AP Hospitality Bulletin Asia Pacific - April 2024

New Publication

The 11th Edition of the Annual Asia Pacific Hotel Operator Guide was published last week! This year, HOG features 43 operators capturing over 1.6 million existing rooms and shy of 1 million pipeline rooms in 36 countries and regions in Asia Pacific. Details of the publication is available here.

Deals that Matter.

• After the acquisition of Graduate Hotels, Hilton announced another acquisition of the majority controlling interest in Sydell Group to expand the NoMad Hotel brand, a luxury lifestyle brand. Hilton aims to expand to 100 NoMad properties across the globe, with about 10 deals in discussion with Sydell. While all NoMad properties would be integrated into Hilton’s commercial platforms, they would remain independently owned. By adding NoMad to the portfolio, Hilton now has more luxury brands to choose from, including Waldorf Astoria, Conrad, LXR, and Signia. Additionally, Hilton’s recent partnership with Small Luxury Hotels of the World would further boost the luxury properties under Hilton to 600 to 700 in the coming years.

Transactions that Matter.

1. Capri by Fraser Changi City, Singapore

• TPG Angelo Gordon teamed with Far East Consortium and Atelier Capital Partners to acquire the 313-key Capri by Fraser, Changi City from Frasers Property for S$170 million (US$126 million) or S$543,000 (US$404,000) per key. The sale price is about 6.3% above the property’s book value of S$160 million as of September 2023. It is unknown if the property would remain under Capri brand, as Far East Consortium is experienced in hospitality management with its strategic investment in Dorsett Hospitality International.
• Located at Changi Business Park, the property is about a 5-minute walk from the Expo MRT, which is one stop away from the airport. The occupancy was recorded at 86% with an average rate of S$260 in September 2023, showing a strong recovery from the pandemic. Positioned as a serviced apartment product, the property offers studios starting at 32 sqm, 3 meeting rooms, 2 food & beverage outlets, an outdoor pool, and a fitness centre.

2. The State Sunyu, South Korea

• The 157-key State Sunyu Hotel in Seoul will be added to Weave Living’s growing portfolio two weeks after the announcement of its strategic partnership with KKR in South Korea. This would be the fourth country for Hong Kong-based Weave Living, and it is expected to grow the portfolio to 1,200 rooms across South Korea through the newly established JV.
• Located at Yeongdeungpo, the property sits next to the Seonyudo metro station on Line 9 and is within a short drive to Yeouido business district. The property would undergo renovation and will feature units of 25 sqm and 46 sqm when it reopens later this year. The operator also plans to offer door-to-door transportation to the two airports, Incheon and Gimpo.

Deal Update

• Featured previously in the AP Newsletter, ARA Asset Management is reported to be the new owner of the 434-key Conrad Seoul for US$312 million, or US$719,000 per key. While the deal is yet to be finalized, ARA Korea will need to raise at least 10% of the purchase price from overseas investors under Korea’s Foreign Investment Promotion Act.

Deal Watch

• Netherlands-based boutique hotel group Citizen M is exploring business opportunities, including a potential sale, with bankers to drive expansion post pandemic. The owners of the hotel group include Dutch pension provider APG and Singaporean GIC which took a 25 percent stake in Citizen M in 2019 when the business was valued at €2 billion including debt. It is reported that the business has been expanding since, and it could be a €4bn deal now. The group currently has over 40 locations with 10,000 rooms globally, including properties in Taipei and Kuala Lumpur.

News that Matter.

China

• As international flights resume gradually, China constantly explores visa exemption programs with more countries, including France, Germany, Singapore and Thailand. In the first two months of 2024, the inbound foreign travellers to China reached about 3 million, approximately 41.5% of pre-pandemic levels. According to the preliminary projections by China Tourism Academy, the number of inbound foreign travellers could reach 50% of pre-pandemic levels by end of 2024.

• China Tourism Academy estimated that the outbound travel recorded strong recovery, reaching 87 million trips in 2023, approximately 56% of 2019 levels. After reopening the border for over a year, China became the top feeder market for popular destinations, including Singapore and Thailand. The international flights are now available to 64 countries, and starting from 31 March, the weekly flight cap between China and U.S. would also increase to 100.

Taiwan

• In early April, a 7.4-magnitude earthquake hit eastern Taiwan, the strongest in 25 years. Due to the earthquake, the tourism industry was severely affected, particularly in Hualien. One of the most popular attractions on the east coast, Taroko National Park which attracted 3.45 million visitors in 2023, is now closed for repairs until further notice. The official estimated that the cost of repair would be roughly TWD 1 billion (US$ 30.8 million).
• The authorities had set an annual goal of 12 million inbound travellers in 2024. However, the absence of visitors from mainland China and the decrease in visitors from Japan pose challenges for the tourism industry. As the cross-strait tension remains, Taiwan is still excluded from the list of approved destinations for group tours from China. On the other hand, due to the weak Yen, inbound travellers from Japan recorded only a slow recovery.

Thailand

• Thailand is considering legalizing casinos to boost tourism investment like its neighbouring countries. Thailand’s House of Representatives recently approved the final stage of the study on the development of legal casinos in the country. The study recommended imposing a 17% tax on gross gaming revenue – one of the lowest in the region, and the license would be set at an initial 20 years with a minimum investment of US$ 2.7 billion.
• The study indicated that Thailand could expect about US$ 12 billion by legalizing casinos and housing them within large scale entertainment complexes. The average spending could increase by 52% to 65.050 baht per trip once the complexes are ready. While no specific location of the entertainment complex is announced, the gaming floor would account for only 3% to 10% of the total area. Other facilities, including a concert hall and sports venue, are expected to diversify the offering.

Tourism Recovery in Asia Pacific

Japan remains the leader of tourism recovery in February, showing a 7% increase in travellers from the comparable month in 2019. Other leading countries, including Vietnam, Singapore, and Thailand, reached almost the same level of inbound travellers at the same time. Overall, the tourism recovery shows positive signs across Asia Pacific, and is expected to reach pre-pandemic levels by early next year.