Main Photo: The Ascott Limited’s Chateau Belmont Tours, France
Date: July 2020
Locations: Half of the new contracts are in China, while the additions include Jayapura, Batam and Surabaya in Indonesia; Casablanca, Morocco; and Manila in the Philppines.
Name: The Ascott Limited
No. of Keys:The additions take Ascott close to 118,000 units in over 700 properties globally, and put it on target to hit 160,000 units by 2023.
Sellers: The Ascott Limited has taken the properties on management contracts, franchise agreements and lease.
Brand/Manager: The Ascott Limited – Ascott, Singaporean group CapitaLand’s lodging business, has enjoyed a record start to 2020, signing 25 new properties in the first five months of the year. The growing momentum, set against the international upset of the coronavirus pandemic, represents a 139% year on year increase in units secured.
Half of the new contracts are in China. The strong growth comes as consultants suggest the serviced apartment sector has proved more resilient to the coronavirus downturn than hotels.
Reviewing the European serviced apartment market, researchers at Savills noted recently that “there are some indications that the sector has been weathering the storm marginally better. The reason for this marginal out-performance can be attributed to its guest profile and the typical configuration of properties.”
Aside from growing the pipeline, The Ascott has also opened six new properties so far this year. Of these, two are in China, plus Singapore, Australia’s Gold Coast, Osaka and the French city of Tours. The additions take Ascott close to 118,000 units in over 700 properties globally, and put it on target to hit 160,000 units by 2023.
The group continues to expand by signing a mix of management contracts, franchise agreements and, where necessary, leases. “Despite the challenges of covid-19, this demonstrates that our partners recognise the resilience of our lodging products and the value Ascott brings as one of the leading international lodging owner-operators,” said Kevin Goh CEO of The Ascott Limited.
“We have a strong base of long-stay guests who appreciate the comfort of our spacious apartments where they can live and work. This has enabled our serviced residences globally to maintain robust average occupancy rates. We have already taken steps to ready Ascott to be the accommodation of choice in a post COVID-19 landscape and will continue to cement Ascott’s position as a dominant lodging player and deliver more value for our guests and business partners.”
Ascott Residence Trust (ART) is a stapled group comprising Ascott Real Estate Investment Trust (Ascott Reit) and Ascott Business Trust (Ascott BT).
The company managed to keep many of it’s locations operating as the pandemic spread, providing a safe haven for both key workers and returning nationals, many of whom needed to quarantine for a while. Its “Ascott Cares” regime, launched in May, has helped provide reassurance for guests, and is being rolled out globally.
The company has continued to double down on the Chinese market, where a first rental housing project has also been signed recently, providing fully furnished homes in tier one and tier two cities. Tan Tze Shang, Ascott’s head of business development for China, said the business there is in recovery: “Since May 2020, Ascott has fully resumed operations of our properties and we are seeing encouraging signs of recovery driven by the country’s strong domestic demand. With the implementation of green lanes between China and other countries such as Singapore and Korea, we expect demand for our properties to pick up pace as international travel gradually resumes.”
In the second quarter, Chinese properties achieved occupancy above 70%, rising to 100% during the country’s May holiday weekend. In Europe, Savills note the continuing relative under supply of serviced apartments, and their relative out-performance as a result. “The relative out-performance of serviced apartments over hotels during the Covid-19 crisis may be marginal, but it does reflect a trend seen over the longer term highlighting the counter-cyclical features of the sector during downturns.”
Across Europe’s key gateway cities, Savills estimate serviced apartments account for 7.9% of bed nights, little ahead of Airbnb’s market share. The team recently analysed these markets, noting “even for those markets well represented for serviced apartments, such as Paris and London, there was still an imbalance suggesting room for further stock growth. Once demand fully recovers, we believe this will continue to be the case.”
Savills say investor levels of interest remain strong, and despite some hesitation due to the coronavirus lockdown, they expect a number of deals to complete during the second half of 2020. “Serviced apartment yields across Europe remain relatively attractive, with an average yield spread of approximately 50bps compared to hotels. This is particularly favourable considering other markets such as Asia and Australia tend to see tighter serviced apartment yields in comparison to transient hotels.”
One brand expanding fast in Europe is Locke, backed by the edyn Group. The brand combines aparthotel accommodation with the feel of a boutique hotel, and currently has four properties in London, Manchester and Edinburgh. This year, Locke will launch two more London sites and in Dublin, followed next year by another Dublin site, two in Munich, Berlin, Cambridge and a further London location. Into 2022, the pipeline includes Lisbon and Copenhagen.
HA Perspective: This optimism thing looks contagious. After months of bad news, winners are beginning to emerge. And serviced apartments are among the most resilient of all short-let accommodation segments. The appeal is due to combining self-contained accommodation, which means few facilities are shared with other guests, with the reassurance of a big company guarantee for cleanliness and safety.
This is not to say there has not been pain. Ascott Residence Trust’s AGM on 16th June made plain that there has been plenty. The ART has master leases in place in Australia, France, Germany, Japan, South Korea and Singapore and management contracts with minimum guarantees in the UK, Belgium and Spain.
The Japanese master leaseholder, WBF Hotels & Resorts, filed for civil rehabilitation in late April and ART is engaged in discussions about rent relief with other operator lessees too. It said: “We seek to find a middle ground that is sustainable for both parties”.
To mitigate the decline in occupancies, ART and its operators have had to look to other business opportunities such as providing accommodation to people in self-isolation, healthcare personnel, workers looking for alternative work-from-home arrangements and people impacted by border shutdowns. Marketing is being focused on domestic travel.
ART had closed 18 properties since the pandemic and has subsequently opened three of these. It expects to open all the rest. It remains confident about the sector: “Despite near-term headwinds, we remain positive on the longer-term prospects of the hospitality sector. Historically, tourism has shown an unparalleled ability to recover from a crisis and has proven to be a key driver of international recovery.”
Despite current challenges, there has not been a significant change in transaction prices. ART said that the pandemic would have to be “long-drawn for distressed transactions to appear”.
THPT Comment: We think Andrew Sangster, from Hotel Analyst has said it all….This optimism thing looks contagious. Ascott, best known as serviced apartments has also launched a hotel product.
First Seen: Hotel Analyst
The Hotel Property Team (THPT) are a small group of highly experienced business professionals. Between us, we provide a range of skills and experience which is directly relevant to those involved in the hotel property market.