Tuesday, August 2, 2022

AP COVID Hospitality Bulletin Asia Pacific - August 2022

New AP Article International Hotel Brand Penetration in APAC presents the supply situation of branded hotels in countries/ regions in Asia Pacific together with analysis of the top 10 cities and future supply. Full article is available here.

Deals that matter.

Capital Land-backed The Ascott Limited ("Ascott") announced the acquisition of Oakwood Worldwide from Mapletree Investments, and the transaction is expected to be completed by 3Q22. The acquisition would further strengthen Ascott's global portfolio of serviced apartments with 81 properties and about 15,000 units, among which 8,500 units in operation are expected to bring in immediate revenue upon the completion of the deal. The acquisition would then increase Ascott's portfolio to about 900 properties with more than 150,000 units across over 200 markets together with a great number of hotel management contracts and franchise agreements. In terms of brands, the deal increase Ascott's portfolio to 22 brands, ranging from serviced apartments, co-living and business hotels henceforth.

Transactions that matter.

1. Peppers Kings Square, Australia

The 120-key Peppers Kings Square was sold to Singapore-based High Street Holdings (HSH) for circa AUD 26 million (USD 18 million) or AUD 217,000 (USD 152,000) per key. Located at a prime location in the CBD, the hotel is positioned to capture the demands of both leisure and business travellers. Opened in 2016, the hotel is equipped with one F&B outlet, meeting rooms and gym, and it was rebranded as Rydges Kings Square as part of the transaction.
Having a hospitality portfolio across Asia Pacific, this is the third hotel asset in Australia acquired by HSH after Kennigo Hotel Brisbane (formerly Richmont Hotel) and The Miller Hotel (formerly Rydges North Sydney). The acquisition shows the confidence of investors in Perth’s hotel market, including increasing RevPAR and demand.

2. Sing Hoe Hotel, Singapore

The freehold conversion bungalow known as 41-key Sing Hoe Hotel was acquired by local developer, Crescendas Eco, an entity linked to Lawrence Leow’s Crescendas Group at SGD 29 million (USD 21 million) or SGD 707,000 (USD 512,000) per key. The sale price is 7.4% higher than the guide price of SGD 27 million indicated in April. The property has been operated as a hotel since World War II, and the hotel operation is likely to stay unchanged after the sale. Besides the newly acquired hotel, Crescendas Group’s Crescendas Hospitality also has several hotel properties under Aqueen Hotels & Resorts and Canareef Resort in Asia Pacific.

Deal Update

Seibu Holdings confirmed that it would be selling 31 hotels and other leisure facilities to Singapore-based fund manager, GIC, and the total price is JPY 147.1 billion (USD 1.1 billion). Among the properties sold, 15 of them are under the brand Prince Hotels as well as ski and golf resorts, and the operations will remain unchanged after the transaction which is expected to take place by March, 2023.
Acquired by Fubon Life Insurance in 2020, the 745-key Sunworld Dynasty Hotel Taipei reopens its doors after rebranding in August. The site will be operated in two components; a 408-key hotel under the name “Illume Taipei” and a 300-unit social housing component. While the site has great potential for office and mixed-use projects, the management team decided to reposition the hotel to cater to the domestic market, particularly family guests.

Deal Watch

More hotels are for sale in Hong Kong amid the pandemic and mandatory quarantine on all inbound travelers, including 100-key MK Stay and 695-key Penta Hotel Hong Kong according to the local market source. The expected sale price of MK Stay is around HKD 400 million (USD 51 million) or HKD 4 million (USD 510,000) per key. The Town Planning Board of Hong Kong plans to increase the plot ratios of the neighboring area around MK Stay, and the GFA of the property can be increased up to 25% if the new regulations pass. On the other hand, owned by New World Development, Penta Hotel is reported to be on the market together with other non-core assets, including retail and parking space. The asking price of the hotel property is HKD 2.5 billion (USD 319 million) or HKD 3.6 million (USD 460,000) per room.
Huis Ten Bosch, one of the largest theme parks in Japan, is in discussion for its sale to a Hong Kong-based investment company. Currently, the major stakeholders, HIS and five others, are all planning to sell part of their shares to generate cash flow. There are 5 hotels providing a wide range of accommodation and various attractions, F&B outlets and retail in Huis Ten Bosch. At the same time, this is also one of the options in the planning of the integrated resort in Nagasaki prefecture.

News that matters.

New Zealand

Three months earlier than scheduled, New Zealand opened its border to all inbound travellers on Aug 1, after welcoming visitors from more than 60 countries visa-waiver countries since April this year. It is expected that the number of international students and leisure travellers is going to increase gradually, including cruise travellers. The provisional data of overseas visitor arrivals recorded over 114,000 in the four weeks ended on 10th July, a 175% year-on-year increase and a 17% month-on-month increase. However, the recovery is expected to be slow as the average number of overseas visitors in June and July 2019 is 331,300, which is three times more than the current year.
While the return of travellers excites the hospitality and tourism industry in New Zealand, the labour shortage in the hotel and tourism sector becomes a concern for some operators. Pre-COVID, New Zealand attracted a high number of young workforce in the service industry through working holidays and work visas every year, but it would take time for foreign workers to return due to the visa application. While the government and industry are preparing for the rebound, it is likely to be more challenging to reconnect with available talents at the same time.

Singapore

Singapore welcomed approximately 1.5 million travellers in the first half of 2022, and it is expected to reach 4 to 6 million by the end of the year despite the uncertainties. The Ministry of Transport also anticipated that air travel would rebound to at least 50% of the number of air passengers at pre-pandemic level in 2022. The city state is going to host more international and regional events in the coming months, including the Singapore Grand Prix- Formula 1 in late September, Tour de France Singapore Criterium in October, and Bloomberg New Economy Forum in November. Notably, industry event HICAP will be held for the first time in Singapore this year.
Singapore has also seen a great increase in passenger movements at its Changi Airport since the reopening in April. In June, the monthly figure reached 2.9 million, which was 50.3% of its pre-COVID performance in 2019. In terms of hotel performance, RevPAR in June increased to SGD 183 in 2022, which is higher than the performance in the same month in 2019 at SGD 181 before adjustments.

Taiwan

As one of the few regions with mandatory quarantine on all inbound travellers, Taiwan is re-evaluating their timeline for reopening. The authorities further welcomed visitors for working holidays, internships and religious purposes in July. Meanwhile, the quarantine was shortened to 7 days and the weekly quota for arrivals was increased to 40,000. As the latest data suggested, the number of monthly arrivals still hovered around 38,000 with 18% month-on-month growth in June.
To stimulate the domestic travel market, the Tourism Bureau announced a new round of subsidiary programs for spending on hotels, group travel, and attractions. The program covers a wide range of products for domestic travellers, including up to NTD 1,300 (USD 43) per hotel room during weekdays and 70% off on tickets for designated attractions.