Key Thai and Regional Opportunities Highlighted with Suggested Business Models at Hotel Investment Conference
Hotel investment and development within the Asia Pacific region and beyond went under the microscope by opportunistic investment groups recently at the seventh annual Asia Pacific Hotel Investment Conference (APHIC)
Held at the Dusit Thani Bangkok for the third year in a row, the conference welcomed more than 200 delegates to discuss a range of topics impacting the hotel industry in Asia Pacific, including investment opportunities, strategies and partnerships in such destinations as China, Japan, Australia and ASEAN.
H.E. Kobkarn Wattanavrangkul, Minister of Tourism and Sports of The Kingdom of Thailand opened the conference with a warm welcome to all hotel investors. She emphasized the presence of investment opportunities in the resilient Thailand and invited investors to explore and invest.
The sentiment was echoed by the pre-conference regional investor round-up, where panelists agreed that Thai destinations present vast potential. “Greater Phuket development is moving north to Krabi and Khao Lak,” said Christopher Chung, managing director of Lewis Trust Group. “Land costs are still in check in these places,” he continued. “The case is stronger now.” Ian Lien, managing director of SC Capital Partners, is bullish on the development of the midscale space in Thailand’s urban centers. “Budget hotels are a good space to be in,” Lien said. “If you are going to be in hotels, it’s better to be in the economy space in urban areas. There’s more demand.” Echoed Ronald Barrott, CEO of Pro-invest Group, “The economy sector in Bangkok is ideal: the right brand and rate product. The select-service model is growing throughout Asia.”
A panel investigating successful investment models also ventured into the midscale and budget segments, providing key insights into such developments in high cost Page 2 of 4 environments. “Get land costs and construction costs right to make return on investment more attractive,” advised CDL Hospitality Trusts head of strategic development David Ling. Taking an Oxley Group project in Singapore as example, Ling added, “You can either build a 700 rooms Ibis or a 300 rooms Westin. If you get the costs right, mid-scale can work great.” Teddy Zhang, managing director China from Thayer Lodging Group agreed that efficiency can be created with limited services hotels, citing a Courtyard by Marriott project in Manhattan. Simon Champion, CEO of easyHotel suggested investors to optimize real-estate space with windowless rooms and no food and beverage operations. He brought forth a business model that calls for room distribution directly through brand website, distribute direct and achieves up to 80% operational margins in Europe.
A commercial/legal panel led by Jones Lang LaSalle Hotels and Hospitality Group executive vice president Andrew Langdon explored the essential topics of deal structures, incentives fees and termination clauses. Panelists agreed that flexibility is essential when it comes to hotel management agreement negotiation. “Flexibility is key,” said Rustom Vickers, Dusit International group director of development. “Offering a more balanced approach on the outset and creating a mutual partnership with owners is the approach,” he added. Mövenpick Hotels and Resorts vice president development – Asia Pacific, Jen Reichert concurred. “Negotiations always start off with the ideal position. We accommodate where we can.” David Lawrence, a consultant with the law firm Tilleke & Gibbins admitted that hotel management agreements are not designed to be fair. “Flexibility is proportioned to how much the operator wants the property,” he observed.
Other topics covered include “Capitalizing on Global Hotel Investment Opportunity”, “Established Resort Markets Will Survive the Competition from New Destinations”, “Sourcing Capital for Hospitality Projects in Today’s Market” and “Leveraging Innovative Designs and Construction Methods for Enhanced Return”.
“APHIC was indeed a very great experience. The quality of the speakers was great. The quality of the audience was best in class. I was extremely impressed by all the networking challenges and opportunities, and would have no hesitation to Page 3 of 4 recommend the event as a must do,” said Michael Ascot, Managing Partner, Advantage Leadership Advisory.
APHIC will return to Bangkok in May 2016. For more information, visit http://ihif.questexevents.net