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THE ANNUAL HVS ASIA-PACIFIC Apichaya Wongsuwan OPERATOR GUIDE Analyst (AS OF 31 DECEMBER 2019) Pawinee Chaisiriroj Senior Manager 2020 EDITION | EXCERPT (FULL VERSION IS AVAILABLE FOR PURCHASE AT US$800) Daniel J Voellm Managing Partner

HVS | Level 7, Nan Fung Tower, 88 Connaught Road Central, Forward

A refreshed design for the Hotel Operator Guide brings us into a new decade which from the get-go is beset with new challenges. While the industry struggles during the COVID-19 pandemic on an unprecedent scale, many development projects continue to move forward. Owners, now more than ever, need foresight in selecting the right partner to run their hotel property. This publication is the most established tool in the industry in Asia Pacific to guide owners in understanding the scale, presence and capabilities of operators in the region. HVS has advised numerous owners in the decision-making process to select the right structure and operator for their projects and assist in negotiating favorable terms. Great importance is ascribed to the confidence an owner can take in the operator being familiar with the intricacies of doing business in the locale and the brand delivering the topline performance according to its positioning. That being said, motivations among owners in selecting an operator vary, and criteria and objectives can call for a more creative approach and thinking outside the box.

We greatly appreciate the support from all participants of this guide to provide a more comprehensive profile of our industry in the region. Should you want to participate in the next edition of the guide, please do reach out to us. Daniel J. Voellm, MRICS Managing Partner, Asia Pacific In this Seventh Edition, we have captured over one million existing and more than half a million pipeline rooms spread over 7,148 properties. This publication features 55 operators and we look forward to have more brands included in forthcoming editions. Our analysis covers 33 countries and territories in Asia-Pacific and 1,133 markets with existing as well as 832 markets with proposed hotels. Special thanks also go to my co-authors Pawinee Chaisiriroj and Apichaya Wongsuwan from our Bangkok office who liaised with the operators and compiled that data, presenting you with an important resource in our HVS library. Happy reading and stay safe!

As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE I Overview

The graph below presents the data collection of The Annual HVS Asia-Pacific Hotel Operator Guide over the past seven editions. Between the 2014 Edition and the 2020 Edition, the existing room supply, and the pipeline room supply registered growth rates of 9.9% and 14.2% per annum, respectively. The annual growth between pipeline room supply and existing room supply hovered between 50% to 60% mark in the past, with the exception of the 2015 Edition and 2020 Edition, where the growth was observed at 64% and 63%, respectively.

Existing Pipeline Pipeline/Existing Growth Existing Supply Growth 1,600,000 70% CAGR YE2014 – YE2019 1,400,000 1.3 Million Properties +13.8% 1,200,000 Rooms +9.9% 60% 1,000,000 0.8 Million

Hotel Rooms Hotel 800,000 600,000 50% Growth Pipeline/Existing 400,000 Pipeline Supply Growth CAGR YE2014 – YE2019 200,000 0 40% Properties +19.4% 2014 2015 2016 2017 2018 2019 2020 Rooms +14.2% Edition Edition Edition Edition Edition Edition Edition

Between YE2018 and YE2019 data, the existing properties and the existing room supply registered growth rates of 20.1% and 13.9%, respectively. Similarly, the pipeline supply posted healthy double-digit growth of 31.3% in properties and 14.2% in room supply.

As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE II Geographic Distribution: Existing Supply TOP 5 EXISTING ROOMS SUPPLY

China 649,043 Rooms

Australia 106,460 Rooms

Indonesia 101,840 Rooms South Korea 4%

Thailand 82,662 Rooms China 48% 6%

Japan 78,633 Rooms India 5% Hong Kong SAR 2%

Thailand 6%

Malaysia 3% Given its sheer size, China dominates the market in terms of 3% geographic distribution for existing inventory at 48%. The top five countries have over one million rooms in inventory combined. Indonesia 7% Other significant markets in terms of existing hotel rooms include India, South Korea, , Singapore, and Hong Kong SAR.

Australia 8%

As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE III Geographic Distribution: Pipeline Supply TOP 5 PIPELINE ROOMS SUPPLY

China 504,245 Rooms

Indonesia 56,378 Rooms

Thailand 49,198 Rooms South Korea 1% Japan 2% Vietnam 46,595 Rooms China 58%

India 41,052 Rooms India 5% Approximately 40% of the new supply is under construction, while 45% has signed either a Letter of Intent/Memorandum of Understanding or Thailand 6% Philippines 3% management agreement. Vietnam 5% Malaysia 4%

TOP 10 PIPELINE SUPPLY BY DEVELOPMENT STATUS

Pre-Opening LOI/MOU signed Contract signed Under Construction Initial Planning Expansion Indonesia 7% 100%

80% Australia 3% 60%

40%

20%

0%

Excludes properties with development status not identified

As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE IV Existing Supply and Pipeline Supply by Operators

Existing Rooms Supply Pipeline Rooms Supply

45 Operators with Less than 21,100 rooms

40 Operators with Less than 11,000 rooms

The top five recorded a market share of 67% by existing room The top four operators posted the largest market share of 63% inventory. While Asia Pacific trailed behind Marriott by the number of pipeline properties. Each of the top four International by just 1,437 rooms in YE2018, Accor Asia Pacific operators recorded over 100,000 rooms in the pipeline supply. reported 2,674 rooms higher than in Hilton ranked second, trailing behind Marriott International by YE2019. Okura made it to the top ten list with approximately 24,000 rooms. approximately 21,500 rooms.

As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE V Existing Supply and Pipeline Supply by Brands

Existing Rooms Supply Pipeline Rooms Supply

InterContinental; 2% ; 2% Hilton Garden ; 2% ; 3% ; 2% by Wyndham; 3% DoubleTree by Hilton; 3% Novotel; 3% ; 3% Hilton; 3% Inn; 3% ; 3% Marriott Hotels & ; 3% ; 3% Hilton; 4% Sheraton Hotels; 4%

Holiday Inn Express; 5% Crowne Plaza; 4%

Super 8 by Wyndham; 6% ; 5%

267 Brands with 253 Brands with Less than 30,000 Less than 18,200 rooms; 66% Rooms; 67%

Given the prevalence of multi-brand operators, the brand The brands in the pipeline are leaning toward a mix of limited landscape is subject to a higher degree of fragmentation. With and full service. Hampton by Hilton and Holiday Inn Express its notable presence in China, the economy scale chain each has 5% of the market share. Full-service brands including has the largest market share of 6%, followed by full-service Hilton, Marriott Hotels & Resorts, Holiday Inn, Mercure, brands such as Crown Plaza and Sheraton Hotels, accounting DoubleTree by Hilton, Novotel, and Crowne Plaza have 21% of for 4% each, respectively. the market shared combined.

As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE VI Top 10 Existing Room Supply by Markets

Tokyo Chengdu The ten leading markets feature approximately 350,000 branded hotel rooms or 26% of the total sample. 24,449 rooms

Seoul 24,887 rooms 67,864 rooms Shanghai has the largest number of branded rooms supply of 67,844 rooms, which is equivalent to 5% 7% of the total sample. Three out of the top ten 7% 19% markets are urban cities in China. recorded 25,139 rooms just under 25,000 hotel rooms as of year-end 2019 7% and made it to the top ten list.

Beijing 7% 14%

26,404 rooms 8% 47,746 rooms Jakarta 11% 10% 10% Bangkok

27,278 rooms Hong Kong Singapore 39,575 rooms

34,184 rooms 34,233 rooms

As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE VII Existing & New Supply Growth

The size of the bubble in the chart represents the growth rate between existing and pipeline branded supply. Changsha and Pattaya recorded the largest growth in supply, with a pipeline of 143% and 121% of their existing room supply, respectively. Aside from the top two markets mentioned, most markets in the graph have a pipeline that is between 26% and 106% of their existing room supply. All these markets are likely to experience some level of moderating performance in the medium term until the new supply is absorbed.

30,000 30,000

25,000 25,000

Chengdu Shanghai 20,000 20,000 Xi'an Hangzhou Shenzhen Bangkok 15,000 15,000 Jakarta Nanjing Phuket Changsha Kuala Lumpur Beijing 10,000 10,000

Branded Supply Pipeline Supply Branded Sanya Pattaya Branded Supply Supply Pipeline Branded Suzhou Tianjin 5,000 5,000 Manila

0 0 0 0 5,000 10,00010,000 15,000 20,00020,00025,000 30,000 30,00035,000 40,000 45,00040,00050,000 55,000 50,00060,000 65,000 70,000 ExistingExisting Branded Branded Supply

As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE VIII Net Room Growth

Ranked by a very important KPI in the industry – net room growth – there is a mix of small and large operators at the top. Capella Hotel Group posted the highest net room growth of 142% whereas in absolute terms it ranked 29th with 541 rooms added. In absolute terms, InterContinental Hotels Group claims the top spot for the largest supply added in YE2019 at 21,966 rooms.

Largest room supply added at 21,966 rooms 160% 142%

120%

80%

26% 24% 40% 31% 19% 17% 15% 14% 13% 13% 0% CAPELLA HOTEL NEW CENTURY R O S E W O O D D U S I T F A R E A S T HILTON J U M E I R A H ONYX MELIA HOTELS K E M P I N S K I GROUP HOTEL GROUP HOTEL GROUP INTERNATIONAL HOSPITALITY GROUP HOSPITALITY INTERNATIONAL H O T E L S S A MANAGEMENT GROUP

Rooms Added Net Room Growth Rooms Added Net Room Growth

1 Capella Hotel Group 541 142% 11 InterContinental Hotels Group 21,966 13% 2 New Century Hotel Group 10,499 31% 12 Hotel Shilla 621 13% 3 Rosewood Hotel Group 1,863 26% 13 Hotels Corporation 4,875 11% 4 1,355 24% 14 Cross Hotels & Resorts 126 10% 5 Far East Hospitality Management 835 19% 15 Banyan Tree Holdings Limited 474 9% 6 Hilton 13,986 17% 16 Oakwood Worldwide 578 9% 7 Group 138 15% 17 Swiss-Belhotel International 1,069 9% 8 Onyx Hospitality Group 1,098 14% 18 Accor Asia Pacific 18,472 9% 9 Melia Hotels International 625 13% 19 Pan Pacific Hotels Group 739 8% 10 Hotels SA 1,179 13% 20 Okura Nikko Hotels 1,623 8%

As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE IX Management Structure – Existing Supply

Management Structure for Existing Hotels Most properties are being operated via a Hotel Management

3.3% Agreement (HMA), followed by Franchise. Others management 6.5% 0.1% structure may include owned-operated or leased. White Label is HMA relatively new and witnesses a smaller portion compared to other type Franchise of management structure. Taking a closer look at franchising, most 27.1% Others franchise agreements are established in South Korea, China, India, Not Identified 63.0% Japan, and Australia. The brands strongest in franchising are typically in White Label the budget and midscale positioning.

Top 10 Franchise Brands by Number of Rooms Management Structure by Top 10 Geographic Distributions

25% HMA Franchise White Label Others China 20% Australia Indonesia 15% Thailand Japan 10% India South Korea 5% Malaysia Singapore 0% Hong Kong SAR 0% 20% 40% 60% 80% 100% Excludes properties with management structure not identified

As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE X Management Structure – Pipeline Supply

Management Structure for Existing Hotels In the pipeline, almost 650,000 rooms or 75.1% will be operated under a Hotel Management Agreement (HMA) structure, followed by 22.0% 1.6% 1.2% for a franchise agreement. Pipeline supply witnesses a smaller portion 0.1% 22.0% HMA of Others management structure (owned-operated model) compared Franchise to the existing properties as several operators are moving toward asset Not Identified light strategy. Additionally, more countries in the region are expected to Others increasingly see franchise agreements structure moving forward. In 75.1% White Label terms of the brands, ibis and Hampton by Hilton continue to rank in the top five franchise brands in both existing and pipeline supply.

Top 10 Franchise Brands by Number of Rooms Management Structure by Top 10 Geographic Distributions

30% HMA Franchise White Label Others China 25% Indonesia 20% Thailand Vietnam 15% India Malaysia 10% Australia Philippines 5% Japan 0% South Korea 0% 20% 40% 60% 80% 100% Excludes properties with management structure not identified

As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE XI Table of Content

Operator Operator Accor Asia Pacific 1 Marriott International 29 Akaryn Hotel Group 2 Melia Hotels International 30 Archipelago International 3 Minor International Public Company Limited 31 Banyan Tree Holdings Limited 4 New Century Hotel Group 32 Belmond 5 Oakwood Worldwide 33 International 6 Okura Nikko Hotels 34 Capella Hotel Group 7 Onyx Hospitality Group 35 Centara Hotels & Resorts 8 Outpost 36 Club Med 9 Outrigger Hospitality Group 37 Cross Hotels & Resorts 10 Ovolo Group 38 Dorsett Hospitality International 11 Pan Pacific Hotels Group 39 Dusit International 12 Park Hotel Group 40 Event Hospitality & Entertainment 13 Pragma Hospitality Company Limited 41 Far East Hospitality Management 14 Prince Hotels and StayWell Holdings 42 Four Seasons Hotels and Resorts 15 43 Galaxy Entertainment Group 16 Red Planet Hotels Incorporated 44 Hilton 17 Regal Hotels International 45 Hotel Shilla Company Limited 18 Rosewood Hotel Group 46 Hyatt Hotels Corporation 19 Soneva 47 InterContinental Hotels Group 20 Standard International 48 Jinmao (China) Hotel Investments and Management Limited 21 Swire Hotels 49 Jumeirah Group 22 Swiss-Belhotel International 50 Kempinski Hotels SA 23 51 Langham Hotels and Resorts 24 Urban Concepts 52 Lanson Place Hospitality Management Limited 25 Wharf Hotels Management Limited 53 Lotte Hotel 26 Wyndham Hotels & Resorts 54 Lub d 27 Yotel Limited 55 Mandarin Oriental Hotel Group 28

As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE XII Year Established: 2010 Regional Headquarters: Bangkok Sample Hotel Total # of Brands: 2 Total # of Employees: 1,000

This page illustrates a sample data presentation of each hotel operator.

Number of Existing Rooms by Brand Number of Existing Rooms by Country/Region Management Structure For Existing Property Existing Pipeline

HMA Franchise Properties 20 5

Thailnad White Label Others Rooms 4,000 2,000 Brand 1 Rooms YoY 5% 2% Singapore 6% Countries 5 2 Cities 6 2 12% Hong Kong SAR Top Location by Hotel Rooms Singapore 1,400 China 23% 59% Brand 2 Bangkok 1,000

Phuket 600 Maldives Hong Kong 500

0 500 1,000 1,500 2,000 2,500 3,000 0 500 1,000 1,500 2,000 Shanghai 400 YE 2018 YE 2019 YE 2018 YE 2019

Number of Pipeline Rooms by Brand Number of Pipeline Rooms by Country/Region Management Structure For Pipeline Property

HMA Hotel Image

Brand 1 Thailand

Brand 2 Hong Kong SAR Hotel Image

100% 0 200 400 600 800 1,000 1,200 0 200 400 600 800 1,000 1,200 LOI/MOU signed Contract signed Initial Planning LOI/MOU signed Contract signed Initial Planning

Under Construction Pre-Opening Under Construction Pre-Opening As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE XIII About HVS About the Authors

HVS, the world’s leading consulting and services organization focused Apichaya Wongsuwan is an Analyst at HVS Bangkok. She holds a Master in on the hotel, mixed-use, shared ownership, gaming, and leisure Global Hospitality Business from Ecole hôtelière de Lausanne in Switzerland in industries, celebrates its 35th anniversary in 2015. Established in 1980, partnerships with Hong Kong Polytechnic University and University of Houston – the company performs 4,500+ assignments each year for hotel and real Conrad N. Hilton College. Prior to joining HVS, she launched a in Thailand estate owners, operators, and developers worldwide. HVS principals are with her Bachelor of Science from the University of Delaware. regarded as the leading experts in their respective regions of the globe. Through a network of more than 35 offices and more than 500 [email protected] +66 80 961 0200 professionals, HVS provides an unparalleled range of complementary services for the . HVS.com Superior Results through Unrivalled Hospitality Intelligence. Everywhere. Pawinee Chaisiriroj is a Senior Manager at HVS Bangkok, providing a range of consulting and advisory services for the hospitality industry in the Asia Pacific region. Prior to joining HVS, Pawinee gained experiences in hotel operations with HVS ASIA PACIFIC is represented by seven offices in Hong Kong, the Ritz-Carlton, Mandarin Oriental and Four Seasons. Pawinee holds an Honours Bangkok, Beijing, Mumbai, Shanghai, Shenzhen and Singapore. HVS Bachelor of Arts Degree in Hospitality Management with Real Estate Finance and hosts important industry events in the region, including the Revenue Management from Glion Institute of Higher Education in Switzerland. Investment Conference (CHIC) in Shanghai, now in its 14th year and [email protected] +66 91 107 0270 various HVS Hotel Market Connections events and Learning Seminars. Additionally, HVS publishes a wide range of leading research reports, articles and surveys, which can be downloaded from our online library. Daniel J Voellm, Managing Partner HVS Asia-Pacific is based in Hong Kong and The team has worked on a broad array of projects throughout the asset has provided advice in all major markets across 18 countries in the region. Daniel life-cycle that include economic studies, hotel valuations, operator Voellm started his career at HVS in the New York office; as Vice President at the search and management contract negotiation, development strategies global headquarters he conducted a wide range of appraisals and market studies for new brands, hotel asset management, research reports and as well as underwriting due diligence services in 22 US states and in Canada. investment advisory for hotels, resorts, serviced residences and branded Daniel brings a strong understanding of the hospitality industry to HVS. His residential development projects. HVS Hong Kong’s clients include key experience in hotel and food and beverage operations in Germany, Switzerland, England and the US is complemented by an Honours Bachelor of Science degree investors, developers, hotel operators and lenders. from Ecole Hôtelière de Lausanne in Switzerland. Daniel works closely with key institutional and private owners of hotel properties, financiers, developers and investors, and has gained a strong understanding of their investment requirements and approaches to assessing the market value of investment properties. Daniel further advises on property and concept development and strategy.

[email protected] +852 3628 3871

As of December 2019 HVS HOTEL OPERATOR GUIDE 2020 | PAGE XIV