Chip Eng Seng enters hospitality management JV with Ariva Hospitality

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Chip Eng Seng has entered a joint venture with Ariva Hospitality to provide management, marketing, training and advisory services to hotels and serviced residences, the company said in a filing to SGX Monday. 

“The group has been exploring opportunities to broaden its hospitality business portfolio by acquiring hospitality assets as well as by building up its capability to provide management services to hotels and serviced residences,” Chip Eng Seng said in the statement.

“The provision of management services to hotels and serviced residences will be a complementary extension of the group’s hospitality business. It is an asset-light strategy which will broaden the income stream and increase recurring income,” the company said.

Chip Eng Seng said the joint venture will leverage on Ariva Hospitality’s experience in the industry as a hospitality management business focusing on serviced residences.

The joint venture, called CES-Ariva Hospitality, will be 70 percent owned by Chip Eng Seng’s wholly owned subsidiary CES Hospitality, with the remainder to be held by Ariva Hospitality, the filing said. 

CES Hospitality has contributed S$350,000, which will be funded by internal resources, while Ariva Hospitality is expected to contribute S$150,000, the filing said. 

The joint venture partners have agreed to provide CES-Ariva Hospitality with a loan facility of up to S$10 million to fund working capital requirements, the filing said.

Ariva Hospitality currently provides hospitality management services to serviced residences in Singapore, Malaysia and Thailand, the filing said.

Under the joint venture agreement, Ariva Hospitality is subject to non-compete and non-solicitation requirements, and will only be permitted to continue its existing management agreements until those contracts expire and it won’t renew those deals, the filing said.

Ariva Hospitality is an indirect wholly owned subsidiary of Tang Dynasty, which is wholly owned by Gordon Tang, Celine Tang and Yang Chanzhen, who is Gordon Tang’s mother, the filing said. Gordon Tang and Celine Tang are the controlling shareholders of Chip Eng Seng, the filing said.