Ascott invests $35m in Indonesian hotel chain

Yello Hotel Manggarai Jakarta. Tauzia's in-house lifestyle brands include Harris hotels, Fox Harris hotels, Yello hotels and Pop! hotels. Most of Tauzia's hotels are located in Indonesia, with close to 60 per cent in key cities such as Jakarta, Bali,
Yello Hotel Manggarai Jakarta. Tauzia's in-house lifestyle brands include Harris hotels, Fox Harris hotels, Yello hotels and Pop! hotels. Most of Tauzia's hotels are located in Indonesia, with close to 60 per cent in key cities such as Jakarta, Bali, Bandung, Surabaya and Yogyakarta.PHOTO: THE ASCOTT LTD

CapitaLand's wholly owned serviced residence business unit, The Ascott Ltd, has invested US$25.9 million (S$35.4 million) for a 70 per cent share in Indonesia's Green Oak Hotel Management (GOHM).

The investment in GOHM, which is the holding company of Tauzia, one of Indonesia's top five hotel operators, is part of Ascott's strategy to grow its hospitality business.

With the addition of Tauzia, Ascott's portfolio will increase by close to 20,000 units in 122 hotels across Indonesia, Malaysia and Vietnam, and comprise 94,000 units globally, exceeding its 2020 target of 80,000 units.

Ascott paid US$12.95 million for the acquisition yesterday, with the remainder to be paid annually over five years, up to an aggregate amount of US$12.95 million. The annual payments will be computed using a formula relating to the number of hotel rooms opened in certain hotels managed by GOHM in the relevant year, subject to certain adjustments.

Most of Tauzia's hotels are located in Indonesia, with close to 60 per cent in key cities such as Jakarta, Bali, Bandung, Surabaya and Yogyakarta. About 70 per cent of its hotels cater to business and convention travellers, while the rest are targeted at leisure travellers.

"While Ascott's serviced residences continue to see strong demand from expatriates and corporate travellers, we can capitalise on significant opportunities in the middle-class business hotel segment, which is expanding at an unprecedented rate," said Ascott's chief executive officer Kevin Goh.

"With our investment in Tauzia, we look forward to accessing this market, which is one of the fastest-growing segments of the hotel industry."

 

The acquisition is not expected to have any material impact on the net tangible assets or earnings per share of the CapitaLand group for the financial year ending Dec 31, 2018, the group said.

A version of this article appeared in the print edition of The Straits Times on September 18, 2018, with the headline 'Ascott invests $35m in Indonesian hotel chain'. Print Edition | Subscribe