Park Hotel expands footprint in Asia-Pacific
By Michael Lim
/ The Edge Property |
Singapore-based Park Hotel Group is expanding its presence in Asia-Pacific. The group inked its seventh management contract on May 20 with Malaysian developer Jaya Mapan to operate a new hotel, Park Hotel Melaka, in the Malaysian state. The hotel will be ready by 1H2019.
The construction cost of the 245-room, 16-storey Park Hotel Melaka is estimated at RM90 million to RM100 million, and the hotel will be part of a new RM400 million mixed-use development called The Green by the privately held niche Melaka developer, which specialises in mixed-use developments. Apart from the hotel tower, The Green will have two blocks of serviced apartments of 39 and 44 storeys each, as well as a two-storey retail podium with 22 retail outlets.
According to Park Hotel chief operating officer Mohd Rafin, the group will be managing the serviced apartments, Park Residence, along with the hotel.
Park Hotel’s maiden hotel in Malaysia, Park Hotel Melaka, will be ready by 1H2019
Source: Park Hotel Group
The Green is located in the heart of Kota Laksamana’s entertainment and business district. Park Hotel Melaka is a 25-minute drive from Melaka International Airport, a 10-minute drive from the Melaka Sentral bus and taxi terminal, a 90-minute drive from Kuala Lumpur International Airport and a three-hour drive from Singapore.
An upcoming attraction in Melaka is the RM40 billion Melaka Gateway, a 609-acre master-planned development with residential, commercial, cultural, entertainment and lifestyle elements by KAJ Development. The first phase of Melaka Gateway is scheduled to open in 2018, with the entire project targeted for completion by 2025. Melaka Gateway is expected to attract 900,000 visitors in the first year.
This should benefit The Green and Park Hotel Melaka, as they are located near Melaka Gateway. “Melaka is a Unesco world heritage site and a popular tourist destination that will gain greater popularity when Melaka Gateway opens,” says Allen Law, CEO of Park Hotel.
Beyond Melaka, Law is also looking to expand Park Hotel’s footprint in Malaysia to Penang and Kota Kinabalu, Sabah. The group will stay out of Kuala Lumpur for now, owing to concerns of “oversupply and falling demand” as new luxury hotels open in the next few years — for instance, the 210-room St Regis and the 100- room Ritz-Carlton Suites later this year, and the 150-room W Hotel, the 100-room Banyan Tree Signatures and the 330-room Royale Pavilion in 2017.
“The overall net effect is that the operating environment in Kuala Lumpur is going to get more and more difficult,” he says.
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Regional expansion
Last August, the group inked its first hotel management contract in Australia to operate the 250-room Park Hotel Adelaide. In November, Park Hotel opened its fourth hotel in Singapore, the 442-room Park Hotel Alexandra, adjacent to the Alexandra Central retail mall. This was followed by the opening of Park Hotel’s first resort property, the 190-room Park Hotel Nusa Dua in Bali, Indonesia, in December.
“We are looking to expand at a rate of two to three new hotels a year,” says Law. “We will focus on Asia-Pacific, a market that we’re familiar with. We are not going to be overly aggressive and will pick our projects carefully.”
Law: We are looking at expanding at a
rate of two to three hotels a year over
the next few years, and these will largely
be in Asia-Pacific, where our strength lies
the next few years, and these will largely
be in Asia-Pacific, where our strength lies
Park Hotel intends to grow with its existing developer partners — for instance, RB Capital and Chip Eng Seng. Chip Eng Seng, the developer of Alexandra Central, appointed Park Hotel to manage Park Hotel Alexandra, while its Australian subsidiary, LGB Corp, is the developer of Park Hotel Adelaide.
Meanwhile, RB Capital is the developer of medical hub Farrer Square, which has in turn appointed Park Hotel to manage the 300-room Park Hotel Farrer Park in Little India, which is scheduled to open by the end of this year.
“If we have a good working relationship with a partner, we will want to do more with the same partner,” says Law. “It’s better to grow our partnerships with a few key partners.”
In North Asia, Park Hotel intends to expand its reach to Seoul, South Korea, with the opening of its 17th global sales office, and plans to open at least one business hotel in the city. In China, the group owns and manages three hotels in Kunming, Wuxi and Xi’an with a total of 1,005 rooms. In Japan, it owns and manages a 296-room hotel in Otaru, Hokkaido.
Law is exploring opportunities in Tokyo, Osaka and Okinawa. “The plan is to expand via management contract or, if it makes financial sense, to buy the hotel or even a chain of hotels,” he says.
Last December, Park Hotel opened its first resort hotel, Park Hotel Nusa Dua, in Bali, Indonesia
Source: Park Hotel Group
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Divest and reinvest
In 2005, Park Hotel moved its base from Hong Kong to Singapore, with Law heading the business. This was after the group acquired its flagship property in Singapore, the former Crown Prince Hotel, for $300 million. The hotel was rebranded to Grand Park Orchard, with the retail podium renamed as Knightsbridge. The group also acquired the former 333-room Parkroyal on Coleman Street in 2006 and rebranded it Grand Park City Hall. The third hotel in Singapore marked Park Hotel’s first development property here. It was the 336-room Park Hotel Clarke Quay, which opened in 2009.
Grand Park Orchard Hotel, including its retail podium Knightsbridge, was sold last
August to Chinese company Bright Ruby Resources for about $1.15 billion
By 2013, the group had divested two of its three properties. The 99-year leasehold Park Hotel Clarke Quay was sold to Ascendas Hospitality Trust for $300 million in April that year. This was followed by the sale of the freehold Grand Park Orchard Hotel (including Knightsbridge) to Bright Ruby Resources, a Singapore-incorporated investment vehicle controlled by Chinese billionaire Du Jingtao and his family. Bright Ruby paid $1.15 billion for the hotel, which priced it at $1.1 million per room, a record-breaking price then.
In Singapore, the group still owns Grand Park City Hall. It is currently undergoing an $80 million refurbishment, which is scheduled for completion by end-2017. The number of rooms in the property will be increased to 345. According to Law, the group is open to divesting Grand Park City Hall if an offer comes along and the price is right.
Nevertheless, he still sees opportunities for growth in the Singapore hospitality industry. Despite having sold two of its assets, Park Hotel continues to manage those properties. The four properties that it manages in Singapore contribute about 50% to the group’s overall bottom line, says Law. The three properties in China and its flagship property in Hong Kong (the 350-room Park Hotel Hong Kong) contribute 20% each, while the rest are from Indonesia and Japan.
This article appeared in the The Edge Property pullout of Issue 735 (July 4, 2016) of The Edge Singapore.
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