Hotels & Hospitality Group May Hotel Destinations Indian Ocean

Transcription

1 Hotels & Hospitality Group May 2015 Hotel Destinations Indian Ocean

2 Welcome to the May 2015 edition of our Hotel Destinations Indian Ocean publication, an annual overview providing a snapshot of key hotel markets around the Indian Ocean. As you browse through this report, you will find a selection of notable hotel trends, recent transactions, upcoming new projects and a summary of key market statistics for each destination. Enjoy the read and look out for the next edition! Scott Hetherington Chief Executive Officer, Asia JLL Hotels & Hospitality Group

3 Sri Lanka Contents Sri Lanka: Island on the Rise Is Eco-Tourism a Viable Investment? International Visitor Arrivals in Seychelles Maldives Mauritius 10 Destinations 10 Maldives 11 Mauritius 12 Seychelles 13 Sri Lanka Quick Facts Contributors

4 Island on the Rise With unforgettable beaches, culture and landscapes as well as an array of sumptuous new hotels, Sri Lanka is truly coming into its own as a highend destination for tourists

5 Hotel Destinations Indian Ocean 05 To say that 2009 was significant for Sri Lanka would be to understate the case. It was the year that the country s protracted civil war finally ended, bringing to a close over two and a half decades of conflict. Not only did the new peace mean a clean break from a tragic era, it acted as the launching pad for the country s journey towards becoming a rising star of world tourism, as well as being a serious contender at the luxury end of the spectrum. There was never any doubt about Sri Lanka s potential, even during the tough times. The teardrop-shaped island off India s south-eastern flank has inspired everyone from Arab traders who named the island Serendib, the source material for the word serendipity to the British colonists who settled during the years of empire. Modern visitors, too, have found themselves seduced by the nation s tropical bounty of beaches, mountains and jungle as well as its abundant animal and marine life, and rich Buddhist and Hindu cultures. We have always had a five-star island, says Hiran Cooray, Chairman of Jetwing Hotels, Sri Lanka s most prominent domestic hotel chain. Now it is just a question of harnessing these attributes to make it truly a five-star destination. All the signs currently point towards success. Visitor figures have more than tripled from around 500,000 in 2003 to over 1.5million in 2014 the country s best ever year. The Sri Lankan Tourism Development Authority (SLTDA) is now targeting 2.5 million annual arrivals in 2016, which amounts to a compounded annual growth of over 25% year on year. Taking heed of these overwhelmingly positive numbers, a clutch of big name hotel brands are now either entering Sri Lanka or expanding their portfolios in the country. The debut of Thailand s luxury Anantara brand in Sri Lanka is due in the third quarter of 2015 with the Anantara Tangalle Resort slated to open on the country s south coast. The Anantara Kalutara, adjacent to the existing Avani Kalutara Resort, also on the south coast of Sri Lanka, is scheduled to commence operations at the same time. Sheraton, Hyatt and Moevenpick have all announced hotel projects in the capital, Colombo, while other big hotel firms with their sights set on the country include Shangri-La and Marriott. The addition of these major players will complement an existing hotel sector that has been burnished by the presence of several acclaimed independent boutique hotels as well the award-winning Amangalla and Amanwella run by the Aman Resorts group. Domestic chains such as Jetwing are also making significant investment in order to improve and expand their hotel inventory. The company is set to unveil new luxury properties in the capital Colombo, the pilgrimage town of Dambulla, the hill country enclave of Wellawaya and, perhaps most significantly, the northern Tamil city of Jaffna previously out of bounds to tourists during the civil war. We see great potential in the north of the country, continues Cooray. As well as great beaches and fascinating landscapes, the area has an entirely different culture and feel to the southern parts of the country due to its Hindu traditions. We have always had a five-star island, now it is just a question of harnessing these attributes to make it a truly five-star destination. Hiran Cooray, Chairman, Jetwing Hotels Ltd To fulfil its commitment to providing guests with international-class fivestar service and facilities, Jetwing has pledged up to USD100million in investment through 2017, a sum that will be spent on upgrading its existing properties as well as ensuring its new inventory meets the demands of the high-end market. Sustainability is another key part of the chain s strategy and it hopes to generate 80% of its energy through solar and biomass within the next 18 months. We have to swim with the big boys if we don t want to get swallowed and I m confident that is just what we will do, adds Cooray. There s a real feeling of solidity about what is happening in the country s tourism industry at present. So much so that we are willing and comfortable to plough a huge chunk of our profits back into the business. Stability, growth and confidence seem to be prominent among the words currently used in association with Sri Lanka. A relatively new government headed by President Maithripala Sirisena has moved to smooth previously rocky relations with the west and neighbouring India while continuing to nurture a warm friendship with China a source-market that has shown by far the most significant growth in visitor arrivals into the country. The new regime, meanwhile, has vowed to press forward with major infrastructural improvements set in motion by the previous incumbent, President Mahinda Rajapaksa. Connecting loops from the Colombo Katunatyake Expressway, a fast airport link from the capital to Bandaranaike Airport, to southern highways are due to open later this year, slashing journey times to major destinations such as Galle and Kalutara. With the paradisiacal atolls of the Maldives lying tantalisingly close, Sri Lanka s potential as part of a twin-destination luxury package is obvious. Yet those who know the country intimately are confident that it is more than capable of catering to the high-end market on its own terms. Besides beaches, Sri Lanka has a rich culture and features mountains, tea estates and enormous amounts of nature, concludes Cooray. Visitors can see blue whales in the ocean one day and observe elephants the next. Few countries can truly claim to offer this value proposition.

6 Is Eco-Tourism a Viable Investment? Hollywood actor Leonardo DiCaprio recently hit the headlines after he announced plans to develop an ecoresort on his private island in Belize. Is this a simple case of celebrity altruism, or is the Titanic star capitalising on an emerging trend in hotel investment?

7 Hotel Destinations Indian Ocean 07 Leonardo DiCaprio is a well-known environmental activist, so it was little surprise when the world s media publicised his plans to transform Blackadore Caye, his 104-acre unpopulated island off the coast of Belize, into a luxury resort. He first set eyes on the island a decade ago and bought it with a partner for a reported US$1.75 million. Once work is complete in 2018, it will house luxury villas and all the frills associated with five-star hospitality in one of the most beautiful corners of the globe. But there appears to be more to this venture than financial gain. The main focus is to do something that will change the world, DiCaprio said in press reports. I couldn t have gone to Belize and built on an island and done something like this, if it weren t for the idea that it could be ground breaking in the environmental movement. Plans for Restorative Island, as it will be known, show a large raised platform that stretches in an arc over the water, with artificial reefs underneath. The island will grow indigenous plants to support a manatee conservation area, and mangrove trees will be replanted. This vision is the result of 18-months of work from a team of designers, scientists, engineers and landscape architects but this labour of love extends beyond the last year-and-a-half. Apparently, DiCaprio spent a decade searching for the perfect hotel operator to partner with and he settled on Restorative Islands L.L.C., which is owned by Paul Scialla, founder of Delos, a global company known for its work on well building designs. Delos, the partner in this development is the founder of the WELL building standard they are positioning this as a rating tool for wellness in the same way that LEED/BREEAM etc. are to environmental sustainability, said Matthew Clifford, Head of JLL s Energy and Sustainability Services, Asia Pacific. He says that the WELL accreditation is still very new to the hotels industry but its implementation is a growing trend as developers, operators and consumers alike become more conscious of responsible travel. While the WELL standard may be new, the concept of an environmentally sustainable hotel is not. Aside from DiCaprio, Marlon Brando conceived something similar in Tahiti and, whilst relatively well-known, we ve also had the experience of Soneva and Six Senses in Asia for a number of years with their eco-resorts. Australia, Caribbean, Central America, North America, Scandinavia and the Alps are also markets where eco-resorts have been created; in truth, they can be found on all continents, that s according to Bob Merrigan, Executive Vice President, Hotels Project Services, JLL Asia Pacific. From luxury resorts championed by wealthy individuals, to the back to basics eco-lodges that promote community living, eco-travel caters to all budgets. Yet it s affluent travellers who are driving the larger scale resort developments. According to a 2012 Four Seasons survey of luxury travel trends, the affluent put much more thought into their purchasing decisions to determine whether a product or service will intrinsically improve their lives. And when it comes to developing these resorts at the higher end, a significant investment is involved and funding often comes from private wealth. Clifford added: Any development project will focus closely on how they can generate a buzz and, ideally, pre-sales. Developers are pretty smart at lowering their risk, and these days most major projects won t go ahead without some level of pre-commitment. The celebrity endorsement is another way to generate a lot of interest, and I would be quite surprised if these didn t sell out in rapid time. It s clear that eco sells but Merrigan maintains that the market remains relatively niche: There are the savvy entrepreneurs who see opportunity for which some will remain true to the eco-friendly spirit and others will play lip service interested only in the commercial returns. Ultimately, the hotels industry is driven by consumers. Overall, environmental and sustainability issues continue to grow across all property types it is not uncommon for guests to check the carbon footprint of their air travel to a destination, Merrigan said. Others may favour green policies such as obtaining all consumables within a specific radius of a property. A recent TripAdvisor study found that the green travel trend is gaining momentum among its members; 71 percent said they plan to make more eco-friendly choices in the next 12 months compared with 65 percent who said the same a year earlier. There has been a growing consciousness of the need to protect these beautiful locations, rather than paving them all over, or ruining them with cookie cutter, or environmentally destructive resorts, added Clifford. Perhaps this is a way to avoid this destructive trend, by developing these beautiful locations, but in a way that keeps it beautiful and special for the long term. What makes a hotel eco? JLL experts explain: A carefully selected site: It must take advantage of positive local features, such as proximity to sustainable transport, rather than requiring people to fly in. Eco-sites mustn t destroy areas with endangered species, high value agricultural land etc. A holistic design and delivery: the process must consider the full life cycle costs, not just up-front costs. For example, it may cost more up front to make the building efficient in terms of water, waste, recycling and energy, but these can pay for themselves over the lifecycle of the asset. Something which takes into consideration other macro-trends like climate change. What happens to your luxury resort if hurricanes, floods, coastal erosion, or sea level rise continue? And the project must be managed well to maintain the design goals. For example, don t design an eco-hotel and then serve unsustainably fished seafood in the restaurant. A positive impact on the community: This might include helping to bring renewable energy investment to a remote area, which may not otherwise happen without the support of a developer, or to create jobs for local

8 Maldives Sri Lanka Seychelles Mauritius Indian Ocean

9 Hotel Destinations Indian Ocean 09 International Visitor Arrivals in 2014 South Korea; 2.9% Switzerland 2.6% Japan; 3.2% India; 3.8% Australia 2.1% Italy 3.4% Switzerland 3.4% India 7.2% France 28.6% France; 4.2% Germany 7.3% Italy; 4.8% MALDIVES 1.2m China; 30.2% China 7.4% MAURITIUS 1m Russia; 5.5% South Africa 10.8% Reunion 16.6% United Kingdom; 7.4% Germany; 8.2% United Kingdom 13.2% Austria 2.7% Japan 4.0% Switzerland 5.8% U.S.A. 4.0% South Africa 7.4% Germany 21.2% Australia 5.9% India 24.5% United Kingdom 7.4% Russia 7.0% China 7.9% SEYCHELLES 232,667 France 19.1% France 8.0% SRI LANKA 1.5m U. K. 14.6% UAE 8.2% Maldives 8.7% Italy 11.7% China 13.0% Russia 8.7% Germany 10.4% Source: STR Global

10 10 Hotel Destinations Indian Ocean Maldives A vast stretch of 26 atolls in the azure waters of the Indian Ocean, the Maldives is one of the world s finest paradise resorts. Few destinations are blessed with such close proximity to so many fast-growing tourist markets: Russia, India, Mainland China and the emerging markets of Southeast Asia are all within 10-hour direct flights. But demand from Europe, the Maldives traditional visitor source, is growing too, with Germany supplying the second highest number of arrivals. Mainland China takes the top spot. Nightly rates are rocketing as a result, driving real estate transactions in access of USD 1 million per room as investors scramble to get their share of paradise. HIGHLIGHTS Tourism Demand Supply Outlook As at YTD December 2014, visitor arrivals increased by 7.1% y-o-y to 1.2 million visitors. This increase was underpinned by strong growth in visitors from Mainland China, South Korea and India. The Mainland Chinese market has been a major source market that has resulted in a surge in visitor arrivals to the Maldives over the last few years. As the leading source market to the Maldives, Mainland China comprises about 30.2% of total visitor arrivals to the country in 2014, which is more than three times that of the second leading source market: Germany. The fastest growing source markets in 2014 included India, South Korea and Mainland China with 19.9%, 15.1% and 9.6% growth respectively. There were four resort openings in 2014, adding 280 to the Maldives room inventory. One of the latest resorts to open this year in the Maldives is Loama Maamigili, a 105-villa resort located within the sparsely populated Raa Atoll. Underpinned by its liberal trade environment, increasingly dynamic private sector, and robust growth in visitor arrivals, we expect investor interest in the Maldives to remain strong. Recent legislative changes that include acquiring islands on longer leases as well as the opportunity to extend existing leases will also help encourage investment demand. NEW HOTELS NOTABLE HOTEL DEALS Reethi Beach Resort Undisclosed Konotta Island Resort Undisclosed Beach House Iruveli USD 72 million Herathera Island Resort USD 33.3 million UPCOMING HOTELS Outrigger Konotta Island Resort Radisson Blu Maldives Hulhumale Amilla Finolhu Maldives 105 Loama Resort Maldives at Maamigili QUICK FACTS 1.2 million International Visitor Arrivals JA Manafaru Amilla Fushi Maalifushi by COMO Club Med Finolhu Villas 280 Number of New Rooms 2014 Note: Maldives Hotels refers to market-wide hotels. Source: STR Global, Ministry of Tourism, Arts & Culture, JLL ADR - Average daily rate, RevPAR - Revenue per available room 70.4% Occupancy USD 986 Average Daily Rate (ADR) USD 694 Revenue per Available Room (RevPAR)

11 Hotel Destinations Asia Pacific 11 Mauritius Mauritius is a fascinating island paradise. Its very name is synonymous with tropical luxury and extravagance. Luxury here is surprisingly affordable Mauritius has some of the best value accomodation in the Indian Ocean. While in many destinations famed for cobalt-blue seas, white sandy beaches and luxury hotels, you may eventually find yourself wishing for something to do besides sunbathing and swimming, it s often hard to know what to do next in Mauritius. It was writer Mark Twain who said: You gather the idea that Mauritius was made first and then heaven was copied after Mauritius. HIGHLIGHTS Tourism Demand Supply Outlook France is the leading inbound market to Mauritius at 243,665 tourists in 2014, representing a quarter of all arrivals. Europe is the principal source of tourist travel increasing by 4.3% last year. The number of visitors from the USA rose by 26.5% and visitors from Mainland China alone increased by over 51.2% since Air Mauritius introduced direct flights. Mauritius attracts tourists looking for a tropical climate. There is relatively little business travel with fewer than 5% of tourists in 2014 arriving for business purposes. Mauritius competes with the likes of the Maldives, Sri Lanka and the Seychelles for the tropical tourist market. There were an estimate 13,000 available hotel in Mauritius in There are a number of projects that recently opened that will lead to an increase in available. Accomodation in Mauritius is facing increased competition from high-end self-catering residences that are attracting wealthy tourists. An increase in airline capacity to Mauritius will support increased inbound tourism however, Mauritius is facing stronger competition as a tourist attraction from nearby resort markets and an above average pipeline of new luxury hotels that will place pressure not only ADR, but also occupancy. NEW HOTELS NOTABLE HOTEL DEALS RIU Portfolio USD million La Plantation d Albion Club Med USD 72 million UPCOMING HOTELS Royal Palm Mauritius 333 Trou aux Biches Resort & Spa QUICK FACTS 1million International Visitor Arrivals St. Regis Mauritius The Westin Mauritius Holiday Inn Mauritius Airport 664 Number of New Rooms % Occupancy USD 216 Average Daily Rate (ADR) Centara Grand Azuri Resort & Spa USD 150 Revenue per Available Room (RevPAR) Note: Mauritius Hotels refers to market-wide hotels. Source: STR Global, Ministry of Tourism and Leisure, JLL ADR Average daily rate, RevPAR Revenue per available room

12 12 Hotel Destinations Indian Ocean Seychelles The granite islands of the Seychelles archipelago cluster around the main island of Mahé, home to the country s international airport and its capital, Victoria. Measuring 28 kilometres long by eight kilometres wide, the island is home to almost 90% of the Seychelles total population, reflecting the country s diverse ethnicity and descent from African, Indian, Chinese, and European populations. Together, the islands of Mahé, Praslin and La Digue form the cultural and economic hub of the nation and contain the majority of Seychelles tourism facilities as well as its most stunning beaches. An expensive destination renowned for its ultra-luxurious options, the Seychelles also offers plenty of quaint, affordable self-catering facilities and guesthouses. HIGHLIGHTS Tourism Demand Supply Outlook In 2014, international visitor arrivals to Seychelles increased to 232,667, largely driven by visitors from China. However, the growth rate has slowed to 1.0% in 2014 compared to 10.7% in Germany, France and Italy remain the dominant source markets with a contribution of 15.4%, 13.9% and 8.5%, respectively. However, visitor arrivals from France and Italy declined by 9.4% and 8.7% y-o-y during Chinese visitors offset this decline with a y-o-y growth of 72.4%. The Savoy Resort & Spa opened in May 2014, adding 163 to the market. Supply is expected to continue to grow during 2015 with a total inventory of 284, including the 124-room Avani Seychelles Barbarons Resort & Spa that was launched in February The Seychelles Tourism Board plans to launch its I love Seychelles tourism promotion campaign during 2015, with the aim of raising Seychelles profile and strengthen awareness of Seychelles as a destination. The board plans to concentrate on the key European source markets and China, which includes the commencement of non-stop direct flights from Beijing to Seychelles. NEW HOTELS NOTABLE HOTEL DEALS None 124 Avani Seychelles Barbarons Resort & Spa QUICK FACTS UPCOMING HOTELS Six Senses Zil Pasyon Nira Sathwa 232,667 International Visitor Arrivals Number of New Rooms % Occupancy USD 456 Average Daily Rate (ADR) USD 296 Revenue per Available Room (RevPAR) Note: Seychelles Hotels refers to Luxury and Upper Upscale Hotels. Source: STR Global, Seychelles National Bureau of Statistics, JLL. ADR Average daily rate, RevPAR Revenue per available room.

13 Hotel Destinations Indian Ocean 13 Sri Lanka Located south of the Indian subcontinent and just above the Equator amid the pleasant waters of the Indian Ocean, the tropical island nation of Sri Lanka is a place where nature s beauty remains abundant and unspoilt. Six years after the end of the Sri Lankan civil war, the tourism sector has seen tremendous growth. The impressive pace of infrastructure development including several new expressways and a second international airport, as well as focused destination marketing efforts, have strengthened the country s position as a competitive tourism destination. HIGHLIGHTS Tourism Demand Supply Outlook Sri Lanka continued on its high growth trajectory, with 2014 arrivals growing by 19.8% year-on-year to 1.5 million tourists. Total tourism earnings during the nine-month period from January through September (latest available) increased 31.4% to USD 1.6 billion in The Sri Lankan Tourism Development Authority (SLTDA) has set a target of 2.5 million annual arrivals by 2016, which amounts to a compounded annual growth of over 25% y-o-y. While Sri Lanka earlier depended heavily on European tourist traffic, there has been a recent increase in tourist inflow from the Asia Pacific region, particularly from India and Mainland China. Visitors from Mainland China grew 136.1% in 2014, making it one of the fastest growing source markets to Sri Lanka, while India remained the top source market with a share of 15.9%. The 158-room Ozo Colombo opened in May 2014, marking the entry of Onyx Hospitality in Sri Lanka. The hotel operator also opened a 122-key Ozo Kandy in April 2015 and has recently announced the ground breaking construction of a 172-key Amari-branded resort in Galle. With a new government formation under the leadership of President Maithripala Sirisena, the government remains committed on its focus to improve the overall tourism infrastructure in the country. Continued focus on facilitating FDI investment into the country, particularly in the tourism, infrastructure, knowledge services, export and manufacturing sectors will continue to drive business demand to Sri Lanka. NEW HOTELS NOTABLE HOTEL DEALS Amangalla Undisclosed (Part of a global portfolio sale) Amanwella Undisclosed (Part of a global portfolio sale) UPCOMING HOTELS Marriott Weligama Bay Anantara Tangalle Cinnamon Red Colombo QUICK FACTS 1.5 million International Visitor Arrivals 2014 Centara Ceysands Resort & Spa, Bentota 1,855 Number of New Rooms 2014 Ozo Colombo 63.5% Occupancy Ozo Kandy USD 120 Average Daily Rate (ADR) Best Western Elyon Hotel Colombo USD 76 Revenue per Available Room (RevPAR) Note: Sri Lanka Hotels refers to market-wide hotels. Source: STR Global, SLTDA, JLL ADR - Average daily rate, RevPAR - Revenue per available room

14 14 Hotel Destinations Indian Ocean Quick Facts INTERNATIONAL VISITOR ARRIVALS 2014 NUMBER OF NEW ROOMS 2014 OCCUPANCY USD AVERAGE DAILY RATE (ADR) USD REVENUE PER AVAILABLE ROOM (REVPAR) Maldives Mauritius Seychelles Sri Lanka 1.2 million % million % , % million 1, %

15 Contributors Scott Hetherington Chief Executive Officer, Asia Nihat Ercan Executive Vice President Investment Sales, Asia Frank Sorgiovanni Head of Research Asia Pacific About JLL JLL s Hotels & Hospitality Group serves as the hospitality industry s global leader in real estate services for luxury, upscale, select service and budget hotels; timeshare and fractional ownership properties; convention centers; mixed-use developments and other hospitality properties. The firm s more than 320 dedicated hotel and hospitality experts partner with investors and owner/operators around the globe to support and shape investment strategies that deliver maximum value throughout the entire lifecycle of an asset. In the last five years, the team completed more transactions than any other hotels and hospitality real estate advisor in the world totaling more than US $48 billion, while also completing approximately 4,500 advisory, valuation and asset management assignments. The group s hotels and hospitality specialists provide independent and expert advice to clients, backed by industry-leading research. For more news, videos and research from JLL s Hotels & Hospitality Group, please visit: download the Hotels & Hospitality Group app for ios and Android, or view our e-magazine The Hotel Investor, available for ipad.

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