Exclusive: Why Ace was the right play for Seibu Prince

SINGAPORE — Seibu Prince’s acquisition of Ace Hotel is about fueling the company’s expansion outside of Japan, which will primarily be in luxury and lifestyle, a top executive for the company said at the 35th annual Hotel Investment Conference Asia Pacific (HICAP).

We would like to make sure that Ace maintains its strengths and original identity, while we work together to have more Ace hotels globally. I’m sure Ace will expedite our global expansion when talking about luxury.

Chris Penn

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“Our expansion outside Japan will be in luxury and lifestyle… Ace Hotel is among the highest standards and highly recognized globally. It has a very interesting, distinctive and unique DNA,” said Yoshiki Kaneda, president and representative director for Tokyo-based Seibu Prince Hotels Worldwide.

Seibu Prince acquired Ace Group International and its eight-property (1,400 rooms) Ace Hotel brand and in-house creative agency Atelier Ace for $90 million in September. Ace will operate as a U.S.-based subsidiary of SPW, retaining independence and creative direction.

Kaneda said Seibu Prince wants to help Ace maintain its high standards while also using the company as a vehicle for its global expansion into luxury.

“We would like to make sure that Ace maintains its strengths and original identity, while we work together to have more Ace hotels globally,” he said. “I’m sure Ace will expedite our global expansion when talking about luxury.”

Ace Hotel CEO Chris Penn spoke about the day on stage during a panel on Day 2 of HICAP. It came from a question about the relationship between owners and operators.

Ace Hotel CEO Chris Penn

“It’s a relevant answer to what we’ve been through recently, because you spoke about alignment, and particularly broad alignment,” Penn said. “I’m very fortunate, because I’ve just spent probably the best part of six months discussing strategy with a new owner.”

Penn said those conversations have led to what he calls “the best part” of the two companies’ journey together.

“There is real alignment at the moment because we’ve spent the time together to really understand strategy and build strategy together. So, we’re very clear collectively about what the next 10 years needs to be, what Ace can do, what [Seibu Prince] can do and how we can work together to drive that growth and ambition over the next 10 years,” he said. 

Q&A with Seibu Prince president

After his panel, Kaneda sat down with Hotel Investment Today for an exclusive interview about the deal and Seibu Prince's future plans. 

Kaneda said the acquisition gives Seibu Prince its first lifestyle brand.

“Lifestyle provides a custom experience and, as you know, many of the lifestyle brands have been taken by large, international hotel companies,” he said. “Seibu Prince didn’t have a lifestyle brand. Ace Hotel and Seibu Prince Hotel have the same vision and we both respect our local communities.

Lifestyle provides a custom experience and, as you know, many of the lifestyle brands have been taken by large, international hotel companies. Seibu Prince didn’t have a lifestyle brand. Ace Hotel and Seibu Prince Hotel have the same vision and we both respect our local communities.

Yoshiki Kaneda

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“Ace is quite unique and a very creative brand. I believe Ace was also looking for a partner and someone they could grow together with.”

Ace also gives Seibu Prince a stronger foothold in the U.S. through its hotels in New York City, Brooklyn, Seattle, and Palm Springs. But Kaneda said the expansion for Ace wouldn’t just be limited to the U.S. (he mentioned Europe and Asia Pacific as potential expansion locations).

At the same time, Kaneda added, “The U.S. is a very important market and the right place for us to grow.”

Since the acquisition, Kaneda said there have been many inquiries about future expansion, but he doesn’t see rapid expansion.

“Ace Hotel is not like a cookie-cutter,” he said. “They’ll decide [the best location] and what’s the best offer.”

When asked about Seibu Prince's growth, he said the company is well positioned to create more opportunities.

“We focus on luxury, particularly outside of Japan, because the people who stay in luxury are not necessarily [worried about price]. It’s a different level of niche,” he said.

Kaneda said he is also bullish on the hotel market in Japan in general because of record numbers of inbound visitors (last year the country had a record high of 37 million visitors, and it’s set to exceed 40 million this year).

“Most of the required infrastructure, transportation, cleanliness, safety in Japan [is already there]. So, I believe it will keep growing,” he said.

He also mentioned that 60% of inbound tourists are only visiting Tokyo, Kyoto, and Osaka, and thinks there is much more Japan can offer those visitors on return visits.

“That is still a small portion of Japan,” he said. “There are many, many other destinations in Japan.” 

When asked where in Asia Pacific Kaneda would like Seibu Prince grow, he noted that Southeast Asia will continue to be a focus for the company, but he also mentioned capital or gateway cities in Australia as attractive options.