HVS Monday Musings: Why is Franchising Still Struggling to Make a Breakthrough in Indian Hotels Sector?

By Akash Datta and Dipti Mohan
This article discusses some of the reasons why franchising, which is the most popular model in mature hospitality markets, is still struggling to make a breakthrough in the Indian hotels sector.

To view and download the full article, please click here.

Blackstone to Acquire Eight Hotels from Japan’s Kintetsu

Japanese-based railway company, Kintetsu Group Holdings (“Kintetsu”), will sell a portfolio of eight hotels to US-based investment fund, The Blackstone Group (“Blackstone”) at an undisclosed sum. The Japanese media estimated the sale to be approximately JPY60 billion (USD550 million). The entire portfolio consists of 2,294 rooms, and Kintetsu will continue to operate the properties with the current team and the hotel names will remain unchanged. Within the portfolio, there are three prime assets including the 988-room Miyako Kyoto Hachijo, located across Kyoto station, the 456-room Universal City, adjacent to Universal Studios Japan in Osaka, and the newly built 208-room Miyako Hakata, next to Hakata station in Fukuoka. The remaining five properties, a mix of upscale hotels and resorts are located around key tourist destinations within the Greater Osaka and Nagoya regions, with the smallest property being the 30-room Miyako Kobe Kitano hotel. Christopher Heady, the head of real estate in Asia for Blackstone commented that the sale gives Blackstone a unique opportunity to access a sizeable, high-quality hotel portfolio in Japan’s top hospitality markets. As of 31 March 2020, the properties had a book value of JPY42.3 billion (USD390 million), with Miyako Hakata alone accounting for JPY14.3 billion.

Beachcomber Hotel Acquired by Oscars Hotel Group for AUD20 Million in Australia

Australia-based hospitality company, Oscars Hotel Group (“Oscars”), announced their AUD20 million acquisition of the Beachcomber Hotel after operating under a single owner for 25 years. Situated within Toukley, a town in New South Wales Central Coast, the 79-key hotel features a 100-metre lake frontage and a private pier. The hotel group mentioned that they aim to relaunch the property into a modern beach club and resort complex, marketing the complex as a hip weekend getaway for those seeking “good vibes and lakeside relaxation” while providing an integrated hospitality experience. Spanning across one hectare, the complex will feature an 80-key upscale resort, numerous indoor and outdoor bars, restaurants, six function rooms, gaming and bottle shop facilities, a 20-metre pool, sauna, gymnasium, wellness services and a three-level carpark. Prior to this acquisition, Oscars’ portfolio consists of 31 hotels across New South Wales, including The Como Hotel, The Belvedere Hotel and Towradgi Beach Hotel.

Australia Lifts Travel Ban on New Zealand Ahead of the Trans-Tasman Travel Bubble

From 22 March 2021, Australian citizens and those who have been in Australia for at least 14 days will be able to travel to New Zealand without applying for exemptions. However, travellers will still have to be quarantined for 14 days upon arrival. New Zealand’s Prime Minister Jacinda Ardern revealed that the quarantine travel phase will soon end, and the two-way, quarantine-free trans-Tasman travel bubble between the two nations will be announced on 6 April 2021. While using the bubble, both nations have the rights to stop flights when an outbreak occurs. Ms Arden reminded the public that outbreaks would still be possible and to ensure that the virus does not return to New Zealand, travellers from New Zealand will have to risk being trapped in Australia. Kiwis will also not be covered by travel insurance if an outbreak leaves them stranded. When the bubble opens, the New Zealand airport will likely be separated into “Green Zones” and “Red Zones” where the former will be used by domestic and bubble travellers while the latter will be for travellers to be quarantined.  Air New Zealand stated that non-stop flights will be launched between Auckland and Tasmania once the bubble starts.

Third Round of South Australia Travel Vouchers to Boost Tourism

A third round of South Australia’s (“SA”) Great State Voucher Program will be launched after the Easter weekend and April school holiday period. The voucher aims to entice more Australians to spend on tourism in South Australia to boost the tourism sector during the quieter and cooler months. Previously, the first two rounds of vouchers generated more than AUD32 million for SA’s economy. The third round of vouchers, worth AUD50, AUD100 and AUD200, will be available to South Australians and a limited number of interstate tourists. An estimated 500 tour operators are expected to register their experiences, including hosted tours or adventures such as shark-cage diving, helicopter tours, wildlife experiences and guided food and wine trails. Tour operator EscapeGoat Adventures’ Deborah Fehler mentioned that tour operators would greatly benefit from the tourism vouchers. She added that as two-thirds of SA’s tourists were overseas and interstate visitors, she hopes that South Australians would travel and spend in SA just like how they would do when travelling interstates or overseas. The SA government stated that a system will be introduced to distribute the vouchers fairly and equitably.

Absolute Share Price Performance, as on 2 April 2021