CapitaLand’s fully owned serviced residence unit Ascott Ltd. will be investing US$25.9 million, or around S$35.4 million, for a 70 percent stake in Green Oak Hotel Management, which is the holding company for Tauzia Hotel Management, it said in a filing to SGX on Monday.
CapitaLand said US$12.95 million, or around S$17.7 million, has already been paid in cash, with up to US$12.95 million to be paid via annual payments over five years, subject to adjustments.
The seller of the stake, Tauzia Business Development, will continue to hold the remaining 30 percent of Green Oak Hotel Management, it said.
Tauzia, which is one of Indonesia’s top five hotel operators, has a network of 122 hotels in operation and under development under several different brands in Indonesia, Malaysia and Vietnam, it said.
Most of its hotels are in key cities in Indonesia, such as Jakarta, Bali, Bandung, Surabaya and Yogyakarta, with about 70 percent catering to business and convention travelers and 30 percent targeted at the leisure market, it said.
Ascott said the instant boost of around 20,000 units from the deal would put its total at more than 94,000 units globally, above its 2020 target of 80,000 units.
“While Ascott’s serviced residences continue to see strong demand from expatriates and corporate travelers, we can capitalize on significant opportunities in the middle-class business hotel segment which is expanding at an unprecedented rate,” Kevin Goh, Ascott’s CEO, said in the statement.
“Tauzia’s fastest growing mid-tier business hotels will enable us to capture the ballooning middle-class segment in Asia, which will be home to two-thirds of the world’s middle-class by 2030,” he added.
Goh said Ascott would use its global network of around 100,000 corporate clients to bring Tauzia’s offerings to international markets. He noted that before the investment, Ascott had 10 business hotels with about 2,000 keys, adding that on top of Tauzia’s units, he saw the potential to add another 20,000 keys over the next five years in Southeast Asia.