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Hotel Transactions Reviving

By on Jun 21, 2011 in Hotel-Tourism

Published on Bangkok Post dated 20 June 2011 by Kanana Katharangsiporn

High occupancies add to Phuket’s appeal

More hotel investment transactions will be completed in the second half of this year, mainly in Phuket where occupancy rates have been strong, says Robert McIntosh, executive director of CBRE Hotels in Asia-Pacific.

He forecast the value of hotel investment transactions in 2011 would be higher than last year’s total of 5 billion baht, after no transactions in 2009.

In the first five months of 2011, transactions included the acquisition of Laguna Beach by CDL, and the 50-room,four-star Layana Resort on Koh Lanta by the Bangkok-based retail operator MBK from a private foreign investor.

The transactions in 2010 involved five properties: four in Phuket and one on Samui. In Phuket, Dusit International bought Dusit Laguna from Laguna, a private company bought the Novotel Beach from the SETlisted developer Natural Park,and Hotelcorp bought the Manathai Resort on Surin Beach from a foreign owner.

Another acquisition in Phuket involved Yamu, acquired by a joint venture between Como Hotels and Resorts and the owner of Alila Cha-am from a foreign investor.

“The reason why hotels in Phuket were acquired the most was that Phuket was very attractive for hotel investment for both seller and buyer, with a very good performance in occupancy rate,”said Mr McIntosh.

In the first quarter, average hotel occupancy in Phuket was 82.9%, up from 82.3% in the same period last year, the best performance in Thailand, he added.

The story was totally different on Samui as the market was very quiet and the only transaction was a financial consolidation. Baan Taling Ngam Resort, formerly owned by Lehman Brothers, was bought by the Srivikorn family. It will be operated by InterContinental starting late this year.

“Three- to four-star hotels are very attractive for investment as they generate more return with steady income,”he said, adding that in Thailand, initial rates of return averaged 9%.

Mr McIntosh said the last really big year for hotel investment in Thailand was in 2006. Activity was sluggish in 2008 as financial institutions were reluctant to lend after hotel occupancy dropped. Hotel investment everywhere was frozen until early 2010, when recovery was seen in most of Asia-Pacific.

The second half of 2010 was better than the first half. The most active market was Australia as bankrupt hotels were forced to sell by banks.

Big hotel buyers in Australia included the Government of Singapore Investment Corporation (GIC) and the Singapore-based private fund City Developments Limited (CDL). Also active was the Thai liquor tycoon Charoen Sirivadhanabhakdi.

In the first five months of 2011, Hong Kong was Asia’s best performer with 90% hotel occupancy, up from 85% in 2010, followed by Singapore with 86%,up from 85%.

“Hotels in Hong Kong and Singapore are very interesting due to high occupancy rates. Everyone wants to acquire one but no one wants to sell,” said Mr McIntosh, who is based in Singapore.

In Asia, Singaporeans were the biggest investors in hotel businesses, going to Japan, China, Australia, India and Thailand. They were by Hong Kong investors,in China and Thailand. Chinese investors went to Europe, Taiwanese mainly in China, while Thai investors sought properties in Australia and the US.

Mr McIntosh said that by next year there would be more hotels in Europe and North America being forced to sell as financial institutions complete reorganisation in 2012.

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