HVS Asia Pacific Hospitality Newsletter - Week Ending 2 June 2017 (June 2, 2017)

Ascott REIT Snaps Up Its Third Manhattan Hotel for S$147 million

Ascott Residence Trust (Ascott REIT) is acquiring a prime hotel near Times Square in Manhattan for S$146.6 million (US$106 million). The trust’s key-count will increase to over a thousand rooms spread across three properties in New York, with the acquisition of the 224-room DoubleTree by Hilton Hotel New York. Financed by a mixture of debt and perpetual securities, once the hotel is transacted, the United States will become the trust’s fourth-biggest market after Singapore, Japan and China which are its key markets in Asia. The acquisition of the hotel has an EBITDA (earnings before interest, tax, depreciation and amortisation) yield of 6 per cent, which is expected to increase Ascott REIT's pro forma distribution income in the 2016 fiscal year by almost US$1 million. The improvement will lead to an increase in distribution per unit from S$7.23 cents to about S$7.29 cents on a pro forma basis. The REIT will continue to pursue assets in key gateway cities in the US, Europe, Australia and Japan.

The Gold Coast Council Approved an A$440 million Luxury Hotel Development

The Gold Coast Council greenlighted a A$440 million hotel development project by Aquis Pacific Point development. Positioned to be a “six-star” hotel, the 48-storey development is located on Main Beach Parade, Surfers Paradise, and will feature 580 hotel rooms and several restaurants. The hotel will benefit from new tourism related projects as well as major public infrastructure projects planned on the northern end of the Gold Coast in the long run. Overall developments in Gold Coast have been buoyant, with the recently approved A$1.2 billion twin tower by Chinese-backed Orion International Group, which is set to be Australia’s tallest tower and will feature a 165-room five-star hotel as well as the A$850 million redevelopment of the Broadbeach casino, which will expand its hotel facilities by an additional 700 keys.

Auckland Council to Introduce Bed Tax

On 1st June, Auckland Council approved the bed tax, a targeted rate on accommodation providers. The bed tax ranges from NZ$1 to NZ$3 a night in motels and from NZ$3 to NZ$6 a night in hotels. Accommodation providers can consider passing the taxation onto consumers by bundling it up with the rate, as they did with costs. The tax revenue will be channeled into the council agency Auckland Tourism, Events and Economic Development (ATEED), and will be utilized for tourism promotions, infrastructural developments and event sponsorships. According to Auckland’s Mayor, Phil Goff, NZ$13.45 million of taxpayer funding for ATEED would be alleviated through the taxation, and could instead be contributed toward essential transport and infrastructure projects. However, the tax may potentially hinder the performance of accommodation providers, as operator may not be able to pass on the tax to consumers without negatively affecting their business.

Malaysia Launches New Hotel Rating System

Malaysia Ministry of Tourism and Culture launched a new hotel classification and rating system with effect from 1st June. The new system categorizes hotels into categories of city hotels, highlands hotels, island/beach/lake river resorts, innovative hotels and boutique hotels. Prior to the launch of the new system, the old system stipulated that all the hotels had to provide an executive floor and lounge to be rated five stars, and to have a swimming pool to be rated four stars and above. These made it difficult for island and hill resorts, which mainly serve holidaymakers, to obtain a fair rating. In comparison, the new classification and rating system provides a more precise guidance to agents and partners on hotel categories. Trade players generally consider the new system to be a reasonable and better representative of hotel’s ratings than the old system.

Marriott International on Track for Progressive Year in Asia Pacific

Marriott International has announced that 2017 is on track for a breakthrough year in Asia Pacific, targeting to open approximately 80 hotels with 19,000 new rooms in the region. Furthermore, the company will introduce two new brands in Asia providing a total of 23 brands that will cater to all occasions and guests. The group will launch its first MOXY hotel in Tokyo, which is expected to open before the end of 2017, as well as debut Delta Hotels by Marriott Shanghai Baoshan in suburban Shanghai this summer. Moreover, Marriott plans to further build up its resorts portfolio with 16 new hotels that are expected to open in 2017, such as the Ritz-Carlton Langkawi in Malaysia and Courtyard by Marriott Siem Reap in Cambodia. Marriott's Asia Pacific business has reported strong growth momentum; in accordance with its growth vision, Marriott plans to have over 140,000 associates wearing the Marriott badge at its company operated and franchised hotels in Asia Pacific by the end of 2017. Marriott now has over 500 properties in its development pipeline in Asia Pacific which are planned to open by 2021.

Absolute Share Price Performance, as on 2 June 2017

Closing Share Price as at 2 Jun 2017 26 May 2017 % Change
Australia Stock Exchange (ASX)
Elanor Investors Group 2.17 2.15 0.9%
Event Hospitality and Entertainment Ltd 13.05 13.48 -3.2%
General Property Group 5.32 5.25 1.3%
Mirvac Group 2.28 2.27 0.4%
Mantra Group 3.05 2.99 2.0%
Bangkok Stock Exchange (THB)
Central Plaza Hotel Public Co Ltd 36 36.5 -1.4%
Dusit Thani Public Co Ltd 10.2 9.45 7.9%
The Erawan Group Public Co Ltd 4.74 4.74 0.0%
Grande Asset Hotels and Property Public Co Ltd 0.92 0.92 0.0%
Laguna Resorts & Hotel Public Co Ltd 25.5 26.25 -2.9%
Minor International Public Co Ltd 37 37.5 -1.3%
China Shanghai Stock Exchange (RMB)
Jinling Hotel Corporation Ltd 11.17 11.2 -0.3%
China Shenzhen Stock Exchange (RMB)
Huatian Hotel Group Co Ltd 4.84 5.06 -4.3%
Guangzhou Dong Fang Hotel Co Ltd 11.95 12.2 -2.0%
China Lodging Group Ltd 79.61 77.47 2.8%
Home Inns & Hotels Management Inc 35.71 35.71 0.0%
Hong Kong Stock Exchange (HK$)
Miramar Hotel & Investment Co Ltd 17.12 17 0.7%
Regal Hotels International Holdings Ltd 6.45 6.55 -1.5%
Sino Hotels Holdings Ltd 2.68 2.74 -2.2%
The Hong Kong & Shanghai Hotels Ltd 9.37 9.15 2.4%
Shangri-La Asia Limited 12.88 11.36 13.4%
National Stock Exchange (INR)
IHCL (Taj Hotels, Resorts & Palaces) 134.9 136.35 -1.1%
EIH (Oberoi Hotels & Resorts) 135.4 137.5 -1.5%
Hotel Leela Ventures 23.4 21.4 9.3%
Korea Exchange (KRW)
The Shilla 60500 61900 -2.3%
Singapore Stock Exchange (S$)
Amara Holdings Ltd 0.57 0.56 1.8%
Ascendas Hospitality Trust 0.79 0.77 2.6%
Ascott Residence Trust 1.14 1.12 1.8%
Banyan Tree Holdings Limited 0.535 0.545 -1.8%
CDL Hospitality Trusts 1.61 1.59 1.3%
Far East Hospitality Trust 0.65 0.63 3.2%
Frasers Hospitality Trust 0.72 0.705 2.1%
Hotel Grand Central Ltd 1.38 1.455 -5.2%
Hotel Properties Ltd 3.94 3.95 -0.3%
Mandarin Oriental International Ltd (US$) 1.575 1.45 8.6%
OUE Hospitality Trust 0.72 0.71 1.4%
Stamford Land Corporation Ltd 0.530 0.530 0.0%
Taiwan Stock Exchange (NT$)
Formosa International Hotels Corporation 157 156 0.6%
The Ambassador Hotel, Ltd 23.7 23.5 0.9%
Tokyo Stock Exchange (JPY)
Japan Hotel REIT Investment Corp. 81200 79800 1.8%
Imperial Hotel, Ltd 2185 2189 -0.2%
Red Planet Japan Inc 27 27 0.0%

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