AP Hospitality Bulletin Asia Pacific - October 2024

Transactions that matter.

1. Citiadines Kyoto Karasuma Gojo Kyoto, Japan

• Hilton Grand Vacations (HGV) acquired the 124-unit Citiadines Kyoto Karasuma Gojo in Kyoto from CapitaLand Ascott Trust (CLAS) for JPY6.2 billion ($42 million), or $338,700 per key. After the acquisition, the property will be converted into 63 one-bedroom timeshare units for sale and is expected to complete in the first quarter of 2026. This would be the HGV’s third property in Japan, after the Beach Resort Sesoko in Okinawa opened in 2021 and the Bay Forest Odawara in 2018. HGV now has approximately 72,000 members in Japan, the company's only destination in Asia Pacific.
• CLAS divested the property at 40.1% above book value at an exit EBITDA yield of about 0.3% and recognized a net gain of JPY0.9 billion ($5.9 million). CLAS is also in the process of acquiring the lyf Funan Singapore at S$263 million ($199 million) at a yield of 4.7%. The recent transactions are aligned with CLAS’s strategy to recycle capital into higher yielding assets.

2. Mercure Ambassador Hotel Hongdae, South Korea

• Hyundai Asset Management sold the 270-key Mercure Ambassador Seoul Hongdae to JB Asset Management for KRW300 billion ($227 million) or $841,300 per key, after putting it on the market in 2023. Japan-based operator, Sotetsu Hotels, will take over the property after the sale.
• Opened in 2020, the property is situated near Hongik University, a district known for its young crowd and increasing number of foreign tourists. Guestrooms are located on the 5th to 19th floors, and various retail and commercial facilities are leased out from the first basement floor to the fourth floor, adding great value to the property.

Deal Watch

• Opened in 2006, the 492-key Hilton Sanya Yalong Bay is now for sale at RMB1.85 billion ($260 million) or 528,500 per key. With direct access to the beach, the property sits opposite Yalong Bay Golf Club and is surrounded by branded hotels including the adjacent Ritz-Carlton. Notably, it was the first Hilton resort in mainland China. In view of the ageing property and potential capital investment in the future, Jinmao decided to divest the asset after almost 20 years of holding. Amid a reversal in the recovery of tourism from the pandemic, RevPAR declined from 2023, recording an occupancy of 89.3% at an average rate of RMB1,207 in the first half of 2024.
• Singapore-based Garcha Group puts its heritage hotel, the 49-key Duxton Reserve, under Marriott’s Autograph Collection for over S$90 million ($68 million), or $1.38 million per key. The property consists of three shophouses and offers guestrooms ranging from 20 to 51 square metres. Prior to the franchise agreement with Marriott in 2021, the property was operated under Six Senses between 2018 and 2020, and briefly under Starwood in 2016.

Deal Update

• The 54-key Twenty One Whitfield in Hong Kong, sold at HKD260 million ($33.5 million), or $619,600 per key. The Taiwanese-backed consortium acquired the property for HKD395 million in 2014; the property had been put on the market with an asking price of HK$650 million since March 2023.

News that Matters.

Laos

• To promote tourism in Laos, the Ministry had set 2024 as the Visit Laos year, targeting a total of 6.2 million tourists, including about 4 million foreign visitors. According to the latest figures, Laos welcomed over 2.1 million foreign visitors in the first half of 2024. The largest feeder market, Thailand, contributed more than 680,100 visitors, accounted for 32% of the total during the period. Vietnam and China also contributed over 510,000 visitors each.
• In July, Laos launched a visa exemption policy for tourists from certain countries. The temporary visa waiver is effective until the end of the year. Visas would be exempted for Chinese visitors, including those with Hong Kong, Macau, and Taiwan passports, traveling in groups with approved agencies. Citizens from eight eligible European countries would also enjoy visa exemption for tourism purposes for up to 15 days.

Malaysia

• Setting an annual goal of 27.3 million international visitors for 2024, Malaysia welcomed a total of 16.45 million international visitors as of August. In August, the monthly figure surpassed the level in 2019, showing a strong recovery of inbound tourism in Malaysia. Singapore was the largest feeder market with 5.77 million visitors, followed by Indonesia with 2.4 million and China with 2.29 million. The visa-free policy between China and Malaysia boosted the number of Chinese travellers to Malaysia, particularly during peak seasons.
• Domestic travel in Malaysia is also booming in 2024, and 68.4 million visitors were recorded in the second quarter of 2024, a 24% growth from the first quarter. Domestic tourism expenditure also showed significant growth in the second quarter, recording 17% quarter-on-quarter growth at RM28.1 billion. However, domestic travel in 2024 remained behind the levels in 2019, about 11% less on the number of tourists and 18% on expenditure.

Tourism Recovery in Asia Pacific

In terms of monthly inbound visitor arrivals in August, several countries and regions recorded a higher number than levels in 2018 or 2019. Inbound visitors to Hong Kong surpassed the figure in Aug 2019 but remained 25% below its peak performance in Aug 2018.