AP Hospitality Bulletin Asia Pacific - February 2023

Deals that Matter

1. ACE Group

• US-based Sortis Holdings announced the acquisition of boutique hotel operator, ACE Hotel, at USD 85 million in cash. Ace Group currently operates hotels in 11 locations primarily in the Americas with international footprint in Kyoto, Japan, and Sydney, Australia. The deal is comprised of the brands and its hotel management company. The majority of the existing ACE properties are operated under HMAs, and the acquisition only includes one lease in Seattle. After the acquisition, Sortis plans to further expand ACE's hospitality portfolio to 30 properties through growing ACE brand internationally beyond its traditional urban setting. Additionally, Sortis sees the potential of adding new ACE properties through asset acquisition and rebranding in the future.

2. Greenland Hotel

• Shanghai-based Greenland Holdings sold 52% of its stake in its hotel management entity to Minyoun Hospitality for RMB 624 million (USD 92.5 million). The transaction implies that Minyoun is going to take over the hotel business under Greenland Holdings, including its four operated hotels in China. Through the partnership, they aim to expand the portfolio of mid-scale hotels across China. Minyoun, on the other hand, is also the third-party management company of franchise hotels under Hyatt’s six brands.

Transactions that Matter

1. Rihga Royal Hotel Osaka, Japan

• Canadian investment firm BentallGreenOak (BGO) announced the takeover of 1,039-key Rihga Royal Hotel Osaka from Japan-based Royal Hotels. While the total price is not disclosed, it is believed to be at least JPY 50 billion (USD 385 million) or approximately USD 370,550 per key. The company will also acquire a 33% stake in Royal Company and become its largest stakeholder, eyeing the reopening of Japanese tourism and a weak Yen.
• Situated in a prime location of Osaka the hotel is one of the landmarks in the city. The property has hosted a number of royalties and foreign diplomats since its opening in 1935. There are 18 restaurants, 56 meeting rooms, banquet halls and a large conference facility, an indoor pool and other facilities.
• BGO plans to invest JPY 13.5 billion in the refurbishment and repositioning of the asset. After the acquisition, the property will be rebranded as Vignette Collection under IHG and set to open by 2025, when the Osaka Expo will take place during April and August.

2. Kimberly Hotel, Hong Kong

• Shortly after the reopening of the border between Hong Kong and mainland China, the 546-key Kimberly Hotel was sold at HKD 3.4 billion (USD 442 billion) or HKD 6.23 million (USD 810,000) per key. The new owner is reportedly the hospitality arm of China Tourism Group. Taken over from the previous owner, the hotel changed hands for HKD 4.3 billion, excluding 20% stamp duty, in October 2019. The property was reportedly put on the market in 2022 by China Cinda Asset Management. The transaction represents a 20% markdown over a +3 year period.
• The property is situated in the centre of Tsim Sha Tsui, with proximity to various attractions, shopping malls, offices, public transportation, and university. There are a total of three F&B outlets, two meeting facilities, a fitness centre and other facilities including a retail podium. The property also houses a government waste collection facility and mainland China visa processing office.
• The announcement of the border reopening with mainland China boosted investor confidence and several hotels changed hands since. Aside from the transactions covered in the previous AP newsletter, the 28-key Pop Inn in Mong Kok was sold for HKD 170 million (USD 22 million) or HKD 6 million (USD 789,000) per key.

3. Grand Mercure Bangkok Windsor, Thailand

• Thailand-based Asset World Corporation has acquired the 456-key Grand Mercure Bangkok Windsor for THB3.2 billion (USD 95.4 million) or THB 7 million (USD 209,000) per key. Located along Sukhumvit’s Soi 20, the property is within a 10-minute walking distance to Asok BTS station and a 6-min drive to Queen Sirikit National Convention Center.
• Rebranded from Windsor Suites Hotel, the property was taken over by Accor in 2019 following refurbishment and repositioning. There are six food and beverage outlets, a fitness centre, a spa centre, an executive lounge, and a helipad on its rooftop.
• Thailand’s hotel market has ramped up from the low during the pandemic, and the sale of Grand Mercure Bangkok Windsor is the largest hotel transaction recorded in Thailand in 2022. Together with Phuket’s Westin Siray Bay, Asset World Corporation actively invests in the hotel market. Earlier last year, Worldwide Hotel also acquired 177-key Oakwood Studios Sukhumvit in Bangkok for THB 1.1 billion (USD 30 million) or THB 6.4 million (USD 170,000) per key.

News that Matter

New Zealand

• International tourism in New Zealand is registering a faster than expected rebound after reopening its border to international visitors. In November, New Zealand welcomed over 231,000 international travellers, approximately 60% of the monthly figure before the pandemic. All this despite the absence of Chinese travellers, which was the second largest feeder market, Australia, the US and UK were the top markets.
• In 2023, the government plans to strengthen the promotion of international tourism to target markets and maintain the marketing to the domestic audience with a wider scope. While international tourism was cut during the pandemic, domestic travellers became the focus. In fact, the spending of domestic travellers accounted for 60% of the total before the pandemic.

‍Singapore

• Singapore recorded over 6.3 million visitor arrivals in 2022, where Indonesia, India and Malaysia were the top three feeder markets. The recovery surpassed the earlier forecast by STB, bringing in estimated tourism receipts of SGD14 billion. The hotel performance also recovered to pre-pandemic levels, recording a monthly RevPAR of SGD 226 at 80% occupancy rate.
• It is estimated that visitor arrivals to Singapore will double to over 12 million in 2023, and full recovery is expected in 2024 by STB. Tourism receipts are also estimated to climb to SGD 18-21 million. Tourism recovery in 2023 will be supplemented by a SGD 110 million injection which is part of the $500 million set aside by the government to boost the industry. STB will continue to strengthen the partnership with key players, including the MICE business, to boost the tourism recovery.

Thailand

• In December 2022, Thailand welcomed more than 2.4 million foreign visitors, a 28% growth from the previous year or 57% of the monthly figure in 2019. Since its ‘full reopening’ in October, Thailand has seen a rapid growth in overseas visitors. In 2022, Thailand received 11.15 million foreign visitors, which surpassed its annual target of 10 million. The key feeder markets of 2022 were Malaysia, India and Singapore, according to the tourism ministry.
• The ministry announced the target of 25 million foreign visitors in 2023, aiming at at least 5 million from China, its largest feeder market in 2019. While it falls short of the figure of 40 million recorded in 2019, Thailand is optimistic about its tourism recovery, particularly seeing the return of Chinese visitors. In the first three weeks of 2023, Thailand ieportedly received 1.34 million foreign visitors.

Tourism Recovery in Asia Pacific

Among 10 key markets in Asia Pacific, Indonesia is leading the recovery in December 2022, recording 65% of pre-pandemic visitor arrivals. Thailand and Japan also recorded a recovery of at least 50% of the monthly visitors of 2019. Macau and Hong Kong remained at the bottom of the ranking due to the lack of Chinese tourists. Signs in January 2023 indicate a swift rebound as Chinese travellers start heading overseas again.