In this week’s roundup of news from the Asia/Pacific region: Huzahu Group buying Deutsche Hospitality; Hyatt’s China performance; investment in the Asian hotel industry; and more.
Hotel News Now each week features a news roundup from a different region of the world. Today’s review covers the Asia/Pacific region.
Huazhu Group to buy Deutsche Hospitality for €700m
Shanghai-based Huazhu Group announced it will acquire Frankfurt-based Deutsche Hospitality through its wholly owned subsidiary China Lodging Holding Singapore, according to a news release. The two have agreed on an all-cash share purchase deal amounting to about €700 million ($775.4 million).
Hong Kong, select service represent hurdles for Hyatt
Executives at Hyatt Hotels Corporation shared during the company’s third-quarter earnings call that Hyatt has lowered its full-year revenue-per-available-room guidance because of pressures on the select-service segment and political unrest in Hong Kong, reports HNN’s Danielle Hess. However, President and CEO Mark Hoplamazian said he has expects solid performance in Greater China.
“We see resilient demand for our brands in the face of the recent challenges, and our full-service hotel market share in Greater China was (up) approximately 110 basis points in the quarter,” he said. “While there is uncertainty as to when the disruption in Hong Kong may end or when the trade concerns will dissipate, we continue to have great confidence in the long-term prospects in Greater China, and we are excited about our growth plans there.”
What’s driving Singapore’s hotel demand
New attractions and demand drivers are helping hotel performance in Singapore, writes HNN contributor Selena Oh. Another factor helping the market is a shift in group and leisure travelers who otherwise would have gone to Hong Kong.
“(That is) a result of our marketing and yield strategy, as well as growth from our source markets largely driven by India, followed by China and Australia,” Tejveer Singh Bedi, group revenue director of Park Hotel Group, said about positive RevPAR trends seen at his company’s properties. “As we see some shifts toward Singapore as a (meetings, incentives, conventions and exhibitions business) venue due to the ongoing situation in Hong Kong, the market, our business included, is certainly feeling the uplift in demand directly and indirectly.”
Banyan Tree founder reflects on 25 years of resilience
Banyan Tree founder Ho Kwon Ping received 2019’s Hotel Investment Conference Asia-Pacific “Lifetime achievement award” and cited resilience, having a focus in life and being surrounded by loving people as the factors behind his success, reports HNN’s Terence Baker.
Banyan Tree’s first property was the result of Ho not knowing what to do with a piece of land adjacent to a beach.
“It was purely entrepreneurial,” he said. “We rode the wave. I tell business students that success derives at the confluence of hard work and luck.”
Cheap debt, low interest rates fueling Asia hotel boom
JLL projects the Asia-Pacific region will see $70 billion in global hotel transactions for full-year 2019, a 23% year-over-year increase, and that is thanks in part to cheap debt and low interest rates, reports HNN’s Terence Baker from the “The investment outlook: APAC” session at the Hotel Investment Conference Asia Pacific.
Kevin Colket, founder and CEO of Global Hospitality Investment Group, said it’s not surprising that capital is seeking to invest in Asia.
“The recession was a great time for buying hotels,” he said. “Assets were all buys discounted to replacement costs, and cheap debt generated 10% cash on cash. No one had to do anything in the U.S. and Europe, and a lot of people made a lot of money, but that party in the U.S. is coming to an end.”
Asia pressures rise, but long-term trends remain strong
Investors continue to see Asia as an attractive place for capital despite pressures on specific countries and markets within the continent, reports HNN’s Terence Baker from HICAP.
Jesper Palmqvist, conference chair and area director, Asia/Pacific, at STR, the parent company of Hotel News Now, said there are positive signs for the region.
“There is a great deal of interest in growth and development in the (Asia/Pacific) area. ... It is not just doom and gloom for sure,” he said.
STR: Asia/Pacific hotel performance for Q3 2019
Hotels in the Asia/Pacific region reported negative year-over-year performance, according to data from STR. Occupancy dipped 1.7% to 71%, and average daily rate declined by 0.5% to $98.23, resulting in a drop in RevPAR of 2.2% to $69.72.
Deals and developments
- Australia’s Mandala Asset Solutions has acquired the freehold 79-suite Mackay Marina Hotel for 10 million Australian dollars ($6.9 million).
- The 575-key Marina Mandarin Singapore will be rebranded as the ParkRoyal on Marina Bay.
- Canadian private equity firm Brookfield Asset Management acquired India’s Hotel Leelaventure for approximately 40 billion Indian rupees ($564.8 million).
- Singapore-based GIC Private Limited announced a four-hotel portfolio deal through its joint venture with Summit Hotel Properties for $249 million to acquire the 258-key Residence Inn by Marriott Portland Downtown/RiverPlace, 169-key Hilton Garden Inn San Francisco Airport North, 161-key Hilton Garden Inn San Jose/Milpitas and 122-key Residence Inn by Marriott Portland Hillsboro.
- Singapore-based M+S Private Limited is selling the 342-key Andaz Singapore to Singapore-based Hoi Hup Realty Private Limited for 475 million Singapore dollars ($349.4 million).
Compiled by Bryan Wroten.