TO DISCUSS YOUR PROJECT OR LEARN MORE ABOUT OUR SERVICES:

  • This field is for validation purposes and should be left unchanged.

Hotel Sales Market Heats Up

Category: , Posted:05 Jun 2010 | 11:42 am

The Phuket Gazette.
News of hotels being sold because they are in great financial distress is indeed part myth, just like Bigfoot and the Loch Ness Monster, and – in part – the 1997 Asian contagion. Two years ago, the global financial crisis spurred yet more tabloid-like reports of more than 100 hotels in Thailand being offloaded.
It's time once again to brace ourselves. The captain has turned on the seat belt sign and we're to return to our seats in anticipation of severe turbulence. As the entire country collectively prepares for a tumultuous period, with some people maybe even retracting into the “Brace! Brace! Brace!” position, we now await the coming storm.
Unlike 1997 and 2008, many industry experts expect significantly high levels of transaction activity during the latter half of 2010. Already this year, two high-profile Lehman's-related hotel assets, the Baan Taling Ngam on Resort & Spa on Koh Samui and the Novotel Phuket Beach Resort Panwa in Phuket, have been put on the market.
The latter in fact traded for 870 million baht, which was above market value.
As this article goes to print, and although yet to be announced, the buzz through the property market is that the Samui property was traded to the group that owns the Bangkok InterContinental for a reported 750 million baht.
Despite private equity vulture funds circling the sky and stress fractures appearing in tourism numbers, there remain no cheap deals.
What is apparent, though, is that investors with liquidity in Asia – including Thailand – are now looking at the fairly on-going stabilized yields of hospitality products and diversifying into the sector.
At the same time, some developers and firms are looking to create capital, and two high-profile operating hotels will be coming into play over the next few months. This news is already creating a buzz in the investment community.
While the current market situation is fine for hotels that are up and running, what does it mean for those in the building phase? Jumeriah Private Island has yet to commence construction, The Yamu has stalled as a half-complete site, Taj Exotica has yet to be realized as investors have favored staying on the sidelines, and the Shangri-La remains long delayed in Bang Tao.
These developments are largely based on “mixed use”, which means they're essentially hotels with managed residences. As mixed-use commercial properties, they need a healthy property investment market with sales returned to any semblance of trading. This leaves owners looking to both the debt and equity markets, which clearly have taken a beating by the hour from Bangkok's “red shirt” breaking news mega-series.
For now, underwriting hotel green field investments through the use of real estate sales seems to be mothballed, and capital-formation exercises require cashed-up developers who have access to Thai bank financing. It's a home field advantage for now and as such, it's the listed firms or conglomerates that are creating the most market activity.
At the same time, the property funds listed on the Thai Stock Exchange (SET) continue to carry large chucks of change on their balance sheets, and as land prices rise in Bangkok along with political concerns (which look to go on for some time), shifting risk to a Phuket hotel asset makes considerable sense.
While it's doubtful that a great hotel fire sale will ensue, there remains little doubt that for the rest of this year, hotel transaction activity is going to see a marked rise in Phuket.
I think I may unbuckle my seat belt for a moment though and ask the flight attendant for a drink. Flying high above the earth looks to be the last peaceful place, though you have to be ready for those jolts and mid-air hi-jinks now and again. It certainly beats driving.

Other News

Read more

Mind the Gap – Keep People Inspired Event in November

Category: Hotels|Tourism, Posted:22 Oct 2022 | 08:50 am Keep People Inspired (KPI) is the second in a series of Mind the Gap Learning events. The focus of the event is on inclusiveness in hospitality, spanning Phuket’s hotels, tourism and service industries. Inclusiveness is a key element of businesses that rely heavily on human resources and is in effect all about people, whether they […]
Read more

Japanese Luxury Brand Hoshinoya Heads To Niseko

Category: Hotels|Real estate, Posted:14 Oct 2022 | 17:42 pm Leading Japanese hotel operator Hoshino has inked a deal for a luxury resort in Niseko with developer Zekkei Properties. Located in a prime ski-in and ski-out location in Upper Hirafu Village, the 62-unit hotel and residence property will be named Hoshinoya Lodge Niseko. With one of Hirafu’s best locations, the site was formerly occupied by […]
Read more

Phuket and Beyond, A Brief Friday Hotel Update

Category: Hotels, Posted:14 Oct 2022 | 10:24 am In Phuket, Wyndham Vacation Resorts has signed a deal to manage the 50-key Zenmaya Oceanfront in Kalim. The property will be under the Trademark Collection by Wyndham. There are synergies for the hotel given it is located across a main coastal road from the Wyndham Grand Phuket Kalim Bay. Regional carrier Myanmar Airways International (MAI) […]
SiaJai logo

Thailand's Leading Homecare Marketplace