HVS Asia Pacific Hospitality Newsletter - Week Ending 6 March 2020

Vibe Hotel Darling Harbour Sold for AUD108 Million in Sydney, Australia

The Vibe Hotel Darling Harbour was sold to a family that owns Thailand-based food import businesses, Sino-Pacific Trading Company Limited ("Sino-Pacific Trading") for AUD108 million. The Savetsomphob family is a first-time buyer in the Australian hotel market and also owns the 79-key Intercontinental Samui Baan Taling Ngam Resort in Koh Samui, Thailand. The hotel opened late last year at 319-325 Sussex Street, Sydney Central Business District, and features 145 modern guest rooms, a landmark rooftop bar and swimming pool with view of the city's skyline. The property was developed by Australia-based property group, Icon Oceania Corporation Private Limited ("Icon Oceania"), with investments from Asia Pacific fund manager, Aura Group Private Limited ("Aura Group"), and Australia-based Karbon Property. In 2016, Icon Oceania acquired the site for AUD21.35 million from two private investors and signed the hotel management agreement with Australia-based Toga Far East Hotels ("TFE Hotels"). TFE Hotels' portfolio includes five hotel brands - Adina Hotels, Vibe Hotels, Travelodge Hotels, Rendezvous Hotels and TFE Hotels Collection. The hotel group has 73 hotels across Australia, New Zealand, Germany, Denmark and Hungary, with another 30 in its development pipeline.

IGB Corporation Sells 60-Key Pyrmont Hotel for AUD28.7 Million

Malaysia-based IGB Corporation Berhad has announced the disposal of a 60-key hotel located within the heart of Sydney's Pyrmont Peninsula to a private Taiwanese family for AUD28.7 million. In 2016, the property was acquired for AUD11 million. Located at 131-133 Murray Street in Pyrmont, the nine-level freehold property sits on a 280-square-metre site and has been leased for ten years to Singapore-based serviced apartment company, MetroResidences, which is backed by Japanese-based electronic commerce and online retailing company, Rakuten. It has a gross floor area of approximately 1,134 square metres and B4 Mixed Use zoning with an approximate height limit of 28.87 metres. The hotel was sold unencumbered by management, which allows for considerable flexibility over the eventual market positioning, brand and operating structure.

Bangkok High Speed Rail Project Linking Singapore to China

The Thai government has announced the spending of more than USD21 billion to expand Bangkok's mass transit system, extend current train lines, and build high-speed rails, including the USD1.3 billion grand central station which will become the largest train station in South East Asia when it opens in 2021. The plan is part of the government's move to ease air pollution in Bangkok, boost the economy, overhaul its dated train system and tame its currency. Majority of the USD33 billion infrastructure budget over the next three years will be spent on rail projects in a bid to attract more private investment and boost consumption. The development is expected to double the current rail's capacity and triple freight capacity with 22 million commercial passengers and more than 30 million tons of commodities. Currently, the first phase of the 608 kilometres rail is under construction. The second phase, which would connect to the Chinese railway in Laos, is in the design process. Several high-speed contracts covering 668 kilometres and 970 kilometres routes are being planned. By 2037, the rail network is expected to expand by 60% from the current network.

More Than 90% of Hotels Resumes Operation in China

According to the statistics from Beijing-based Qunar.com, a Chinese leading online travel platform, over 90% of domestic hotels have resumed operation as of 29 February 2020. The number of operating hotels in Guangzhou and Shenzhen has resumed to what it used to be in early January, and over 95% of hotels in major cities such as Shanghai and Chengdu have resumed operation. In the past week, hotel bookings grew significantly by 34% from the previous week. Shanghai, Guangzhou, Chengdu, Shenzhen and Beijing received the highest number of hotel guests. Xi'an recorded an increase of 83% while Chongqing, Chengdu and Hangzhou saw a growth of more than 35% over the previous week. The statistics show that business travellers are currently the main contributors and hotels around transportation hubs are the popular choices for guests. Moving forward, China's hotel industry is expected to gradually recover and pick up as the Chinese and local governments have taken all necessary safety and preventive measures to control the coronavirus.

Sri Lanka Received USD370 Million FDI for New Hotel Projects Over Last Two Months

Sri Lanka has attracted US370 million in Foreign Direct Investment ("FDI") during the last two months, including the USD250 million mixed-use development project by Shangri-La to build an apartment and shopping complex in Colombo. Sri Lanka's Industrial Export, Investment Promotion, Tourism and Aviation Minister, Mr Prasanna Ranatunga, expects a revival of investment and the tourism industry. The Board of Investment of Sri Lanka ("BOI") expects to achieve an FDI target of approximately USD122 million from 30 new tourism-related projects by the end of 2020. Several major hotel projects are being planned in the country, including the construction of 550 new rooms and 400 new villas. The Ministry is in the process of expediting the necessary steps to grant approval to these projects.