CEO Kevin Goh joined HICAP Conversations to discuss new
opportunities in Asia Pacific and Ascott’s shift to asset light growth.
SINGAPORE – The Ascott Ltd. is focused on adapting existing
brands to meet emerging needs of its guests. That was a big message from CEO
Kevin Goh, who participated in the HICAP Conversations – Third Edition on
August 20 hosted by The BHN Group and Hotel Investment Today.
Take, for example, its emerging flex hybrid concept for its
serviced residences. Rather than creating a separate brand for every typology,
Gow said Ascott adapts its existing brands across a range of property types to
cater to different travel purposes and lengths of stay.
The flex hotel-in-residence model enables Ascott to cater to
varying lengths of stays and different guest profiles with the convenience of
services, facilities and amenities of a hotel. Room options range from studio
apartments, penthouse suites to connecting and dual-key units.
During COVID, we noticed that in our service apartment product were maintaining a 40% to 50% occupancy, which was more than enough to pay for bills and to be able to generate a little bit of profit for the owner. So, that is actually a very attractive proposition to owners to say that they can have a hybrid model.
Kevin Goh
“During good times, we can lean a lot more to the shorter
stay segment, where we can yield up profits for owners,” Goh explained. “During
leaner times, like for instance during COVID, we’ll lean into the longest stay
segment. During COVID, we noticed that in our service apartment product were
maintaining a 40% to 50% occupancy, which was more than enough to pay for bills
and to be able to generate a little bit of profit for the owner. So, that is
actually a very attractive proposition to owners to say that they can have a
hybrid model. They can flex between long and short. They can decide where in
the spectrum they want to play depending on the economic cycles.”
Ascott, big picture
Looking more broadly at new opportunities, Goh said Ascott’s
growth is anchored in Asia’s dynamic markets, these being Southeast Asia,
alongside India and China. Currently, The Ascott lodging portfolio exceeds
1,000 properties across operational and pipeline assets.
Southeast Asia contributes over 30% of Ascott’s total
revenue and accounted for more than half of Ascott’s global signings last year.
India, on the other hand, is a high-potential frontier for
Ascott, according to Goh, due to increasing urbanization, a growing middle
class, and an appetite for global hospitality standards. “We are actively
expanding our footprint, starting with strategic gateway cities,” he said. “We
have a target to double our portfolio in India to 12,000 units by 2028, up from
about 5,500 units at the end of 2024.”
Ascott plans to achieve a 20% annual growth rate over the
next five years in the Middle East, Africa, and Turkey. The company aims to
steadily grow its regional presence toward 15,000 units in operation or under
development by 2030, leveraging its flexible living portfolio and
experience-led hospitality models. Strategic growth in Saudi Arabia and the
United Arab Emirates anchors Ascott’s expansion plans. In Saudi Arabia, the
company intends scaling operations across Riyadh, Jeddah, Makkah, Madinah and
key secondary cities.
Quest is one of our bigger franchise operations down in Australia, with Australia and New Zealand close to 200 properties. We are also signing franchise contracts across Singapore, Europe and other countries like Thailand and Malaysia.
Kevin Goh
Looking at China, Goh said they used to only have maybe
about 10 properties there in 2008 versus some 230 today in to city with robust
domestic demand. “We continue tapping into its domestic travel momentum through
management and franchise partnerships, such as our collaboration with Jin Jiang
Hotels to scale brands like Quest,” Goh said.
He also pointed to developing countries like Indonesia,
Vietnam and Philippines, where there has been a lot of construction and Ascott
has been more management contracts in the last two or three years.
“What we are focusing on a lot more is asset-light growth
through management contracts and franchises,” Goh said. “We’ve been very
focused on building distribution, whether it’s a loyalty program or direct
distribution with our corporate clients.
“We are very focused on operational efficiency, and we are
also moving a lot into the franchise space,” Goh continued. “Quest is one of
our bigger franchise operations down in Australia, with Australia and New
Zealand close to 200 properties. We are also signing franchise contracts across
Singapore, Europe and other countries like Thailand and Malaysia. So, I do see
ourselves doing a lot more in this space, and we’re also going into new product
groups, for instance, branded residences and resorts typologies. Whether it’s a
business park or a city, our brands can actually traverse all these different
locations.”
Franchise growth
The shift to franchise again is an adaptation for The Ascott
has Gow said owners become more sophisticated and want to self-operate.
“In Asia, a lot of hotel companies are actually more doing
management contracts,” Gow added. “But I think slowly and surely, the shift of
mindset is to do more franchises as owners want to do more themselves. It is
becoming more and more apparent.”
Their collaboration with Jin Jiang Hotels in China is a
prime example – leveraging franchise-ready infrastructure, scale and local
expertise, and Ascott’s experience in operating international-class serviced
residences to accelerate franchise-led growth.
Our expertise in design and service delivery is also valued by the market. So, many owners with whom we have a management contract with are also coming to us to say, ‘can we do the brand and residence together with you?’
Kevin Goh
Goh said Ascott is also making good progress with
franchising the Citadines brand in China, supporting its ambitions to scale
quickly across tiered cities.
He added that in Europe, a mature franchising market, Ascott
is seeing strong interest from partners keen to work with their brands.
Co-living, branded resi
The Ascott is also active in the co-living space with its
lyf brand, the first which opened in Singapore in 2019 and today has about 50
properties either open or in the pipeline in cities like Paris, Sydney,
Melbourne, Kuala Lumpur and Bangkok, according to Goh.
Ascott wants to grow co-living to 150 properties by 2029,
Goh added, and sees the concept growing in popularity with next-gen travelers.
With a tagline “experiential-led social living,” Ascott is
creating more of a retail product, looking at it from a rent per square meter
perspective, Goh said. Self-contained rooms are 15-16 square meters and much
larger social spaces include co-working, social kitchens and communal
interaction with more guests staying on property.
“From a revenue stream perspective, we get high rate per
square meter, but we also get ancillary income for all the other activities
that we’re organizing,” Goh said. “I see that as a win- win product. It is
attractive for the guests and, on the other hand, it’s actually very profitable
for the owner.”
The other segment Goh talked about was branded residential,
“a reflection of what the market demands,” he said.
“We are seeing more and more signings in this area. We feel
that our brand has good traction with many markets that we have been in for 40
years,” Goh said. “Our expertise in design and service delivery is also valued
by the market. So, many owners with whom we have a management contract with are
also coming to us to say, ‘can we do the brand and residence together with you?’”
Goh said he sees a lot of residential traction in Asian
especially, Malaysia, Vietnam, Singapore, Philippines and the like.