Landmark M&A transactions highlight hospitality allure

June 21, 2023 | 11:54
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The hotel and resort segment is proving enticing to foreign investors in mergers and acquisitions.

The ibis Saigon South and Capri by Fraser were among the latest transactions announced last week by JLL Hotels & Hospitality Group.

Landmark M&A transactions highlight hospitality allure
Investors are seeking quality hotels in the post-pandemic landscape

In its latest announcement, JLL said that a landmark transaction, including two developments in Vietnam and one in Indonesia, settled for $106.1 million, marking the first hotel portfolio sale in the Southeast Asia region for 2023. Three hotels are strategically located in the key gateway cities of Jakarta and Ho Chi Minh City, representing 632 rooms.

“Investors are extremely confident on the fundamentals of Southeast Asia’s hotel space. The sale of this unique hotel portfolio not only underscores the resurgence of deal activity in Southeast Asia, but also reinforces the ongoing recovery of cash flows of hotels in the region,” says Julien Naouri, SVP of Investment Sales in Asia-Pacific for JLL Hotels & Hospitality Group.

The Capri by Fraser and ibis Saigon South are the only internationally branded hotels situated in walking distance of offices tenanted by multinational companies and the Saigon Exhibition and Convention Centre, the city’s largest exhibition facility.

“Despite macroeconomic headwinds, the project was completed within six months of its launch, reinforcing the strength of JLL’s global investment advisory network. Through our deep understanding of the local markets, we successfully navigated the intricacies of the investment environment, identifying the right buyers and achieving optimal outcomes for our client,” said Nihat Ercan, CEO in Asia-Pacific for JLL Hotels & Hospitality Group.

As a consultant who regularly contacts investors, Phan Xuan Can, chairman of Sohovietnam, a company specialising in the transfer and sale of real estate projects, said that there were currently a number of domestic and international investors with capital resources in hand, looking for 4-star and 5-star hotels.

“The asking price of hospitality in this period is softened significantly compared to before the pandemic, with more opportunity open for both buyers and sellers,” Can said.

Potential buyers are funds specialising in hotel and resort investments from wealthy families around the world. These funds have clear strategies and criteria for the Vietnamese market.

“After the pandemic, they all see this as an opportunity to buy quality hotels in Hanoi and Ho Chi Minh City, or in coastal areas like Phu Quoc, Nha Trang, and Hoi An. The portfolio that these funds have is usually 5-7 hotels worth about $50-70 million per asset,” Can said.

The second potential group is foreign companies and corporations operating in other fields, such as essential consumer goods and medical equipment, and want to expand their portfolio into the hotel and resort segment.

In the past 10 years, Vietnam market has been the focus of the property mergers and acquisitions sector with dozens of deals carried out involving foreign capital. The most favoured destinations are Ho Chi Minh City, Hanoi, Danang, Phu Quoc, Dalat, and Quang Nam.

Hanoi and Ho Chi Minh City both have a hotel merger and acquisition (M&A) market outperforming the rest, while the latter is the leader in terms of transaction value across the country.

In the past, Ho Chi Minh City was not only the centre of high-class hotel M&A transactions on a national level, but also entered the top 10 most popular hotel M&A deals in the Asia-Pacific region.

Among the deals were Indochine Park Tower, Movenpick Saigon, Riverside Serviced Apartments, New World Saigon Hotel, Duxton Hotel Saigon, and Intercontinental Asiana Saigon.

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By Ngoc Anh

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