HVS Asia Pacific Hospitality Newsletter - Week Ending 18 December 2020 (December 21, 2020)

HVS Monday Musings: Price wars in the Indian hotels sector during the COVID era

By Mandeep S Lamba and Dipti Mohan
Hotels need to come together and align themselves to the common goal of reviving the growth in the industry. They should think ‘long-term’ by promoting value-added services, targeting new customer segments or markets, and implementing cost optimization strategies instead of indulging in price wars, which can be detrimental for the growth of the sector. Brands can also play a crucial role in this by pushing the envelope on driving better revenue and rate management strategies.

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CDL to Sell Copthorne Orchid Hotel & Resort Penang for RM75 Million

Singapore-based City Developments Limited (“CDL”) has announced that it plans to divest Copthorne Orchid Hotel & Resort Penang in Malaysia for approximately RM75 million. This sale and purchase agreement was entered into by CDL’s wholly-owned subsidiary, Millennium & Copthorne Hotels Limited (“M&C”) and the property will be acquired by Malaysia-based Ivory Properties Group Berhad (“Ivory”). Ivory is then expected to gain 318 rooms, in addition to the freehold land that the hotel sits on. CDL has also released a press statement, emphasizing that this divestment is in line with their group strategy to extract value from its non-core hotel assets and streamline the portfolio. This transaction is projected to lead to a pre-tax gain of SGD9.2 million. Moreover, with this disposal being the group’s third asset disposal in 2020; their combined sales value is now worth SGD104.8 million, with pre-tax divestment gains for CDL amounting to SGD50.3 million. This string of disposals comes along with CDL stating the value of their properties are now “significantly higher than their acquisition cost”. M&C is also expected to complete another one to two disposals up till 2022. Presently, M&C’s portfolio comprises a total inventory of more than 40,000 rooms and operations across 29 countries.

Park Hotel Group and Apricot Capital Jointly Acquires Kyoto Boutique Hotel in Japan

A joint venture between Singapore-based Park Hotel Group (“PHG”) and Apricot Capital has completed the cross-border transaction to acquire a newly built boutique hotel in Kyoto from Angelo Gordon and Mizuho Real Estate Management, at an undisclosed sum. Situated in the heart of Japan’s cultural capital, the 114-key property has a gross leasable area of 3,276 square metres and will be branded as Park Hotel Kyoto. This represents PHG’s first Park Hotel brand and expansion in Japan, and its second property after 296-key Grand Park Otaru in Hokkaido. Slated to open in December 2020, the property offers 112 guestrooms, two suites, a restaurant and bar, and a fitness room. This deal diversifies the domestic-dominated hotel market in Japan, providing differentiated offerings for increasing numbers of international visitors to Kyoto. Notably, the deal was successfully completed after the onset of COVID-19, with key inspections being completed virtually, a first for Asian hotel transactions. It also signals the continued interest by international investors for hotel opportunities in Japan.

Universal Studios Japan to Open Nintendo Park in February 2021

Universal Studios Japan (“USJ”) will be opening its USD580 million Super Nintendo World, on 4 February 2021 after delays due to the covid pandemic. Built on the existing USJ theme park, the attraction will feature Nintendo’s legendary worlds, characters and adventures. Guests will be able to step into the immersive world of their favourite Nintendo games. One of the main attractions will feature a Mario Kart ride inside Bowser’s Castle, where visitors can collect virtual coins and items through a smart-phone linked wristband, just like in the popular Super Mario game. Augmented reality headsets will also be used on certain rides and visitors will be able to interact with park features through a Nintendo Switch console. USJ is currently operating at half capacity to curb the virus as Japan grapples with fresh outbreaks in Osaka, where the theme park is located at. This attraction is part of Nintendo’s efforts to broaden its franchises beyond console players and promote its merchandises to new users.

Luna Park Sydney To Invest AUD30 Million in Major Upgrades and Nine New Rides

On 24 November 2020, Luna Park Sydney announced an AUD30 million investment plan, which aims to rejuvenate the 85-year-old park into a modern, world-class amusement venue. This investment seeks to improve park facilities and upgrade the existing attractions while maintaining its emblematic heritage. Nine new state-of-the-art rides would be introduced, including the Big Dipper, which will be the world’s first inline seating launch roller coaster. The Minister for Jobs, Investment, Tourism and Western Sydney, Stuart Ayres, commented that this investment would continually attract more visitors towards the New South Wales (“NSW”) and aid in the state’s post-pandemic economic recovery, through job creation and economic stimulation. Mr Ayres further added that this investment is a sign of confidence in NSW and urges other tourism firms to utilise the opportune low-peak period to reinvest into their products. Luna Park Sydney will close for its transformation on 27 January 2021 and is scheduled for its reopening in mid-June.

Absolute Share Price Performance, as on 18 December 2020

Closing Share Price as at 18 December 2020 11 December 2020 % Change
Australia Stock Exchange (ASX)
Elanor Investors Group 1.72 1.90 -9.7%
Event Hospitality & Entertainment Ltd 8.95 9.39 -4.7%
General Property Group 4.58 4.65 -1.5%
Mirvac Group 2.67 2.68 -0.4%
Bangkok Stock Exchange (THB)
Central Plaza Hotel Public Co Ltd 26.00 26.25 -1.0%
Dusit Thani Public Co Ltd 8.00 7.75 3.2%
The Erawan Group Public Co Ltd 3.96 3.72 6.5%
Grande Asset Hotels & Property Public Co Ltd 0.62 0.61 1.6%
Laguna Resorts & Hotel Public Co Ltd 29.00 28.25 2.7%
Minor International Public Co Ltd 27.50 28.00 -1.8%
S Hotels and Resorts Public Company Limited 2.94 2.68 9.7%
China Shanghai Stock Exchange (RMB)
Jinling Hotel Corporation Ltd 7.90 8.11 -2.6%
China Shenzhen Stock Exchange (RMB)
Huatian Hotel Group Co.,Ltd. 2.79 2.66 4.9%
Guangzhou Dong Fang Hotel Co Ltd 7.40 7.89 -6.2%
Huazhu Group Limited 47.72 47.02 1.5%
Hong Kong Stock Exchange (HK$)
Miramar Hotel & Investment Co Ltd 13.06 12.90 1.2%
Regal Hotels International Holdings Ltd 2.66 2.72 -2.2%
Sino Hotels Holdings Ltd 2.44 2.40 1.7%
The Hong Kong & Shanghai Hotels Ltd 7.19 7.19 0.0%
Shangri-La Asia Limited 7.22 7.33 -1.5%
National Stock Exchange (INR)
Chalet Hotels Ltd 196.90 192.65 2.2%
IHCL (Taj Hotels, Resorts & Palaces) 130.0 128.0 1.6%
EIH (Oberoi Hotels & Resorts) 99.6 100.2 -0.6%
Hotel Leela Ventures 5.4 5.0 7.0%
Lemon Tree Hotels Ltd 43.4 43.7 -0.7%
Korea Exchange (KRW)
The Shilla 81700 85000 -3.9%
Singapore Stock Exchange (S$)
Amara Holdings Ltd 0.40 0.36 9.7%
ARA Htrust (US$) 0.49 0.48 1.0%
Ascott Residence Trust 1.10 1.06 3.8%
Banyan Tree Holdings Limited 0.28 0.27 3.8%
CDL Hospitality Trusts 1.30 1.28 1.6%
Eagle Htrust 0.14 0.14 0.0%
Far East Hospitality Trust 0.63 0.62 0.8%
Frasers Hospitality Trust 0.55 0.55 -0.9%
Hotel Grand Central Ltd 1.02 1.00 2.0%
Hotel Properties Ltd 3.04 2.86 6.3%
Mandarin Oriental International Ltd (US$) 1.86 1.92 -3.1%
Stamford Land Corporation Ltd 0.33 0.31 6.5%
Taiwan Stock Exchange (NT$)
Formosa International Hotels Corporation 139.5 139.0 0.4%
The Ambassador Hotel, Ltd 30.0 30.0 0.2%
Tokyo Stock Exchange (JPY)
Japan Hotel REIT Investment Corp. 53700 53000 1.3%
Imperial Hotel, Ltd 1955 1980 -1.3%
Red Planet Japan Inc 61 61 0.0%

For the latest in the hospitality industry, please visit: http://www.hvs.com/. You are also welcome to contact the following personnel.
Hok Yean Chee, Regional President – HVS Asia Pacific [email protected]
Mandeep S. Lamba, President, South Asia – HVS Anarock [email protected]
Mei Leng Ho, Senior Vice President – HVS Singapore [email protected]
Steven Zhu, Vice President – HVS Shanghai [email protected]
Florian Kittler, Managing Director – HVS Executive Search Europe & Asia Pacific [email protected]

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