Philippine-listed property developer DoubleDragon Properties Corporation—a joint venture between Mang Inasal founder Edgar “Injap” Sia II and Jollibee Foods Corp. owner Tony Tan Caktiong—has officially entered the hospitality sector after acquiring a majority stake in Hotel of Asia, which will serve as its hospitality arm in the country.
In a disclosure to the Philippine Stock Exchange this week, DoubleDragon said it has completed the purchase of 70 percent of Hotel of Asia for P832.17 million, fulfilling a planned acquisition of shares announced in August. The transaction is set to be paid in DoubleDragon common shares.
Hotel of Asia owns, operates, and develops hotel projects, and currently has 866 hotel rooms operating under its Hotel 101 brand and its franchise of Asian hotel brand JinJiang Inn. It was established in 2011 as a joint venture between Injap Investments, a holding company owned by DoubleDragon chairman Edgar “Injap” Sia II; Chan C. Bros. Holdings of the Oishi Group; and Staniel Realty Development Corp.
Earlier this year, DoubleDragon had said that it wanted to buy HOA because of the “optimistic outlook” of the country’s tourism industry. “The stake in HOA will now allow DoubleDragon to benefit from the booming tourism prospects for the Philippines in the years to come as well as fully optimize the use and value of its string of prime properties in various strategic areas of the country,” the company said in a statement.
The hotel group is looking to add another 608 rooms to its portfolio as it plans to launch a new Hotel 101 property.
Manila on the Rise
DoubleDragon's eagerness is understandable. Earlier this year, Julius Guevara, head of advisory services at Colliers Philippines, said that the hotel room inventory in Metro Manila is poised to grow in the next three to four years, adding roughly 11,000 rooms to the current total of 24,000. But while growth is expected to be sustained short-term, there are challenges in the medium term, among them the lack of airports—the biggest obstacle to increasing foreign tourists who drive demand for hotel rooms, Claro dG. Cordero, Jr., head of research and valuation at Jones Lang LaSalle, added. “As a result of slower to no growth in tourist arrivals due to lack of new facilities, the new developments will add further supply and will displace the old developments,” Cordero added. “This will likely result in an oversupply scenario that may also adversely affect the revenue and baseline of operators and developers.”
Other companies are already growing their footprints in the city. SM Hotels opened the Conrad Manila, the Hilton group's first hotel in the country under the luxury brand, in June, adding 247 more rooms to the company's current portfolio of more than 1,000 rooms.
The Deal
According to the disclosure, “Injap Investments Inc. shall be paid in DD common shares priced at a 5 percent premium over the 30-day weighted average of the closing prices of DD common shares preceding the closing date of the transaction which is at P61.34 per share.” When the transaction closes, CCBHI and SRDC will retain their 15 percent stake in the hotel company.
Photo by Holger Mette