AP COVID Hospitality Bulletin Asia Pacific - September 2021

Deals that will matter

After the Australian Travelodge portfolio, another deal is set to make headlines: Seibu Holdings is looking to sell around 10 properties in its portfolio in Japan for approximately USD900 million. The transaction is target to close in April 2022 - while there is still time, investors are racing to conduct their due diligence. Seibu finds itself in good company of railway operators divesting their non-core holdings with Kintetsu Group and Japan Railway having accomplished similar deals in the past.

Transactions that matter.

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1. Butterfly on Prat

• Located in Tsim Sha Tsui, Butterfly on Prat, an 18-story boutique hotel, was acquired from King State Holdings Limited ("KSHL"). The 158-key property is sold at the price of USD126 million, approximately USD798,000 per room key as the largest hotel transaction in Hong Kong in 2021. The buyer is rumoured to be affiliated with Ascott.
• The hotel is close to several tourist attractions, shopping centers and the MTR station. It was converted from a commercial building to a boutique hotel under Butterfly Hospitality Group after the acquisition by KSHL in 2008.
• Butterfly Hospitality Group has continued to adjust its strategy in response to the lodging market in Hong Kong. After Butterfly on Hollywood sold in 2017 and Butterfly on Morrison ceased operations in 2020, the group had three hotels operating under the brand name of Butterfly, including Butterfly on Wellington, Butterfly on LKF, and Butterfly on Prat. Butterfly on Prat is likely to be rebranded post-acquisition.
  

2. Courtyard by Marriott Tokyo Station, Japan

• Mori Trust Hotel REIT announced to sell part of the Courtyard by Marriott Tokyo Station to its sponsor Mori Trust for 1,001 million yen (USD 9.1 million). After the transaction, Mori Trust Hotel REIT would continue to hold 94.5% quasi-co-ownership interest of the property. This transaction implies a value of USD1.1 million per room at a cap rate of 3.8% for the property.
• Completed in 2014, this 150-key property enjoys a strong location in Tokyo’s central business district, only steps from the famous Ginza shopping area and Tokyo train station.

3. Grand Chancellor Hotel, Australia

• V-Leader group, an Australian integrated property developer led by Andy Zhang, has acquired the heritage Claremont Hotel from local hotelier Michael Renzella at reportedly AUD22 million (USD16.2 million). The price per room is around USD200,000. The future development of the building is expected to be a mixed-use building with more retail space and commercial uses.
• Claremont Hotel is currently a 3-story building with 81 rooms in South Yarra, Melbourne. Built in 1886 as South Yarra Coffee Palace, the building has been designed as a hotel at the time and maintained its original Victorian design while owned and operated by Renzella Hospitality.
• This deal suggests that this precinct has attracted developers’ attention on mix-used development of residential and commercial use outside Melbourne's city center. Recent transactions in this area include South Yarra Square, where a hotel project is planned by a local developer.

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COVID News that matter.

Vaccination Leaderboard: where is your country ranked at?

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Updates on key countries:
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Singapore

• Singapore has outpaced other Asian countries in vaccinating its population with the 4th highest full vaccination rate in the world. Its fully vaccinated population has reached more than 77%, and over 80% have taken the first dose. With more and more people getting vaccinated, the government has announced its transition toward a COVID-19 resilient nation instead of its previous COVID-Zero approach. However, the daily number of new cases still hovered around 100 in the last week of August.
• Sadly, the travel bubble earlier in discussion with Singapore and Hong Kong is no longer happening. Singapore’s resilient approach has loosened the border measure for inbound travelers. If travelers are coming from low-risk countries and regions, including Hong Kong, Macao, Taiwan, New Zealand, with negative PCR tests on arrival, they are exempted from quarantine (Stay-Home Notice, SHN).

Taiwan

• The vaccination rate of Taiwanese population was relatively low in Asia, but the government has rolled out vaccinations after a recent COVID-19 outbreak in May. Taiwan has successfully secured the supply of vaccines with assistance of its alliances, and the government also provides options of locally developed and produced vaccine starting from August. Although Taiwan still has a low percentage of fully vaccinated residents, it has more than 40% of residents who received the first dose.
• While the Taiwanese government aims for a COVID-zero nation status, the travel bubble between Taiwan and Palau has been resumed after its initial plan back in April. The agreement would waive or reduce quarantine for travelers with negative PCR test result. Additionally, the Palau government provides 2,000 does of COVID vaccine to attract visitors from Taiwan under this scheme.

Mainland China

• Mainland China is the other leading country on the vaccination leader board in Asia. Its fully vaccinated population has reached 63.5%, and the COVID-19 situation is considered stable with smaller outbreaks in particular cities.
• Exciting news for all amusement park lovers! Universal Beijing Resort announced to open its door to the public in September after several delays due to the pandemic. This would be the first Universal studio in China where a new theme, Kung Fu Panda Land, is introduced. It also comes with two resort hotels showcasing a fusion of Chinese culture and hospitality. Merlin Entertainments also began the construction of Legoland Theme Park on Shenzhen's eastern Dapeng Peninsula, and the park is planned to open in 2024, the third Legoland in the pipeline in China.