Salter
Brothers has been busy snapping up hospitality assets in its home market
Australia. It now has a big appetite for Asia as well and is hiring the right
talent as a first step.
Salter
Brothers is opening an office in Singapore and has started talks with investors
to launch a hospitality fund focusing on Asia.
The investment
manager, a star hotels acquirer in its home market Australia post-COVID, has
set its sights on close neighbor Asia, excluding China, for the first time. In
an interview with Hotel Investment Today, Managing Director Paul Salter reveals
their Asia plans are immediate, not eventual.
“We did a number of
investor meetings to determine interest before we decided to set up in Asia, in
Singapore specifically,” he said, adding hiring has started and an announcement
will be made of the new team and structure when confirmed.
Of the new fund,
Salter said, “We’re just working through exactly what the mandates will be in
terms of geographies, investment style, return criteria, et cetera. Once we’ve
finished that, which will probably be towards the end of this year, we’ll
launch one, or maybe two, hospitality-focused funds with an Asian slant, for
sure. We’re still working through whether that will be individual countries or
pan-Asia.”
There is good tailwinds for institutional capital investment into the region in hospitality.
Paul Salter
What’s almost
certain is it won’t include China. “China is an investment market of its own, a
strategy by itself,” Salter said. “People that are investing in China aren’t
likely to want to mix it with a pan-Asian strategy.”
Why Asia now?
The move into Asia
is fueled by demand for hospitality asset class.
“Firstly, there is
demand from institutional investors for hospitality. Secondly, in this part of
the world, there is a good appetite for real estate investments. So, there is
good tailwinds for institutional capital investment into the region in
hospitality,” Salter said.
Moreover, the
Blackstones and Brookfields of the world have put out to the press that the two
big themes in which they will be investing a lot of capital are hospitality and
travel and leisure. “So many of the institutional investors that previously
hadn’t look too hard at the sector are now thinking a lot more seriously about
it. That's the flavor we’re getting,” he said.
“We’d probably be
more focused on institutional investors than high net worth individuals,
although HNWIs and family offices in Asia are well-known for their hospitality
investments. Mixing capital partners is sometimes problematic with issues such
as investment timeframes, returns requirements, et cetera. And institutional
capital likes to invest with institutional capital if they are going to be
co-mingled, in a JV or whatever the case may be.”
No retreating
The Asia drive
coincides with the company’s recent launch of Salter Brothers Hospitality, a
single platform that amalgamates all the core functions needed to manage its
recent serial acquisitions of luxury boutique and lifestyle retreats in Australia.
Tash Tobias, formerly with IHG, has been named CEO, overseeing the operations
of the portfolio.
Spicers Peak Lodge, Queensland, Australia
Currently it
includes Spicers Retreats (acquired in December 2022), Milton Park (March 2023)
and Escarpment Group (May 2023), creating a total of 17 operating retreat
hotels and estates, 20 hatted restaurants and bars, eight spas under the Spa
Anise brand and other wellness facilities, and Spicers Scenic Rim Trail, which
includes five camp sites with a total of 38 rooms.
Furthermore, Salter
Brothers in June also launched its own retreat brand, Ardour, to complement
Spicers Retreats. Ardour has a larger key count of 30-100 rooms compared with
the all-suite Spicers with 20-30 keys. It is events-driven – think group
celebrations or corporate retreats – compared with the all-inclusive Spicers,
which also has a higher level of service due to its smaller size.
With retreats
expertise, coupled with investment management chops, “we feel really pretty
well-placed to expand the business to Asia,” Salter added.
But the primary
focus of the Asian expansion is still M&A and managing the acquired assets
under the new platform, rather than third-party management, i.e., providing the
platform and capabilities on a white-label basis to assets it does not
necessarily have an ownership interest in. “That’s probably a stage two,” Salter
said, adding there is a gap for it.
“Third-party
management is a well-understood model in the U.S. and Europe [where franchise
agreements are more predominant than HMAs and third-party managers are hired to
manage the assets.] But in this part of the world [Australia and Asia], there
aren’t many third-party managers. As the market matures, we believe that will
become an alternative owners want to think about,” Salter said.
Large and
small
In Asia, Salter
Brothers intends to invest in both large assets with international brands
attached to them, as it has done in Australia – the latest being the
acquisition of Sofitel Adelaide – and in retreats.
“In Asia there are
lots of retreats and resorts that don’t necessarily fit with one of the large
brands. So, it’s important for us to have this boutique [management] capability
for opportunities that aren’t appropriate for those large platforms,” he said.
Salter Brothers in July acquired the Sofitel Adelaide
The luxury
lifestyle space is not well-addressed today, according to Salter. “We believe
by bringing a product to a state of luxury lifestyle, delivering the service
and facilities you’d expect, and running on a centralized platform, you can
achieve outsized returns. Most of these assets never have the scale of a
centralized platform and the backbone of revenue management, reservation
systems, property management systems – all of those elements that, as an
individual owner with one property, can’t afford to invest.
“So, we think it’s
a case of putting value-add capex in these assets and lift them to the right
quality, then run them with the best people with the best systems. Then you’ll
be able to achieve higher performance from when you bought them,” he said.
We’re definitely pushing hard into Asia. We’re still doing development in the U.S. but in pushing for new acquisitions, Asia is our focus, and we’ll continue to invest in Australia.
Paul Salter
There could be
Spicer or Ardour retreats in Asia, along with Spa Anise. “That’ll be one of
Tash’s [Tobias] remits, how to put those brands onto more assets in Australia,
New Zealand and Asia-Pacific,” Salter said.
Currently Salter
Brothers has A$3 billion worth of hospitality assets under management, comprising
35 properties with a total of 5,000 keys. Most are in Australia although it has
forayed into the U.S. with a luxury hotel in Charlotte, North Carolina, and an
upscale hotel in Greenbelt, Maryland.
When asked if the focus
has shifted from the U.S. to Asia, Salter said, “We’re definitely pushing hard
into Asia. We’re still doing development in the U.S. but in pushing for new
acquisitions, Asia is our focus, and we’ll continue to invest in Australia.
“Asia is going to be
a great market for hospitality in particular over the next 10 years. So, we’re
very excited about expanding the business into Asia.”