HVS - ASIA PACIFIC HOSPITALITY NEWSLETTER - For The Week Ending 25 Mar 2016 (March 28, 2016)

New Room Concept for Novotel

AccorHotels unveils a new room concept, ‘N Room’ for its worldwide Novotel chain. The Novotel Bangkok Ploenchit Sukhumvit will be the pilot property for this new room concept which offers, what AccorHotels describes as, ‘a universal ideal of more customizable design to better address local hotel and guest needs’. The ‘N Room’ features an iconic bed, wider window design, a 40-inch TV, adjustable sofa, new amenity layout and more device ports. According to Patrick Basset, Chief Operating Officer for Upper Southeast and Northeast Asia for AccorHotels, the transformation cost for each new-concept room will be 750,000 THB. However, once the renovation work is complete, the improved product will contribute to an increase in overall average room rates. Currently, AccorHotels operates 450 Novotel hotels and resorts in 61 countries around the world.

Marriott-Starwood Merger Back on Track

Marriott International has topped Anbang Insurance Group’s US$13.2 billion offer to acquire Starwood Hotels & Resorts Worldwide with a US$13.6 billion counter bid to form the world’s largest hotel company. Marriott has significantly increased the cash component of its offer. The amended agreement states that Starwood shareholders will receive US$21 in cash and 0.80 shares of Marriott International’s Class A common stock for each share of Starwood Hotels & Resorts’ common stock.

Chinese Investors in US Hotels Pursue Core-At-Any-Cost Plan

Decelerating industry fundamentals and weakness in forward-looking equity market prices for hotel-related companies has not kept Chinese companies from dominating the hotel investment landscape recently, according to Fitch Ratings. Chinese investors have been aggressively bidding on mostly upper-tier hotel assets in core markets. Historically, this type of activity, rich property valuations paid by less-established (often international) market participants, has corresponded with U.S. CRE cycle peaks. This cycle could be shaping up to follow a similar path. Hotels in non-core markets are unlikely to benefit from increased international investment, at least with respect to China. Several of the largest institutional Chinese investors have publicly discussed what Fitch views as a ‘core-at-any-cost’ investment mentality with respect to hotel investments that generally dovetails with the recent Chinese-led investment activity. Fitch made widespread downward revisions to growth forecasts in its latest Global Economic Outlook published on March 7, lowering its 2016 growth outlook for advanced emerging economies to 4.0%, from 4.4% in December, primarily due to large downward revisions for emerging market commodity producers such as Brazil, Russia and South Africa. 2016 growth outlook for advanced economies have been lowered from 2.1%, to 1.7%, a level that remains above global recession territory.

Indonesia Grants Visa-free Entry to Australia

Indonesia has finally granted visa-free entry to Australia after nearly a year of deliberation, due to its reciprocal principle in visa exemption policy. Australia is the 169th addition to the list of countries that enjoy visa-exemption. Despite the risk that Australia may not reciprocate in kind with visa-free access for Indonesians, this development may only be seen to benefit Indonesia’s travel, tourism and hotel industry. In 2015, Australia had once again topped Bali’s source market rankings, with nearly 967,000 arrivals recorded. Despite the trend, Australian arrivals have declined by 2.53% year-on-year. According to Indonesia’s Minister of Tourism, Arief Yahya, this change in its own is expected to drive some 20% growth in arrivals from Australia.

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