Ascott expects to invest up to AUD500 million (S$560 million) to acquire new properties that Quest will secure for its franchise in Australia over the next five years.
SINGAPORE – CapitaLand’s wholly-owned serviced residence business unit, The Ascott Limited (Ascott) – the world’s largest international serviced residence owner-operator, has entered into a strategic partnership with Quest Serviced Apartments (Quest) – the largest serviced apartment provider with 112 properties in Australia.
Ascott expects to invest up to AUD500 million (S$560 million) to acquire new properties that Quest will secure for its franchise in Australia over the next five years. Ascott will have a right of first refusal to acquire the properties sourced by Quest. Quest will then provide a lease for the properties, which will be operated under franchises using the Quest brand.
In addition, Ascott has signed an agreement to acquire a 20% stake in Quest for AUD28.8 million (S$32.3 million1). As part of the agreement, Ascott has the option to increase its stake in Quest to 30%.
In a separate agreement with Quest, Ascott’s real estate investment trust, Ascott Residence Trust (Ascott Reit), will acquire three operating serviced residences in Greater Sydney from Quest for AUD83 million (approximately S$93 million). Quest Sydney Olympic Park, Quest Campbelltown and Quest Mascot will continue to be operated under franchises using the Quest brand.
Mr Lee Chee Koon, Ascott’s Chief Executive Officer, said: “Ascott has an established presence in Australia where our serviced residences enjoy a strong demand from travellers to the country, and we see vast potential growth opportunities for serviced residences. Serviced apartments represent over 25% share of the accommodation market in Australia where Quest is a leading player. Ascott has many global customer accounts and strong global systems to manage our properties. Through our strategic partnership with Quest, we can leverage each other’s knowledge and contacts in Australia to rapidly extend our presence in the growing market for international quality serviced apartments. We also expect a stronger pipeline of properties in Australia for Ascott to acquire.”
Mr Lee said: “The Australian accommodation sector continues to expand with more than 100 properties expected to be opened over the next few years. Foreign investment in Australia’s accommodation sector has been on the increase in recent years due to the reliable legislative environment, resilient economy and stable returns in Australia. Ascott and Quest have complementary strengths and confidence in providing quality serviced residences as an alternative to traditional hotels to discerning travellers for business or leisure. We look forward to closer collaboration with Quest in cross selling, conducting joint marketing initiatives, and jointly exploring opportunities for franchises outside of Australia.”
Mr Lee added: “We have formed strategic alliances with leading developers such as Vanke and Yuexiu to combine our expertise to drive Ascott’s growth in China. Our partnership with Quest is another strategic move that will further propel Ascott’s growth. Besides Australia, we will seek investment opportunities in key markets where we have presence such as Singapore, India, capital cities in Southeast Asia, Paris, London and key cities in Germany. We will also continue to expand through management contracts, strategic alliances and franchises to achieve our target of 80,000 apartment units globally by 2020.”
Mr Paul Constantinou, Chairman of Quest Serviced Apartments, said: “Quest is the fastest growing and largest network of serviced apartments in Australia. As one of the global leaders in franchising within the accommodation sector, we have opened an average of eight new properties each year. There is now the opportunity to accelerate our growth to secure 250 properties across Australia and New Zealand before the end of this decade.”
Mr Constantinou added: “Quest brings franchising experience and expertise to this partnership, whilst Ascott offers a global presence, and longevity in the industry. This partnership offers both parties the opportunity to broaden a highly successful franchising model to other parts of the world.”
“More than 80% of our customers are corporate travellers from some of Australia’s biggest companies and our properties are located in underserved regions with high demand for quality accommodation. We are stringent in selecting our franchisees and are actively involved in the operations and growth of every property. Having a global brand like Ascott partner with us is further affirmation of the strong reputation Quest has built over the last 25 years,” Mr Constantinou said.
In Australia, Ascott currently operates five serviced residences with more than 670 apartment units. Quest has around 150 properties with over 8,000 existing units in Australia, New Zealand and Fiji, and a further 1,500 units under construction.
Photo caption (left to right): Paul Constantinou, Chairman of Quest Serviced Apartments and Lee Chee Koon, CEO of The Ascott Limited
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