AP Hospitality Bulletin Asia Pacific - January 2023

Transactions that Matter.

pentahotel Hong Kong

• Hong-Kong based New World Development sold the 695-key pentahotel in east Kowloon to Wang On Properties and US-based Angelo, Gordon & Co for HKD 2 billion (USD 260 million) or HKD 2.9 million (USD 376,800) per key. Opened in 2013, the property is located at San Po Kong in West Kowloon with one F&B outlet, a gym, outdoor pool, five meeting rooms and entertainment zones. The property is set to reopen in 2024, after renovation and rebranding, according to the announcement by the buyers.
• The disposal of the property comes as a result of the asset-light strategy by New World Development (NWD) to reduce its debt through selling non-core assets. It is reported that NWD started looking for buyers in July 2022, other assets for sale include retail and commercial properties across Hong Kong. In October, NWD sold a 51% stake in an office project in Kowloon to Ares SSG for HKD 3 billion.
• As part of the initiative to activate the second CBD in Kowloon East, the accessibility of the area was enhanced after the completion of a new railway line in June 2022. Additionally, the completion of Kai Tak Sports Park in 2023 is likely to stimulate the demand in the long term. Most importantly, the border with mainland China will gradually reopen on 8 January after almost three years, boosting the confidence of local tourism and hospitality industries.
• Rumors have it that Dash Living will become the new operator of the property after the pentahotel brand was sold by a NWD subsidiary in 2020.

Daiwa Resort, Japan

• Daiwa House announced the sale of its resort business to G.K. Ebisu Resort, whose asset manager is Japan Hotel REIT Advisor (JHRA) at JPY 55.6 billion (USD 417 million). The portfolio includes 24 resorts across Japan, and properties included in the sale are resorts outside key cities under its own brands: Active Resorts and Royal Hotels. On the other hand, business hotels and apartment hotels, such as Daiwa Roynet Hotels and Mimaru, will remain under the ownership of Daiwa House.
• In pursuit of a sustainable growth model, Daiwa House decided to sell the resort unit to enhance its capital efficiency. Established in 1973 as a part of Daiwa House, Daiwa Resort has faced challenges in operation in the past years due to aging facilities and the global pandemic. While the industry is recovering, Daiwa House believes that the resort unit should be handed to an experienced manager in the hospitality field, such as JHRA, for more sustainable growth.

Deal Watch

• The 223-key Hualuxe Kunming managed by IHG is put on the market for sale at RMB 731 million (USD 106 million) or approximately RMB 3.28 million (USD 475,000) per key, and the seller is reported to be a subsidiary affiliated with state-owned enterprises. Located at Dianchi Lake National Tourism Resort, the property is one of the first Hualuxe properties in China. Offering 3 F&B outlets, 2 lounges and comprehensive facilities, the property benefits from proximity to various demand generators, including golf courses and leisure attractions.

News that Matter

Mainland China

• Starting from 8 January, China will lift most of the travel restrictions and mandatory quarantine is to be waived for all inbound travellers to mainland China. The new measurement indicates the resumption of normal inbound and outbound travel, while it is concerned that the number of cases will surge after the relaxation of rules. The authorities expect to resume flights back to 90% of pre-pandemic levels by the end of January. Given the challenges to ramp up airlift capacity at short notice, it remains to be seen how much capacity constraints will limit outbound tourism growth in the short-to-medium term.
• Many countries and regions are preparing for the return of Chinese tourists, while some of them announced additional requirements for visitors from China. Thailand, which welcomed 11 million Chinese travellers in 2019, is excited to receive visitors from China again. The authorities expect to see an increase in inbound tourists during Lunar New Year (22 Jan 2023), with a maximum of up to half a million from China. On the other hand, some popular destinations, such as Japan, Korea and the U.S., announced mandatory PCR tests for travellers from China, including Hong Kong SAR and Macau SAR, starting from early January.

Myanmar

• Myanmar has resumed international flights and normal travel in April 2022, and the number of visitor arrivals reached over 215,000 in 2022. In 2019, the contribution of travel and tourism to GDP was 6.7%, and the nation welcomed approximately 4.4 million international visitors in 2019. Observers estimated that it would take 3-5 years to return to ‘near-normal’ travel in Myanmar.
• Despite the impact of the pandemic and coup, the Ministry of Hotels and Tourism has launched the Strategic Recovery Roadmap to help the industries revive. In the short term, the authorities plan to get the nation prepared for the new normal and build the image as a safe destination. In the medium to long term, Myanmar is expected to have greater product diversification and focus on sustainable tourism.

Taiwan

• Since reopening its borders in October 2022, inbound and outbound travel in Taiwan is resuming gradually. In November, a total of 173,137 inbound visitors to Taiwan were recorded, among which over 75% was from Asia. The open borders also stimulate outbound travel of Taiwanese; there are approximately 276,500 outbound trips in November, and popular destinations are in Asia, such as Japan and Vietnam, and Thailand.
• In 2023, the authorities are targeting a total of 6 million inbound travellers, approximately 50% of the pre-pandemic figure. In 2019, the key feeder markets are mainland China, Japan, Hong Kong SAR and Macau SAR. Due to the tension with mainland China, the focus has switched to other markets in Southeast Asia under “The New Southbound Policy.” To boost the inbound travel in Taiwan, the authorities launch several promotions and campaign to hit the annual target.

Tourism Recovery in Asia Pacific

Singapore remains the leader in terms of recovery of monthly visitor arrivals, followed by Indonesia and Thailand. Due to the differences in timelines of reopening, some countries and regions still recorded a high month-on-month change in November 2022, while some showed fairly stable figures. The table below outlines monthly visitor arrivals across key markets in Asia Pacific.