Why brand repositioning requires careful scrutiny | Hospitality Investor
Oct 15, 2024
By Isobel Lee
Selecting the right brand as part of a hotel repositioning can change the asset’s future in a fundamental way, but plenty of nuance remains around brand choice, delegates heard at the IHIF Asia.
Tim Alpe, managing director, TriO Capital, welcomed a panel of owners and operators who had successfully repositioned properties and were embarking on expansion strategies with the brands they loved.
Rakesh Patel, CEO and Founder, Alta Capital Real Estate, said that his firm – which invests in “both physical assets and operating platforms” – liked “lifestyle as a broad sector” with a particular focus on “sub-sectors including wellness and boutique luxury”. He explained that the fund had pounced on an opportunity to invest in two lifestyle brands, Vikasa and Teardrop Hotels, through which it was pursuing growth.
“Vikasa is currently a single wellness retreat in Koh Samui, but we are building a second in Phuket and aim to go to five locations in the coming years. Teardrop, a boutique luxury concept in Sri Lanka, currently comprises seven properties, and we plan to grow to ten,” he said. For Patel, these brands present an opportunity to “scale and grow” while optimising returns. He added: “The bulk of our focus is still a return on a physical asset – we are looking for a two-times return on the physical, while the brand is a multiplier on top of that.”
Expansion across Asia
Hostel and hotel giant Generator is expanding beyond its European and US core markets into the Middle East and Asia-Pacific regions. Anmol Bhojwani, Generator’s head of development, Asia Pacific & Middle East, said that expansion plans commenced around 24 months ago and that “APAC has a few bright spots for us… we can’t see it slowing down”. The group has recently signed a partnership with Thailand’s Dusit Hotels and Resorts for mutual, global expansion. Asian growth is centering around “highly compressed markets, well-connected city centre or resort locations with high demand and restrictive supply” he said, including cities like Sydney.
Daniel Yip, partner, High Street Holdings Singapore, also shared that his firm was in growth mode with some key brand collaborations. He said that the QT Singapore had just opened, a partnership with EVT which had brought the luxury lifestyle hotel brand to Southeast Asia for the first time. “We have always liked the QT brand – it works well from a food and beverage (F&B) perspective as well – and we are already working with EVT in Brisbane and Sydney,” he said. “Other factors were that they were relatively flexible – we did the management contract in just three weeks. We completed the transaction on 1 December, closed the hotel on 1 April and are reopening in September following a full gut of the building.” He added that although the brand was relatively unheard of in Asia, QT was “in expansion mode”.
Rahul Parrab, co-founder and CEO, Ark Capital Partners, described a similar, recent punt on a growing brand, bringing Ennismore portfolio brand Hyde to Perth, Australia. “We had a beautiful building in Perth and we saw a great opportunity,” Parrab noted. He described the hallmarks of the Perth market as “lots of domestic travel… and strong inbound flows from Asia, such as Singapore and Malaysia – really good luxury travel that has pulled up the rates and needs to be supported by an infrastructure that can really drive loyalty”. He said that they had also been looking for a brand which could support a “local Perth identity”, adding – “when our friends come from Sydney, we want them to stay here”.
For Parrab, choosing Hyde meant the opportunity “to really target and engage with customers that want to spend a little bit more and really enjoy that space”. He concluded: “Within the Ennismore portfolio there is a very strong F&B prioritisation, and I think Hyde particularly leans into that. This hotel has a significant street frontage which really resonates with a strong restaurant, bar and terrace, and with Hyde openings in Ibiza, Bodrum, Johannesburg and London this month, it’s an increasingly recognisable name.”
Yip added that from his perspective, being a family office often “gives them an edge” when closing contracts. “Banks are very much our friend, but we are a bit less reliant on them, so we can be a bit more flexible as to when we take out debt or when looking at LTVs,” he said. “Deals during Covid closed quickly.”
He said that his firm also “talks to a lot of other family offices” who are monitoring the dynamic evolution of brands. “Everyone is talking about lifestyle, but the new generation of hotel owners really does want to make their mark on a property whether through F&B or the right operator, and that is making a difference,” he said. “Although rooms are getting smaller, than no longer means you are just limited to a handful of brands.”
