Singapore developer spends big for Indonesian management company stake

Ascott Songshan Lake Dongguan and Citadines Songshan Lake Dongguan, China. Photo credit: CapitaLand (Ascott will manage the apartment buildings currently under development and future projects signed with three developers in China, Japan and Thailand. )

Singapore-based CapitaLand Limited, one of Asia's largest real estate developers, has invested $25.9 million for a 70-percent stake in Indonesia's Green Oak Hotel Management.

CapitaLand paid $12.95 million for the acquisition upfront, with the remainder to be paid annually over five years starting from Jan. 1, 2018, up to an aggregate amount of $12.95 million. The annual payments will be determined based on the number of rooms that have opened in certain hotels managed by GOHM in the relevant year.

The investment in GOHM, which is the holding company of Tauzia, one of Indonesia's top five hotel operators, is reportedly part of CapitaLand's strategy to grow its hospitality business through The Ascott Limited, its wholly owned serviced-residence business unit. The deal is Ascott’s first major move into the lodging segment beyond its core serviced-residence business and apartments for corporate lease.

The addition of Tauzia's assets will boost Ascott's portfolio by close to 20,000 guestrooms in 122 hotels across Indonesia, Malaysia and Vietnam. In total, the portfolio will have 94,000 guestrooms operating worldwide, exceeding its 2020 target of 80,000 rooms.

Most of Tauzia's hotels are located in Indonesia, with almost 60 percent in key cities such as Jakarta, Bali, Bandung, Surabaya and Yogyakarta. 

“While Ascott’s serviced residences continue to see strong demand from ex-patriates and corporate travelers, we can capitalize on significant opportunities in the middle-class business hotel segment which is expanding at an unprecedented rate,” said Kevin Goh, Ascott’s CEO. “This is brought on by the rise of the gig economy, super commuters, infrastructure builders, other project-based workers, and tech-savvy, self-sufficient and value-conscious leisure travelers. With our investment in Tauzia, we look forward to accessing this market, which is one of the fastest-growing segments of the hotel industry.

“We also are looking to expand beyond serviced residences where we can leverage Ascott’s over 30 years' of experience managing properties globally. Scaling up the lodging business will allow Ascott to address these new segments of customers by widening our offering of products and services. Together with our earlier platform investments in Synergy Global Housing and Quest Apartment Hotels, increasing the scale of our business will allow us to achieve greater synergies in cross-selling and operational efficiencies, as well as better customer outreach.”