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Ascott invests in Indonesia's hotel operator TAUZIA

YELLO Hotel Manggarai Jakarta

CapitaLand’s wholly owned serviced residence business unit, The Ascott Limited invests about US$26 million for a 70% stake in TAUZIA Hotel Management (TAUZIA).

This is Ascott’s first major move into the lodging segment beyond its core serviced residence business and existing business in apartments for corporate lease.

TAUZIA is one of Indonesia’s top five hotel operators. With its investment in TAUZIA, Ascott will get an instant boost of close to 20,000 units spanning 122 hotels across Indonesia, Malaysia and Vietnam, half of which are under development. This puts Ascott’s portfolio at more than 94,000 units globally, surpassing its 2020 target of 80,000 units well ahead of time. The majority of TAUZIA’s portfolio are well-located in Indonesia, with close to 60% in key cities such as Jakarta, Bali, Bandung, Surabaya and Yogyakarta. About 70% of TAUZIA’s hotels cater to business and convention travellers, while 30% are targeted at leisure travellers.

TAUZIA has six in-house lifestyle brands, comprising the mid-tier HARRIS Hotels, which promote business, leisure and healthy lifestyles, and FOX HARRIS Hotels, which are decked in contemporary design; YELLO Hotels for young, tech-savvy entrepreneurs who seek novel experiences and community-bonding; as well as the economy POP! Hotels for smart and ecofriendly travellers. TAUZIA’s Préférence brand are upscale boutique hotels while HARRIS Vertu Hotels are high-end business hotels. TAUZIA’s brands will widen and complement Ascott’s brands given their different product offerings targeted at different customer segments.

Mr Kevin Goh, Ascott’s Chief Executive Officer, said: “While Ascott’s serviced residences continue to see strong demand from expatriates and corporate travellers, we can capitalise on significant opportunities in the middle-class business hotel segment which is expanding at an unprecedented rate. 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 valueconscious leisure travellers. 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 are also 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; essentially anchoring Ascott’s position as a dynamic chain player in the lodging industry.”

Mr Goh added: “TAUZIA’s fastest growing mid-tier business hotels will enable us to capture the ballooning middle-class segment in Asia, which will be home to two-thirds of the world’s middle-class by 20302. So besides strengthening TAUZIA’s presence in Indonesia, we will be leveraging Ascott’s global network of about 100,000 corporate clients to bring TAUZIA to international markets. Markets with immediate demand include Malaysia, the Philippines, Thailand and Vietnam, as well as secondary cities in Cambodia, Laos and Myanmar. Prior to our investment in TAUZIA, we have 10 business hotels with about 2,000 keys in our portfolio. On top of the units under TAUZIA, we see potential to add another 20,000 keys over the next five years across Southeast Asia. This will increase our hotel portfolio to over 41,000 keys, constituting about 25% of our 160,000-unit target by 2023.”

The hospitality sector in Southeast Asia region is expected to grow with the region’s rapid economic expansion, flourishing tourism industry, rising consumption, and huge influx of foreign investments. The ASEAN Economic Community will also generate more investment and job opportunities in the region, thus fuelling greater demand in the region’s hospitality business.

In Indonesia, Ascott has a 22-year track record with 17 serviced residences and more than 3,000 units across Jakarta, Bali, Bandung, Karawang, Makassar, Surabaya and Yogyakarta. Indonesia is the largest economy in Southeast Asia, the world’s 10th largest economy and fourth most populated nation with a population of 252 million. In 2017, the country has more than 14 million overseas visitors, an increase of over two million from 2016, while its foreign direct investment grew 8.5% to Rp 430.5 trillion.