Thursday, October 19, 2023

AP Hospitality Bulletin Asia Pacific - October 2023

Anchi LIU

Transactions that Matter

1. Hotel Wing International Premium Kyoto Sanjo, Japan

  • Nomura Real Estate Master Fund agreed to acquire the 88-key Hotel Wing International Premium Kyoto-Sanjo for 3.2 billion yen (USD 21 million) or 36.4 million yen (USD 244,000) per key. Opened in 2020, the hotel is located in the heart of Kyoto, proximate to three subway stations. The property is operated by the brand Hotel Wing International, which has over 40 hotels across Japan.
  • In view of the rapid recovery of international tourism and the weak yen, mid-scale hotels in Japan continue to draw the attention of investors. In the past month, Japan Hotel REIT acquired a total of three mid-scale hotels in Kyoto, Fukuoka, and Sapporo for 18 billion yen (USD 127 million).

2. Sheraton Shanghai Hongkou, China

  • The 471-key Sheraton Shanghai Hongkou was sold for RMB 1.6 billion (USD 230 million) or RMB 3.5 million (USD 488,000) per key through an auction ordered by the bank. Built in 2012, the hotel sits next to the intersection of two metro lines and is a short drive to the Pudong and Bund areas. There are three restaurants, one lounge, a fitness centre, an indoor pool, and a total of 13 meeting rooms totaling 1,823 square metres.
  • Due to the impact of the pandemic in the past two years, a number of hotel properties have been put on sale by the owners or up for auction by the banks, including several internationally branded properties. The 550-key Westin Beijing was sold by Jinmao Investments for RMB 2.8 billion (USD 392 million) or RMB 5 million (USD 713,000) per key. Additionally, a pair of hotels, namely the 523-key Crowne Plaza and the 489-key Best Western Premier in Hefei, were auctioned for the third time and sold for RMB 666 million (USD 93 million) or RMB 658,000 (USD 92,000 per key) in September, approximately RMB 230 million lower than the initial asking price. Due to the outlook of the real estate market in China, investors are now cautious about hotel assets.

Deal Watch

  • The government of Sri Lanka is looking for a buyer for Hotel Developers Lanka Ltd. (HDL), the holding company of the 367-key Hilton Colombo. Located in the Echelon Square Business District, the hotel features seven food and beverage outlets, 15 meeting spaces, and various recreational facilities. HDL invested 2.5 billion rupees on the refurbishment of 253 rooms last year, and the second phase of refurbishment as well as a potential expansion by means of the adjacent vacant land are in the pipeline, according to local news.
  • Hong Kong-listed Overseas Chinese Town Holding Limited announces the plan to sell a part of its development in Shanghai, including the 82-key Bvlgari Hotel Shanghai. Earlier this year, the branded residential component was partially sold. The sale is expected to increase the liquidity of the assets and generate cash for debt repayment.
  • The 63-key Popway Hotel at Tsim Sha Tsui is for sale at HKD 380 million (USD 49 million) or HKD 6 million (USD 767,000) per key. Owing to its proximity to several tourist attractions and shopping malls, the hotel reported 99% occupancy during the peak seasons. There are two food and beverage outlets, a fitness centre, and a small meeting room at the hotel.

News that Matters

Hong Kong SAR

  • Hong Kong recorded over 4 million visitors in August 2023, approximately 69% of the figure in 2018, or a 13.6% month-on-month growth. Mainland China, which accounted for 84% of the total visitors, remained the largest feeder market, followed by Macau SAR and Taiwan. Amid the return of visitors, hotel occupancy and average rate also rebounded quickly during the peak seasons, as occupancy reached 87% in August at an average rate of HKD 1,477. The comparable figures in 2018 was 95% occupancy rate at an average room rate of HKD1,306. However, half of the visitors are same-day visitors, and the spending was less significant compared to pre-pandemic figures due to changing travel behaviours.
  • To boost the recovery of the tourism industry, the Hong Kong Tourism Board has launched a series of campaigns to attract visitors, including the latest one, “Night Vibes Hong Kong,” which introduces various nigh-time events with local characteristics. It aims to diversify the leisure offerings in the city for both residents and tourists. However, the plans are merely scratching the surface at this stage and partially haphazard.

South Korea

  • Over 1 million international visitors to South Korea were recorded in August, representing 69% of pre-pandemic levels. After the restrictions on Chinese group tours were lifted in August, there was a surging number of tour bookings from tourists from China. The Bank of Korea forecast an additional 800,000 Chinese tourists to visit Korea due to the resumption of tour groups, and the number of Chinese tourists to Korea is expected to reach 85% of pre-pandemic levels by the end of the year.
  • Jeju, the popular destination in Korea given its visa free status for Chinese, sees a surging number of tourists in 2023, and its tourism is projected to fully recover by 2024. The number of flights serving Jeju has resumed quickly. The airport served 21.8 million passengers in the first nine months of 2023, showing a 94% recovery from the levels of 2019. Additionally, cruises are slowly returning to Jeju after the halt due to the THAAD deployment in 2017. Schedules have 93 and +360 cruise ships call upon Jeju in 2023 and 2024, respectively.


  • In August, Thailand welcomed more than 2.4 million international visitors, driven by Malaysia (18%), China (14%), and Korea (6%). The number of international visitors has reached over 70% of comparable figures in 2019; however, the return of travellers has yet to stimulate the local economy. According to the President of the Tourism Council of Thailand, the slow economic recovery in China still affected overseas spending, and the higher level of household debt also hindered the economic growth of domestic tourism. Additionally, the mass shooting in the mall in October as well as rumours of kidnapping foreign visitors depicted by a Chinese movie have created negative images of Thailand as a destination.
  • To boost the tourism industry, the Prime Minister of Thailand announced a five-month visa exemption program for short-term visitors from China and Kazakhstan starting in late September. The program is expected to bring in 180,000 tourists by the end of the year, as well as 35 billion baht from Chinese tourists. With this initiative, Thailand aims to achieve its target of 25–30 million tourists and 2.38 trillion Baht in revenue in 2023. Due to the increasing demand, particularly from China, Chiang Mai Airport will start to operate flights on a 24-hour basis to accommodate late-night flights from China, Japan, and Korea.

Recovery in Key Markets

Boosted by tourists from mainland China, Macau showed a recovery close to 90% in August as well as 16.7% month-on-month growth. Japan and Vietnam also reached a healthy recovery rate of over 80% in the same month. Taiwan continued to struggle facing a slow recovery due to the lack of tourists from mainland China, despite 8.7% month-on-month growth.

Source: AP Hospitality Advisors
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