Property firm Heeton Holdings aims to scale up its hospitality business as part of its diversification strategy, possibly rolling out its new Luma brand hotels to more markets.
Heeton, along with three consortium partners, opened the first Luma Concept Hotel in Hammersmith in London last month. The firm has a 60 per cent stake in the the joint venture.
Chief executive Eric Teng said the firm is "test-bedding" the new hotel concept which is shorn of the usual facilities - such as a restaurant, bar and pool - but is focused on offering four-star-quality rooms.
"From our in-house research, we found that guests either don't use the facilities much or they are out of the hotel most of the time. We recognise a gap to fill - where a lot of people want good-quality rooms but limited services usage," Mr Teng noted.
Luma Concept Hotel, the eighth hotel property owned by the Heeton-led consortium, has 89 rooms.
The hotel portfolio now comprises 1,048 rooms in Japan, Britain and Thailand. Two more hotels are in the pipeline: in Fortitude Valley in Brisbane, Australia, and in Leeds, Britain, to be run by Hilton.
As a listed firm, we are always looking for recurring income, and hospitality is ideal partly because it's a cash-flow business.
MR ERIC TENG, chief executive of Heeton Holdings, who is confident that hospitality will be a business that has good prospects for the firm.
Mr Teng told The Straits Times in an interview last week that he hopes the segment will contribute to a "significant" portion of its revenue, although he declined to provide any target or projection.
The hospitality business accounted for nearly 14.6 per cent, or about $9.8 million, of Heeton's revenue in the 2016 fiscal year ended Dec 31. That is up sharply from $5.8 million booked in the year before.
Heeton entered the hospitality sector in 2011 by buying the Mercure Hotel Pattaya in Thailand.
Since then, it has expanded rapidly, acquiring three hotels last year - ibis Hotel Gloucester, Holiday Inn Express Hotel Manchester City Centre in Britain and a hotel building in Sapporo City, Japan.
Mr Teng is confident that hospitality will be a business that has good prospects for the firm.
"As a listed firm, we are always looking for recurring income, and hospitality is ideal partly because it's a cash-flow business," he added.
Another reason, Mr Teng said, is to overcome the issue of "lumpy" income from the property development business.
Apart from building up the hotel segment, the firm is also looking to secure development sites in Singapore, including from public tenders and the collective sale market.
Its tender for three Government Land Sales plots this year have all been unsuccessful.
Heeton's most recent private residential project here was the 56-unit Onze@Tanjong Pagar, which obtained its temporary occupation permit in January. There were 38 units sold at an average price of $2,378 per sq ft (psf). The firm is considering raising the price for the remaining units amid a more stable property market and also because of the project's freehold tenure and prime location. "District 9, 10 and 11 are going at $2,500 psf to $2,800 psf; this is a prime area and has good value, so I would consider increasing prices," Mr Teng added.
Despite recent bullish land bids and healthy new home sales, Mr Teng remains "cautiously optimistic" about the property market outlook. This is owing to the number of unsold units - both completed and uncompleted ones - in the market as well as the still lacklustre resale segment, he noted.