Appendix V Letter from the Market Consultant in Relation to Its Report on Hotel Sectors in Hangzhou, Qingdao Lake, Ningbo and Changchun
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THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX V LETTER FROM THE MARKET CONSULTANT IN RELATION TO ITS REPORT ON HOTEL SECTORS IN HANGZHOU, QINGDAO LAKE, NINGBO AND CHANGCHUN MARKET ASSESSMENT FOR NEW CENTURY HOTELS B2(e)(vii) CHINA [●], 2013 — V-1 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX V LETTER FROM THE MARKET CONSULTANT IN RELATION TO ITS REPORT ON HOTEL SECTORS IN HANGZHOU, QINGDAO LAKE, NINGBO AND CHANGCHUN TABLE OF CONTENTS 1 HANGZHOU MARKET .............................................. V-6 1.1 HANGZHOU OVERVIEW ........................................ V-6 1.2 XIAOSHAN HOTEL MARKET .................................... V-20 1.3 NEW CENTURY HOTELS IN XIAOSHAN — SWOT ANALYSIS ......... V-28 2 QIANDAO LAKE MARKET ........................................... V-30 2.1 QIANDAO LAKE OVERVIEW .................................... V-30 2.2 QIANDAO LAKE HOTEL MARKET ................................ V-36 2.3 NEW CENTURY RESORT QIANDAO LAKE HANGZHOU — SWOT ANALYSIS ........................................... V-44 3 NINGBO MARKET V-46 3.1 NINGBO OVERVIEW ............................................ V-46 3.2 NINGBO HOTEL MARKET ....................................... V-56 3.3 NEW CENTURY GRAND HOTEL NINGBO — SWOT ANALYSIS ........ V-68 4 CHANGCHUN MARKET ............................................. V-69 4.1 CHANGCHUN OVERVIEW ....................................... V-69 4.2 CHANGCHUN HOTEL MARKET .................................. V-78 4.3 NEW CENTURY GRAND HOTEL CHANGCHUN — SWOT ANALYSIS .... V-85 — V-2 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX V LETTER FROM THE MARKET CONSULTANT IN RELATION TO ITS REPORT ON HOTEL SECTORS IN HANGZHOU, QINGDAO LAKE, NINGBO AND CHANGCHUN Suite 2006 Central Plaza 18 Harbour Road Hong Kong Tel (852) 2524-6073 Fax (852) 2845-2008 www.horwathHTL.com [email protected] 浩華管理顧問公司 香港港灣道18號中環廣場2006室 電話: (852) 2524 6073 傳真: (852) 2845 2008 電郵: [email protected] 網址: www.horwathHTL.com [●], 2013 New Century Asset Management Limited (as Manager of New Century Real Estate Investment Trust) Level 18, No. 818 Shixin Middle Road, Xiaoshan District, Hangzhou, China [●] HOTEL MARKET ASSESSMENT FOR NEW CENTURY HOTELS IN HANGZHOU, QIANDAO LAKE, NINGBO AND CHANGCHUN INTRODUCTION Horwath HTL was engaged by New Century Asset Management Limited to provide an independent market assessment (“Market Study”) of the hotel sectors in Hangzhou, Qiandao Lake, Ningbo and Changchun in connection to the launch of a Real Estate Investment Trust (“REIT”) which has the inclusion of five proposed hotel assets — New Century Grand Hotel Hangzhou, New Century Hotel Xiaoshan Zhejiang, New Century Resort Qiandao Lake Hangzhou, New Century Grand Hotel Ningbo, and New Century Grand Hotel Changchun. This market assessment is prepared for the purpose of incorporation in the Document of the REIT and the information will form part of the Document for the launch of the REIT. DATE OF ASSIGNMENT The contract engaging Horwath HTL was executed on January 22, 2013. This report contains information, estimates and assumptions that reflect market conditions as of January 2013. — V-3 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX V LETTER FROM THE MARKET CONSULTANT IN RELATION TO ITS REPORT ON HOTEL SECTORS IN HANGZHOU, QINGDAO LAKE, NINGBO AND CHANGCHUN SCOPE OF SERVICES Our scope of work for each property comprises of the following content: • City Overview Regional context and background, economic overview, tourism statistics and transportation infrastructure overview. • Competitive Hotel Market Overview Review of each hotel market, highlighting historical performance, dynamics of each demand segment, future supply, market outlook, 5-year occupancy projections and ADR outlook. • Overview of Subject Properties SWOT of each subject property. STATEMENT OF PECUNIARY INTEREST We confirm that Horwath HTL has no pecuniary or other interest in the market that would conflict with proper assessment or could reasonably be regarded as being capable of affecting our ability to give an unbiased opinion. The position will be maintained until the purpose for which this Market Study is being obtained is completed. INFORMATION UTILISED Our review is based on information developed from research of the markets, discussions with professionals in the hospitality in the respective cities, certain information provided by New Century Asset Management Limited and Horwath HTL’s knowledge of the industry, which is integral to the outcome of our conclusions and estimations. We have also obtained data and information for this Market Study from a wide range of sources. Whist due care has been undertaken in the application of the information, Horwath HTL has no responsibility to warrant or represent that such information is accurate or correct. We also have no responsibility to update this Market Study for events and circumstances occurring after the date of issuance. ASSUMPTIONS This Market Study is based on current as well as the likely future market conditions as perceived by the markets. The estimation of the future demand and supply for the hotel markets may not materialise, and unanticipated events and circumstances may occur; therefore, actual results may vary from our estimates and the variations may be material. We do emphasize that the estimation of the future market conditions and outlook should be regarded as an indicative assessment of possibilities rather than absolute certainties. — V-4 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX V LETTER FROM THE MARKET CONSULTANT IN RELATION TO ITS REPORT ON HOTEL SECTORS IN HANGZHOU, QINGDAO LAKE, NINGBO AND CHANGCHUN The major findings and conclusions are based, in part, on the following critical assumptions: • There will be no political or administrative developments that will significantly impact general confidence in China, specifically in Hangzhou, Qiandao Lake, Ningbo and Changchun, to the detriment of business activity, tourist arrivals and domestic travel. • Support infrastructure such as fresh water, sewage treatment, electricity and gas will be supplied/ generated at a consistent and reliable level to maintain end-user satisfaction. • The existing transportation system to, from and within Hangzhou, Qiandao Lake, Ningbo and Changchun, will be maintained and improved to meet the accessibility requirements of the cities. • The economies of the major trading, investor and tourist generating countries to the PRC, specifically Hangzhou, Qiandao Lake, Ningbo and Changchun, will not experience significant and sustained recession in the near future. Yours sincerely, Nigel Summers Director Horwath HTL — V-5 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack. APPENDIX V LETTER FROM THE MARKET CONSULTANT IN RELATION TO ITS REPORT ON HOTEL SECTORS IN HANGZHOU, QINGDAO LAKE, NINGBO AND CHANGCHUN 1 HANGZHOU MARKET 1.1 HANGZHOU OVERVIEW 1.1.1 Location and Population Hangzhou is the capital of Zhejiang Province at a sub-provincial administrative level with a total population of 7 million by the end of 2012. It is also an important national tourist city with beautiful scenery and a famous city in history and culture affirmed by the State Council. Located at the southern wing of the Yangtze River Delta (YRD), at the west end of Hangzhou Bay, Hangzhou is one of the most important central cities in the YRD and a hub of transportation in eastern China. Hangzhou has enjoyed a history of over 2,200 years since the county administration was established in the Qin Dynasty and is one of the cradles of Huaxia (China) Civilization. As the exploration of the Kuahuqiao Site showed, as early as 8,000 years ago, there were human beings living in the Hangzhou area. The Liangzhu culture, over 5,000 years ago, was known as the Dawn of Civilization. Hangzhou, one of the seven ancient capitals of China, was the capital of Wuyu State, of the Five-Dynasties and also the capital of the Southern Song Dynasty. The following map indicates Hangzhou’s location relative to the rest of Zhejiang province: HANGZHOU’S LOCATION RELATIVE TO THE REST OF ZHEJIANG PROVINCE Source: www.chinahighlights.com — V-6 — THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject