SINGAPORE (July 15): CapitaLand’s lodging business unit, The Ascott Limited, has signed contracts with 26 properties with over 6,000 units across 22 cities and 11 countries.
The properties, which will open in phases from 2019 to 2023, are mostly signed under management contracts, with three on franchise agreements.
This brings the number of contracts secured to date this year by Ascott to over 40 properties with more than 8,000 units, an increase of over 40% in units compared with the same period in 2018.
CapitaLand says by 2022, global lodging sales are forecast to reach US$812 billion ($1.1 trillion), with Asia Pacific remaining the second largest market. International tourist arrivals continue to be driven by stronger economic growth, more affordable air travel and a better visa regime.
The majority of the 26 new properties are in Asia Pacific, which CapitaLand says continues to see strong demand for lodging in tandem with lower cost of travel, improving travel infrastructure and middle-class demographics’ growing disposable income and aspiration to travel.
With these new properties, Ascott has made inroads into six new cities across Asia Pacific, Central Asia and Africa. This includes Atyrau in Kazakhstan, Nairobi in Kenya, Yokohama in Japan, Seongnam in South Korea, as well as Cam Ranh and Hoi An in Vietnam.
Ascott has also expanded its presence in 14 cities – Melbourne and Sydney in Australia; Chengdu, Dongguan, Guangzhou, Shanghai, Shenzhen, Wuhan and Xi’an in China; Bogor and Jambi in Indonesia; Cyberjaya in Kuala Lumpur; Cebu in the Philippines; and Bangkok in Thailand.
Kevin Goh, Ascott’s CEO, says: “We are fast-expanding Ascott’s global network of properties as we continue to pursue an asset-light business model to boost our recurring fee income... For the first quarter this year, our operational units have contributed $59.7 million of fee income. We are targeting to open over 40 properties with about 8,500 units this year. For every 10,000 serviced residence units signed, we are expecting to earn approximately $25 million in fee income annually as the properties progressively open and stabilise. Through these growth strategies, we are looking forward to the fee income boost when we achieve our target of 160,000 units worldwide by 2023.”
With the recent completion of the Ascendas-Singbridge transaction, CapitaLand through Ascott, has become the sponsor of both Ascott Residence Trust (Ascott Reit) and Ascendas Hospitality Trust (A-HTRUST). Including the assets held under these two hospitality trusts, lodging assets under CapitaLand are valued at $31 billion, equivalent to 25% of the group’s total assets under management.
As at 10.50am, shares in CapitaLand are trading at $3.69.
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