The Ascott Ltd., the lodging business fully owned by CapitaLand Investment Ltd. (CLI), has achieved its target of securing 160,000 units by 2023. The Singapore-based company has signed more than 4,000 units in Q1 this year.
Focusing on growth, Ascott aims to double fee revenue to over S$500 million ($374.64 million) in the next five years. The fee revenue target is set off the FY 2022 base of S$258 million ($193.31 million), Ascott’s highest earning on record.
Fee revenue from the lodging business jumped 36% YOY in FY 2020 on the back of record signings and property openings, demonstrating Ascott’s significant contribution to fee-related earnings to CLI’s overall business.
RECORD NET ROOM GROWTH
Ascott also reported peak net room growth of 20% in FY 2022, underpinned by the acquisition of Oakwood. This increased its portfolio by around 15,000 units, 8,000 of which were operating units that contributed to fee revenue. Over the last five years, Ascott expanded its operational units from over 56,000 in 2018 to over 95,000 in 2022.
In 2023, the company hopes to open more than 13,500 units in more than 70 properties. Ascott will grow its product offerings portfolio, which includes serviced residences, hotels, co-living and senior living brands, positioned from mid to luxury scale. Fee revenue growth is likely to be fueled by new property openings and new signings at an expected annual net room growth rate of 8-10% in the next five years.
“With our asset-light strategy, Ascott has doubled in units every five years, growing from about 20,000 units in 2008 to over 160,000 units today. We are now seeing the positive financial impact of growing our portfolio by eight-fold and will focus on driving even stronger fee growth over the next five years,” said Ascott and CLI Lodging CEO Kevin Goh. “Over 80% of our total units are under management and franchise contracts, up from 43% 10 years ago. These management and franchise contracts typically have sticky recurring fee revenue and long tenures.”
OPERATING PERFORMANCE
Ascott demonstrated strong operating performance in FY 2022, with a 40% YOY surge in REVPAU with the recovery of international travel.
The company has deployed significant resources for a global Brand 360 exercise to position its brands so that it can cater to guests across age groups and varying sets of expectations. Brand 360 initiatives have resulted in higher customer satisfaction rates, positive reviews and more loyalty.
Membership of Ascott Star Rewards, Ascott’s loyalty program which was launched in the latter half of 2019, grew by 36%, with member revenue increasing five-fold from 2021.
PLANS FOR 2023
To achieve their new growth target, Ascott plans to secure more management and franchise contracts for prime properties, which will generate higher quality fees and leverage the company’s brand equity and direct distribution channels to deliver more value to property owners and customers, according to Goh.
The company will also increase the number of openings and ramp up efforts to elevate its strategically located properties into flagship assets. Some properties include The Robertson House by The Crest Collection in Singapore, The Cavendish London and Citadines Saint-Germain-des-Prés-Paris, which will be rebranded under The Crest Collection.
“Besides powering growth organically, we will also actively seek strategic merger and acquisition opportunities to accelerate our ambition to be a significant global player in the lodging space. With vertically integrated capabilities, we can also leverage our strong investment and asset management capabilities to expand through our sponsored lodging trust and private funds,” Goh said.
SIXTH YEAR OF RECORD SIGNINGS & OPENINGS
In Q1 2023, Ascott added more than 4,000 units across 20 properties located in Shanghai and Shenzhen in China; Bali and Gorontalo in Indonesia; Fukuoka and Osaka in Japan; Kuala Lumpur and Penang in Malaysia; and Chonburi in Thailand. The company’s growth this year builds upon its record growth of nearly 33,000 units across 160 properties in 2022.
The company grew its presence in key cities, including Vienna in Austria; Chengdu, Chongqing, Guangzhou, Sanya, Shanghai, Suzhou, Xi’an and Zhuhai in China; Goa in India; Jakarta in Indonesia; Penang in Malaysia; Ho Chi Minh City in Vietnam; Bron in France; Djibouti in Africa; Antalya in Turkey; and Al Khobar in Saudi Arabia. These properties are expected to open between this year and 2028.
Thanks to the recovery of international travel, Ascott saw record openings in 2022, launching more than 9,300 units in 4 properties.
This year, in the first three months, the company opened over 920 units in six properties, including Ascott Dadonghai Bay Sanya in China.
Following the relaxation in travel restrictions in China, inquiries have surged and average daily reservations volumes for Ascott’s assets in China soared by nearly 150% this March compared to December 2022. The company is looking to attract more travelers as the frequency of flights continues to normalize and return to pre-pandemic levels.