 2022. The property, formally known as Big Hotel, was acquired by Gaw Capital for S$203 million and is currently self-operated by GCP Hospitality.
• Situated at central region of Singapore, Hotel G is close to several shopping hotspots and attractions in Bugis and Orchard Road. Featuring two food and beverage outlets and a fitness centre, the hotel offers smaller-sized guest rooms starting from 11 to 13 square metres. It is speculated that the property might be repositioned as a co-living property under Ascott’s lyf brand in the future.

2. Australia Hotel Portfolio

• Singapore-based CapitaLand divested a pair of hotels in New South Wales that were under the CapitaLand Ascott Trust (CLAS) in Australia for A$109 million ($73 million) or A$279,000 ($186,930) per key to local investors Silversea Investments at a 5% premium to their October 2023 valuation on a yield of 4.4%. The pair of hotels include the 194-key Novotel Sydney Parramatta and the 196-key Courtyard by Marriott North Ryde.
• After offloading the two assets, Australia remains a key market for CLAS with 12 hotels, including Novotel Sydney and Pullman Sydney Hyde Park. CLAS reported a RevPAR of A$152 for its hotels in Australia in 3Q23, recording 18% year-on-year growth and 13% above 3Q19 levels. CLAS is expected to partially finance the trust’s acquisition of other prime lodging assets at a higher yield of 6.2%.

3. JR West RE JP Hotel Portfolio 2023

• J-REIT MIRAI Corp. announced its acquisition of five core assets across Japan, including three hotels, for a total of JPY11,957 million ($81.4 million). The three hotels, including the 120-key Hotel Wing International Select Nagoya Sakae, the 166-key Kuretake Inn Premium Nagoya Nayabashi, and 191-key Hotel Kuretakeso Hiroshima Otemachi, would be acquired from JR West RE Development for JPY6.7 billion ($44 million) or ranging between $88,000 and $98,000 per key. While the recovery of occupany rate in Nagoya and Hiroshima is slower than major tourist destinations, the investors have confidence in their growth potential.
• As the inbound tourism continues to grow in Japan, hotel assets in Japan are highly sought after by investors in the past year. Hulic transferred the 201-key Sotetsu Fresa Inn Tokyo Roppongi to its Hulic REIT at $65 million or $326,000 per key. The 170-key Hotel JAL City Kannai Yokohama also sold to Japan Hotel REIT for $26 million or $156,000 per key.

Deal Watch

• Canadian investment and asset manager, Brookfield Asset Management is looking for new owners for its 434-key Conrad Seoul at over 500 billion won ($385 million). The property was acquired together with the International Finance Center (IFC)Seoul from AIG at 2.55 trillion won in 2016. Brookfield put the entire IFC asset on the market in late 2021 and entered negotiation with Mirae Asset, however, the deal did not go through at the end. According to the market intelligence, Brookfield would need to exit the investment as its 2.28 trillion won worth debts mature next year.
• The 336-key Hotel COZI at Tin Shui Wai, New Territories, Hong Kong is put on the market for HK$838 million ($107 million) or HK$2.49 million ($320,000) per key. Opened in 2016, the hotel has several F&B outlets leased out as well as basement parking. The property is 5-minute drive away from the metro station and approximately 30 minutes from the checkpoint to mainland China. According to local news, the occupancy rate is around 90% in the past months, and it is believed to have potential of growth in the area once the development of Northern Metropolis takes place in the long term. The Tang's family also put the 598-key Hotel COZI Harbour View at Kowloon East back to the market after the previous attempt for an asking price of HK$2.22 billion ($284 million) with a co-living operator failed last year.

News that matters.

Malaysia

• It is recorded that over 9.1 million tourist arrivals to Malaysia in the first year of 2023, and the government is confident that it will reach 18 million visitors this year. The government postponed Visit Malaysia Year (VMY) to 2026 from 2025 and aims to welcome 23.5 million international tourists with an estimated domestic expenditure of RM97.6 billion. The country plans to further develop Muslim-friendly tourism by funding the promotion of Islamic tourism and other tourism activities.
• To fuel the tourism recovery, Malaysia announced the visa-free initiatives to travellers from China, India, and several Middle Eastern countries in December. Malaysia welcomed more than 1 million tourists from China and 472,000 tourists from India between January and September, and both showed an increase of the figures in 2019, according to the government officials. The temporary visa waiver is expected to reach 25 million foreign tourists in the target markets. At the same time, Malaysia is also on the list of approved countries for visa-free entry announced by China.

Singapore

• Singapore recorded 1.1 million visitors in October, approximately 74% of the figure in 2019. The nation expected to reach its annual goal of between 12 million and 14 million visitors this year, with over 11.3 million visitors recorded between January and October. The top three feeder markets are Indonesia (16%), China (11%) and India (8%) during this period.
• Genting Singapore announced the investment of Resort World Sentosa (RWS) would increase from S$4.5 billion to S$6.8 billion in November. The updated investment called “RWS 2.0” includes the expansion of USS featuring a new Minion Land and Super Nintendo World, and S.E.A. Aquarium which will become the Singapore Oceanrium. An additional 700 hotel rooms which is approved by Urban Redevelopment Authority (URA) will be added to the over 1,600 existing keys at RWS. On the other hand, Marina Bay Sands also expected to the expasion project would exceed its initial estimated amount of S$4.5 billion due to inflation and higher costs.

Taiwan

• Taiwan received more than 621,000 tourists in October 2023, reaching 65% of the figure in 2019. Japan, Hong Kong SAR, and Korea are the feeder markets at the same time, while mainland China was left behind by other countries in Southeast Asia. Due to the cross-strait tensions, it is unknown when the group travel to Taiwan would resume.
• Outbound travelers from Taiwan, on the other hand, reached 1.2 million in October, and the top destinations include Japan, mainland China, and Korea. Due to the weak yen, one third of outbound visitors travelled to Japan.

Tourism Recovery in Asia Pacific

Boosted by strong inbound travelers, Japan recorded 2.5 million visitors in October, surpassing the comparable figures in 2019. Several destinations also see an increase of visitors in October, including Macau, Korea and Taiwan. As the holiday season is approaching, the number of visitors is likely to grow in December.