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Foreign Investment to Japan’s Hotels Top $2 Billion This Year to Date

Alan Woinski
August 23rd, 2023 at 7:52 AM EDT

Skift Take

  • Foreign investors like Goldman Sachs, KKR, and Blackstone have invested $2 billion in Japanese hotel deals this year, driven by a hotel business rebound and favorable exchange rates.
  • Hilton plans substantial growth in Southeast Asia, introducing a new Hilton Garden Inn prototype and adding seven new hotels in Malaysia, including new brands like Curio Collection and Waldorf Astoria.
  • Accor expands across Asia with 30 new hotels, focusing on markets like Japan, Vietnam, Indonesia, and India, while also partnering to introduce the Swissotel brand to Malaysia with Swissotel Genting Highlands.

Bloomberg reported on the boom in hotel investment in Japan. We recently reported on the appetite Blackstone has for Japanese real estate, particularly hotels. The Bloomberg article expanded on that, saying foreign investors, including Goldman Sachs Group, KKR & Co, and Blackstone, have spent a combined $2 billion on hotel deals in Japan so far this year, the most compared with any other sector in Asian commercial property, according to MSCI Real Assets. The total for all of 2022 was $1.4 billion. The rebound in the hotel business in Japan, plus the weak yen, is driving interest. Visitors to Japan and hotel occupancies are still below 2019 levels, but the average daily room rate in the year’s first half was 16% higher than rates charged in the first half of 2019. Last month a consortium formed by Goldman Sachs Asset Management, Abu Dhabi Investment Authority, and Singapore’s SC Capital Partners purchased a portfolio of 27 hotels for $900 million. Canadian private equity firm BentallGreenOak agreed to buy the Ritz-Carlton in Fukuoka this summer. In the spring, KKR and Gaw Capital announced a deal for the Tokyo Hyatt Regency. Bloomberg said the market is tight for investors, and competition is fierce. Spending on hotels by overseas investors recorded its fastest pace in nearly a decade, making up the largest proportion of hotel deals in Japan since 2014.

Hilton hosted their Hilton Garden Inn Roadshow so they could showcase plans for growth in Southeast Asia and introduce a new regional room prototype for the upscale brand. The Roadshow took place in Bangkok and discussed their expansion plans, including leveraging franchised and management hotel agreement options while promising robust returns for owners. The Hilton Garden Inn’s new regional room prototype features innovation in design and amenities tailored to elevate the guest experience while also delivering strong investment returns. The brand’s core elements have been developed based on customer and competitive insights, and its region-specific programming ensures global standards are easily integrated with local preferences specific to each regional market. Hilton Garden Inn has 75 properties operating in Asia Pacific, with over 130 in the pipeline. The latest launch was Hilton Garden Inn Da Nang in Vietnam, and four more properties are expected to open in Thailand in the coming years.

Hilton also confirmed the opening of seven new hotels in Malaysia over the next few years, giving them a 50% jump in its hotel count to 21 and a 48% increase in room inventory to 7,100 rooms. Four of the hotels are scheduled to open in 2025. The new hotels, two each in Kuala Lumpur and Langkawi, will see the addition of 1,259 rooms and strengthen Hilton’s presence in Malaysia. Hotels will include new brands to the country, such as Curio Collection by Hilton, Waldorf Astoria, and Conrad. Malaysia holds the largest portfolio of Hilton-branded hotels in Southeast Asia. The group recently opened the DoubleTree by Hilton Shah Alam i-City and DoubleTree by Hilton Damai Laut Resort as part of its strategy to expand its full-service segment in the country. The DoubleTree brand represents half of the Hilton portfolio in Malaysia. The launch of the Waldorf Astoria brand will be at the site of the former Hotel Istana at the corner of Jalan Raja Chulan and Jalan Sultan Ismail. The 272-suite hotel is owned and is being developed by Tradewinds Corp Bhd. The 488-room Conrad Kuala Lumpur on Jalan Sultan Ismail will be a stone’s throw from the Waldorf and is being developed by Permodalan Nasional Bhd on the site of the former MAS headquarters. The 248-room Nautilus Resort, Curio Collection by Hilton, will be the first property under Curio in Malaysia and Hilton’s first in Langkawi.

Accor has signed 30 new hotels and resorts across Asia over the last two months under the Group’s Premium, Midscale & Economy brands. Japan, Vietnam, Indonesia, and India take up the bulk of the growth.

Accor also announced they teamed up with Crowne Estate Malaysia to debut the Swissotel Hotels & Resorts brand to Malaysia with Swissotel Genting Highlands, slated to open in 2028. The 300-room property will offer conference facilities, a grand ballroom, all-day dining options, executive lounges, and bars. Leisure amenities include a heated swimming pool, sundeck, fitness center, spa, scenic jogging tracks, and a kids’ club. The Swissotel Genting Highlands will be a 15-minute drive to the Genting Highlands summit, close to King’s Park by Highlands Park City.

IHG Hotels & Resorts announced they opened their newest and third Hotel Indigo in Australia, together with Pro-Invest Group – Hotel Indigo Melbourne on Flinders. This marks the debut of Hotel Indigo in Melbourne on the city’s most iconic laneway. The property showcases 216 reinvented guest rooms. A mezzanine-level fitness center with body-weight-powered equipment will add to the hotel’s sustainable credentials, opening in October, and meeting and event facilities for up to 200 guests will be complete in early 2024. A new streetside Spanish bar and restaurant, Beso, is housed within the hotel.

Chatrium Hospitality announced a new hotel Management Agreement for a resort in Khao Yai, Thailand, the Lacol Khaoyai – a Chatrium Collection. The 125-room upscale resort is owned by Korkiert Khaoyai Company Limited and is set to open this coming September. This is Chatrium’s first partnership in Khao Yai with Korkiert Khaoyai Co. Ltd. Chatrium said they are committed to expanding into Thailand and neighboring countries. The resort is located near the UNESCO World Heritage site Khao Yai National Park and will have 125 rooms ranging from the 40-sqm Deluxe Mountain View to the 125-sqm 2 Bedroom Family Suite. The resort has a variety of restaurant concepts, meeting rooms, and wedding venues. It also provides a swimming pool, fitness center, and the Varin Wellness & Spa with its signature treatments, Japanese-style onsen, salt therapy room, and aqua beds.

Fortune Hotels, a member of ITC’s hotel group, announced they expanded their portfolio with Fortune Park Hoshiarpur, a hotel beset on the fringes of the Indian city that adds well-appointed stylish rooms, top-of-the-line amenities, an array of F&B outlets, event spaces and lawns for weddings, conferences, special occasions and more. Fortune Park Hoshiarpur has 57 guest rooms, multiple versatile banqueting spaces of all sizes, and other amenities for guests.

Hong Kong-listed Summit Ascent wants to increase its stake in Suntrust Resort Holdings, the Philippines company trying to develop a US$1.1 billion hotel and casino in Manila’s Entertainment City. Both Suntrust and Summit are majority owned by LET Group, the former disgraced Suncity, and they have been unable to raise capital for this development from outside sources. Summit said they subscribed to Suntrust’s convertible bonds and acquired a parcel of land from parent company LET Group in July. Summit Ascent seems to be the only LET Group interest with any capital, so they are being used as an ATM.

Las Vegas Sands expects the costs of its expansion project at the Marina Bay Sands in Singapore to materially exceed the US$3.32 billion amount they expected when they reached the agreement with the Singapore government. LVS said the costs would materially exceed that given the current market conditions caused by inflation, higher material and labor costs, and other factors. The estimated cost and timing of the total project will be updated as the company completes the design and begins construction.

Alan Woinski
August 23rd, 2023 at 7:52 AM EDT

Companies: Abu Dhabi Investment Authority, Accor, Blackstone, Chatrium Hospitality, Conrad Hotels & Resorts, Crowne Estate Malaysia, Curio Collection by Hilton, DoubleTree by Hilton, Fortune, Gaw Capital, Goldman Sachs, Hilton Garden Inn, Hilton Hotels & Resorts, Hotel Indigo, IHG Hotels & Resorts, ITC Hotels, LET Group Holdings, Marina Bay Sands, Marriott International, Pro-Invest Hotels, Ritz-Carlton, SC Capital Partners, Suntrust Resort Holdings, Swissotel, Tradewinds Corporation Berhad, Waldorf Astoria Hotels & Resorts

Locations: Bangkok, Danang, Fukuoka, India, Indonesia, Japan, Kuala Lumpur, Langkawi, Malaysia, Manila, Melbourne, Philippines, Singapore, Tokyo, Vietnam

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