FOREIGN groups are coming in greater numbers to acquire hotels in Malaysia, especially in the Klang Valley, to take advantage of the good value and expected strong growth in the industry.
Last year, a whopping 85% of the value of hotel transactions in the country was by foreigners compared with 44% in 2005.
According to Zerin Properties chief executive officer Previndran Singhe, the growing interest among foreigners in the hotel sector was triggered by the strong growth in the tourism sector and the economy.
Generally the foreign investors were from the region and the Middle East, he said, adding that there was also a growing interest from investors in Singapore, Thailand and Europe and American funds and hotel chains.
“The advent of low-cost carriers and the strong tourism drive may create an insatiable appetite for hotels,” Previndran told StarBiz.
In the past few years, Zerin Properties has concluded a number of hotel transactions within and outside the country for foreign groups.
“We are basically hotel dealmakers in the region. We are in the midst of concluding a sale in Indochina and selling a resort in the Philippines, and has been appointed by a Middle East fund to negotiate the purchase of hotels in the region.”
As the exclusive agent for the asset disposal programme of the Sheraton Chain of Hotels in Malaysia, it concluded the sale of the 207-room Sheraton Perdana in Langkawi for RM77.5mil and the 267-room Sheraton Kuantan for RM36.6mil in 2005.
It was also involved in the sale of the 149-room Merlin Johor Baru for RM10.46mil and the 66-room Merlin Inn in Cameron Highlands for RM13.5mil.
Last year, the 100-room Grand Centerpoint in Kuala Lumpur was sold for RM12.5mil, and the latest deal was the sale of the 91-room Four Seasons in Langkawi for RM435mil.
“The hotels here are on par with other international markets and the local industry is leading in terms of product innovation through products such as The Datai, Hilton Batang Ai and Tune Hotel.
“New hotels coming in with truly leading designs include Maya Hotel and KL Hilton, which are niche in their market positioning and are market leading,” Previndran said.
Renovation work to spruce up some of the leading existing hotels such as Shangri-La Kuala Lumpur, Sheraton Imperial and The Regent is also underway.
With the tourism drive, average room rates (ARR) for 5-star hotels have moved up by at least 20% over the past two years while other categories of hotels have recorded an ARR increase of to 5% 10%.
Hotel occupancy rates in the Klang Valley have also increased from the mid-60's two years ago to about 70% now.
In August, 4- and 5-star hotels recorded an average occupancy rate of 86% while the average room rate climbed to RM361 from below RM300 previously.
“Moving forward, I think we are going to see a consolidation of hotel ownership – from fragmented ownership to chain ownership, and maybe even a hospitality-based real estate investment trust (REIT) like the Starwood REIT in the US.
“These consolidated owners will be locals and foreigners from the region who are already chain owners. There is also a strong Middle Eastern interest coming into the market, mainly in the premium properties,” Previndran said.
He said more top class brands, such as Conrad and Intercontinental, were expected to come into the market in the near future.
Around the region, Previndran said Vietnam was experiencing a boom in the hotel industry due to shortage of good hotels.
“We see strong opportunities in the Vietnamese cities and resorts for premium and limited service hotels.
“The Philippines is also a good market as the population base is big and its islands are truly a big attraction for the Korean and Japanese markets.
“Australia is also another strong market, with Sydney being the most visited city in the Asia-Pacific.”
Source : STAR
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