Fee income potential continues to grow as the global portfolio increases by over 8,300 units across more than 30 properties year to date.
Singapore – CapitaLand’s wholly-owned lodging business unit, The Ascott Limited (Ascott), has secured over 8,300 units across more than 30 properties in the first seven months of 2021, achieving over 40% year-on-year (y-o-y) growth compared to the same period in 2020. This builds on Ascott’s fourth consecutive year of record growth despite COVID-19, delivering approximately 20% compound annual growth rate (CAGR) since 2017. At S$20–25 million of fees to be earned for every 10,000 stabilised serviced residence units, fee income contribution is expected to increase as units in the pipeline turn operational. To date, Ascott has more than 128,000 units globally and is on track to achieve its target of 160,000 units by 2023. Ascott’s expansion will further consolidate its position as one of the leading international lodging owner-operators worldwide.
Amongst the latest additions to Ascott’s growing global portfolio is the contract to manage the largest serviced residence development in Vietnam with over 1,900 units. The iconic integrated development in Hanoi will feature three of Ascott’s lodging brands. It marks the introduction of The Crest Collection in Vietnam and Ascott The Residence in Hanoi, and will comprise Ascott’s fastest-growing brand Citadines Apart’hotel. The development is expected to open in phases from 2022.
In addition, Ascott is inking another Citadines property in Hanoi this month. It has also secured two management contracts for the first time in Lào Cai; a Citadines-branded serviced apartment and the first Préférence-branded hotel in Vietnam, the 167-key Paddy Field Hotel by Préférence in Sa Pa Town. Up to July this year, Ascott has already achieved a record of over 2,800 new units in Vietnam, exceeding its full-year signings in the country in the previous years.
Besides Vietnam, Ascott is also fast expanding in China, adding over 2,900 units across 12 properties in Hefei, Ningbo, Shanghai, Shenyang, Shenzhen, Wuhan, and Xi’an. This includes the debut of Ascott’s Citadines Connect brand of business hotels in China. To further expand its global portfolio, Ascott will also make its first foray into Senegal and has sealed new properties in Brisbane in Australia; Phnom Penh in Cambodia; Paris in France; Jakarta, Lampung, Lubuk Linggau in Indonesia; Kuala Lumpur, Putrajaya in Malaysia and Casablanca in Morocco. These newly secured properties are slated to open between 2022 and 2027.
Mr Kevin Goh, CapitaLand’s Chief Executive Officer for Lodging, said: “This year, we continued to achieve strong growth by stepping up our expansion with more management contracts and strategic partnerships. We have opened over 3,000 units in 13 properties in China, Indonesia, Japan, the Philippines, Singapore and Vietnam. We expect to open about 50% more units than last year. Property owners and capital partners continue to work with Ascott as they recognise our resilient business model, and the value we create through our strong operational capabilities and ability to innovate to capture new businesses. Ascott will continue to capitalise on our competitive edge in the long-stay lodging segment and seek synergistic opportunities towards adjacent sectors, such as multifamily properties and purpose-built student accommodation, to expand our presence globally.”
“The lodging management business is an important component of CapitaLand’s investment management strategy. The newly secured properties will increase Ascott’s recurring fee income as they open and stabilise, adding on to the over S$195 million in fee income contributed by our operational units in 2020. We have also increased our Fee Related Earnings (FRE) and expanded our Funds Under Management (FUM) to S$8 billion to date through a private fund as well as our sponsored Ascott Residence Trust. Ascott’s strong operating platform is well anchored by our fund and asset management capabilities. We will continue to build on this capital-efficient business model to earn an attractive FRE/FUM ratio, expand our capital partner base and increase recurring management fees,” added Mr Goh.
Since the onset of COVID-19, optimism within the serviced apartment sector is at an all-time high, according to the latest Association of Serviced Apartment Providers and Savills sentiment survey conducted in June 2021. Almost 90% of the respondents were ‘slightly or significantly more optimistic’ about their business outlook over the next 12 months. In addition, about 75% of the respondents expect occupancy levels to return to 2019 levels before the end of 2022.
Ascott achieves 100% occupancy in key cities in China
In China, Ascott continued to see a strong pickup in the demand for its serviced residences. Over the same period, the revenue per available unit of operating properties in the country exceeded pre-COVID-19 levels in 2019 and 2020 by 1% and 35% respectively. Total revenue has also increased by 6% and 38% in comparison to 2019 and 2020 respectively. Ascott achieved 100% occupancy across over 20 properties in more than 15 cities over the country’s five-day ‘Mini Golden Week’5 public holiday.
The 12 newly secured properties in China are set to open between 2022 and 2026. These new properties will grow Ascott’s total footprint in China to more than 34,600 units in over 170 properties across over 40 cities.