Singapore-based extended stay specialist The Ascott has outlined its strategy for accelerated growth.
CapitaLand Investment’s (CLI) wholly owned lodging business unit shared its business outlook in a panel discussion at a recent gathering of over 200 institutional investors, bankers and market analysts.
Positive trajectory
During the event, Ascott outlined the strategic thrusts of its lodging business, riding on post-covid travel recovery to enter a phase of accelerated asset-light growth.
Kevin Goh, CEO, CLI Lodging and The Ascott Limited, shared during the panel discussion: “The recovery of the lodging sector has accelerated alongside the rapid lifting of travel restrictions starting second quarter of 2022.
“At the end of the third quarter, Ascott’s revenue per available unit was pacing close to pre-pandemic levels in 2019. We expect our serviced residences, which have the flexibility to cater to both short- and long-stay customers, to further bolster revenues. Beyond the initial travel rush, growth of the hospitality sector is on a positive and sustainable trajectory.”
Business model
Ascott detailed that its business model is powered by two engines of growth. The investment management engine is anchored by the listed CapitaLand Ascott Trust (CLAS) and its private funds, while the lodging management engine powers the growth of room units across its portfolio of product brands.
The firm believes that it can harness the synergy of its owners’ network, product branding and local expertise, and that it is well-positioned to scale fund and lodging management fees.
Asset-light growth
Ascott is embarking on an increasingly asset-light growth, with over 80% of its properties currently signed under management and franchise contracts, up from 39% in 2011. The long contract duration, for 10+10 years, is said to help to build a stable recurring income stream for Ascott. In the first half of this year, Ascott signed more than 7,500 new rooms and opened over 4,500 rooms.
With the acquisition of Oakwood in July, it has achieved a net room growth of 15%, expanding its global presence to more than 150,000 units in about 900 properties across over 200 cities. This follows a string of prior strategic investments which include the acquisition of Quest Apartment Hotels and substantial investment in Synergy Global Housing – both in 2017. In 2018, Ascott acquired Tauzia Hotel Management.
Global portfolio
Managing both short and long-stay lodging requirements, the group continues to drive lodging options that allow for the flexibility to pivot based on demand across geographies, aimed at ensuring resilience across business peaks and troughs. For example, the lyf brand was created to appeal to the next-generation travellers. The brand has gained traction in the coliving space since its debut in 2019. Now with 21 lyf properties and 13 more under development, Ascott is confident of the brand’s potential and is targeting to sign 150 properties by 2030.
Projects underway include lyf Malate Manila, a 202-room development arriving in the Filipino capital in Q3 2023; the150 -key lyf Thao Dien Saigon, landing in Vietnam’s capital, Ho Chi Minh City, in 2024; and lyf Shougang Park Beijing adding 200 rooms to the Chinese capital in Q4 2024.
Unlocking potential
Goh added: “Ascott has a resilient and differentiated business model and we will continue to build on our strength as an integrated lodging player across the real estate value chain. Our portfolio of brands caters to different types of travellers, from short stay to long-term guests and our strategy is to focus on unlocking their full value potential.
“From 2017 to 2021, Ascott has had five consecutive years of record signings, in spite of covid. We are keeping pace in 2022 as well. Ascott is on track to achieving its target of 160,000 units globally by 2023.”
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The Ascott is a Singapore company that has grown to be one of the leading international serviced residence owner-operators.
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