Tuesday, June 15, 2010

In-demand Ibis on Bencoolen is up for sale

Hotel attracts interest, could fetch more than $200m

(SINGAPORE) Ibis Singapore on Bencoolen, a three-star hotel that opened its doors in February last year, has been put up for sale via a private tender.

Results of the tender will not be out until next month, though market watchers are guessing that the 538-room hotel could fetch more than $200 million.

Ibis Singapore is owned by hospitality group Accor and real estate investor LaSalle Investment Management in a 30:70 venture. Accor also owns the Ibis brand. According to past reports, the partners put in $145 million to develop the hotel at Bencoolen Street after winning the tender for the site in 2006.

Jones Lang LaSalle Hotels is handling the tender. According to its managing director of investment sales in Asia Mike Batchelor, the private tender began last month. As part of the deal, Accor will continue to operate the hotel under a long-term management agreement, meaning that the Ibis brand will stay.

The owners have been receiving 'a number of unsolicited approaches from investors' to buy Ibis Singapore, he told The Business Times. As a result, 'they decided to formally offer the asset for sale.'

Interest in the hotel has come mainly from private families and high net worth individuals, from not just Singapore but also regional countries such as Malaysia and Indonesia, Mr Batchelor added.

Market watchers felt that Ibis Singapore is a fairly attractive asset, given that it is new, well located, and has been performing relatively well. Accor Asia Pacific spokesman Evan Lewis said that for the last three months, the hotel has 'achieved occupancies in the mid-90 per cent with an average rate of around $140.'

A consultant who declined to be named pointed out that 'hotels in Singapore are very difficult to come by' so there will be demand. 'It's only about whether the pricing is sensible enough,' he said.

Another consultant felt that there is an insufficient number of good three-star hotels here. This puts Ibis Singapore in good stead, especially with property funds returning to scout for investments. 'There's quite a lot of money starting to come back globally,' he said.

With Singapore's hospitality industry picking up, some market observers even suggested that it might be better to sell the hotel later, when it might fetch a higher price.

'Most hoteliers would want to hold on to their properties given the robust outlook' for the hospitality sector, an analyst said. One reason is that the integrated resorts could draw more tourists later.

In April, the number of visitors to Singapore grew 20.4 per cent year-on-year to 938,000. Consultancy HVS Global Hospitality Services recently projected that the average room rate will rise 10-15 per cent this year from $191 last year.

Within the hospitality industry, fears of an oversupply of hotel rooms have started fading. Some upcoming hotels include Park Regis Singapore and Ibis Novena.

Source: Business Times, 15 Jun 2010

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