HVS Monday Musings: ‘Vaccine Confidence’ is Driving the Recovery in the Global Travel Sector

By Mandeep S Lamba and Dipti Mohan
The largest vaccination drive is currently underway across the world and is helping in the revival of the global travel sector.

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Four Points by Sheraton Sydney Sold to KSL Capital Partners in Australia

Australia-based Schwartz Family Company (“Schwartz”) has entered into a binding agreement with US-based private equity firm, KSL Capital Partners (“KSL”), to sell its Four Points by Sheraton Sydney, Central Park for approximately AUD150 million. Opened in late 2018, the 297-key hotel is located in Sydney Central Business District, within the Central Park mixed-use development. It features a restaurant and bar, 551-square-metre meeting space and a fitness centre. Development approvals were also granted for the hotel to add eleven new rooms and a distillery along with an enclosed outdoor terrace. With strong corporate and leisure demand, the hotel achieved an average occupancy of 85% in its first full year of operation in 2019. In the long term, the hotel is expected to benefit from the emerging innovation and technology precinct near Central Station zoned out by the NSW Government. The acquisition is expected to further bolster KSL’s investment portfolio in Australia, which includes a majority stake in luxury lodge operator, Baillie Lodges.

USD1 Billion Hotel Project Commenced in Phú Yên Province, Vietnam

Indochina Kajima, a joint venture owned by Vietnam-based property developer, Indochina Capital, and Japan-based property developer, Kajima Corporation, has commenced a USD1 billion resort project along Bãi Nồm’s coastline. Situated in Phú Yên Province, a coastal province on the south-central coast of Vietnam, this luxury resort project covers 60-hectare of land and 35-hectare of water surface. Slated to complete in 2023, the resort will feature clutches of private pool villas and state-of-the-art recreational facilities. The dual investors had the ambition to build one of the most outstanding hotspots in Asia and place Phú Yên on the world’s luxury tourism map, together with the completed expansion of the nearby Tuy Hòa Airport to handle wide-bodied aircraft and five million passengers a year. Earlier in April, Vietnam-based real estate developer, Everland Group, has started the construction of two other luxury resorts in the province at an estimated cost of USD95.1 million: Xuân Đài Bay and Crystal Holidays Marina Phú Yên, bringing an additional 1,200 keys to the hospitality market in Phú Yên. Indochina Kajima has also invested part of the USD1 billion in the first international standard hotel brand in Vietnam, Wink Hotels, with a chain of 20.

Hong Kong to Launch Cruise to Nowhere in Late July

On 26 May 2021, Hong Kong’s Secretary for Commerce and Economic Development, Edward Yau Tang-wah, mentioned that cruises to nowhere can operate under stringent measures in late July 2021. Passengers and crew members would have to be fully vaccinated against COVID-19 and screened for the coronavirus within 48 hours prior to departure. In addition, crew members have to undergo compulsory quarantine upon arrival in Hong Kong while passengers have to use the government’s risk-exposure app “Leave Home Safe” before and after boarding. Ships can only operate at half capacity. Dream Cruises has since announced that they would be the first ship to restart sailing in Hong Kong and would offer a two-night and three-night package in time for the summer holidays. This initiative was part of a series of strategic plans announced by the Hong Kong Tourism Board during the annual Tourism Update event on 18 May. Other initiatives that were also mentioned are the Hong Kong Neighbourhoods campaign, the Holiday at Home platform, and the Open House Hong Kong platform. These initiatives aim to facilitate a safe and progressive tourism recovery and prepare Hong Kong for the return of international travel.

Rottnest Island Lodge Site to be Revamped into AUD40 Million Luxury Resort

On 20 May 2021, the Rottnest Island Authority awarded a Perth-based consortium as the preferred proponent for the redevelopment of Rottnest Island’s Lodge site. The consortium companies, Place Development Australia (“Place Development”), GPA Pty Ltd, and Sirona Capital, have proposed a resort with an estimated cost of AUD40 million. Designed by Fremantle architects Spaceagency, the resort will consist of upgrades towards the existing building, such as the various lakeside villas and accommodations, and the construction of new buildings that will integrate the entire property into its surrounding environment. The resort will feature a total of 94 keys, with facilities ranging from a day spa, restaurants, beach lounge, bars, a new pool and onsite staff quarters. Upon the lease expiration of the current lease on 31 May 2022, Place Development is expected to take over the leasehold tenure of the lodge site and begin construction. The redevelopment is slated to be completed in 2025. Tourism Minister David Templeman mentioned that he is delighted that the consortium is leading this project and is confident that this resort would revamp and stimulate tourism towards the Rottnest Island.

Absolute Share Price Performance, as on 28 May 2021