Hotel Development Strategy in Financial Crisis

Transcription

1 Hotel Development Strategy in Financial Crisis AA Korea Hotel Management

2 1. Company profile AA Korea Accor Ambassador 2. Operation Strategy in the financial crisis Performance of AAK Chain hotels Operation Strategy in the crisis 3. Hotel Development Strategy Overall development status in Korea New tremd of hotel development 4. Prospect for hotel development in Korea

3 AA Korea AA Korea Hotel Management Co., Ltd. A leading Hotel management company in Korea, operates 9 hotels with 2,700 rooms Joint venture of Accor, a global hospitality giant and Ambassador hotel group Established in Master franchisor in Korea for Pullman, Novotel, Mercure, Ibis, Formule One 3

4 Shareholders The world largest non-us hotel chain operator The global leader in the economy and midscale segment Become a forefront player in upscale and luxury hotels on all continents As of Jan 2009, operates 4,000 hotels with 500,000 rooms in 90 countries Aiming 200,000 new rooms in five years 4

5 Shareholders Standardized Non standardized Luxury Up scale Mid scale Economy Budget 5

6 Shareholders Korean hotel expert group with 52 year history Owns 4 hotels in Seoul Provides every aspect of hotel function from development, operation, maintenance and cleaning through affiliate companies Awarded USD10mil prize for tourism in 1992 and 1995 Awarded brand prize from Korea Advertising society 6

7 Chain netwrok in Korea As of 2009, AAK operates 9 hotels with 2,700 rooms and will add 360 rooms more by 2011 Grand Ambassador Seoul Super Deluxe 415 rooms Pullman Ambassador Changwon Super Deluxe 321 rooms Novotel Ambassador Busan 326 rooms Novotel Ambassador Daegu Super Deluxe 204 rooms Novotel Ambassador Gangnam Deluxe 344 rooms Novotel Ambassador Doksan Deluxe 230 rooms Ibis Ambassador Suwon Deluxe 240 rooms Mercure Ambassador Dongdaemun Deluxe 150 rooms 2010 Open Ibis Ambassador Seoul 1 st grade 317 rooms Ibis Ambassador Myeongdong 1 st grade 280 rooms Ibis Ambassador Busan 1 st grade 210 rooms 2011 Open 7

8 Partnership solutions We offer the most suitable partnership by integrating owners needs, market segment and country specificities. Management Contracts - We manage your hotel. - Deploying our operating expertise to manage hotels over the long term. Franchise Agreements - Owner directly operates your hotel under one of our brands. - As a franchisee, you benefit from a full range of services and an array of powerful skills that are unique hotel industry Leases - We rent your property. - This type of lease involves your hotel property, which we operate at variable rents. 8

9 Management services 1. Marketing 2. Distribution and Pricing Accorhotels.com 3. Public Relations 4. Brand Standards 5. Advantage Plus & AICLUB 6. Finance Ambatel.com 7. Sales 8. General Management 9. Human Resources 10.IT 9

10 Board of Directors Mr. Michael Isenberg Chairman and COO Accor Asia Pacific Mr. John K. Mooney Chief Finance Officer of Accor Asia Pacific Mr. Tae-Wook Kwon Chief Representative of AA Korea President of Hyatt Regency Jeju and Seogyo Hotel President of Kukdong Construction co President of Ultra Construction co President of Hanbo Group Mrs. Yun Sook Chung Chief Auditor of Ambassador Hotel Group Mr. Patrick Basset President of AA Korea Vice President of Operations for Accor Asia Pacific- South Korea, Japan, Philippines, Vietnam 10

11 1. Company profile AA Korea Accor Ambassador 2. Operation Strategy in the financial crisis Performance of AAK Chain hotels Operation Strategy in the crisis 3. Hotel Development Strategy Overall development status in Korea New tremd of hotel development 4. Prospect for hotel development in Korea

12 Performance of AAK chain hotels Thanks to weak Korean won against US Dollar and Japanese Yen, hotels in Seoul could have been performing during the recent crisis According to statistics of 35 deluxe and super deluxe hotels in Seoul, Rev par and total room revenue grow about 9 % each in 2008 year on year Comparing the 1 st half of 2009 with 2008, Rev par and total room revenue jumped by 13% respectively even in the swine flue outbreak Of course, all hotels under AAK management could advanced in terms of Rev par, revenue and profit in 2008 year on year But, since mid 2007, F&B revenues have slid about 5% in the mid scale and up scale hotel group, which is from changing trend in the economic down turn Nevertheless Ibis Ambassador, a standard of business hotel, is 12 showing outstanding growth in room and F&B please see the next page for data

13 Performance of AAK chain hotels Occupancy rate Novotel Ambassador Gangnam Ibis Ambassador Myeongdong Ibis Ambassador Suwon 13

14 Performance of AAK chain hotels Average Room Rate Novotel Ambassador Gangnam Ibis Ambassador Myeongdong Ibis Ambassador Suwon 14

15 Operation strategy in the crisis Marketing Super Sale: Very tactical sales promotion to stimulate demand and generate room sales, primarily online, using an attractive price point per city, per brand driving into low demand period Partnership: Reduce direct cost for advertising and more focus on partnership promotion with strategic partners like credit card companies and airlines, who are offering the space for the exposure to very targeted customer group 15

16 Operation strategy in the crisis Staffing Recruitment Freeze for all Accor corporate office Recruitment freeze measure till further notice has been requested by Chairman Pellisson of Accor early this year Cost Share for HR, Accounting staffs - HR & Accounting Department for Ibis Seoul & Myeong-Dong from Feb More hotels to join this cost sharing program - Other department (ex. Purchasing) also to be combined upon cost-saving necessity Staff mobilization to new open hotels Novotel Daegu, Ibis Suwon, Mercure Dongdaemun 16

17 Operation strategy in the crisis Maintenance Peak time electricity management Running a special team for preventive action Implementing risk management by manual Capex Purchasing indispensable items to operation by priority Adjusting FF&E reserve ratio by discussing with owner Executed partial renovation to secure sustainable competitiveness in the future 17

18 1. Company profile AA Korea Accor Ambassador 2. Operation Strategy in the financial crisis Performance of AAK Chain hotels Operation Strategy in the crisis 3. Hotel Development Strategy Overall development status in Korea New tremd of hotel development 4. Prospect for hotel development in Korea

19 Overall Development Status in Korea Thanks to extremely high land price, new hotel development by traditional way in Seoul has become unprofitable However, new hotel projects owned by Korean conglomerates have been progressed even in the financial crisis in the western Seoul and Songdo Kumho, Kyungbang and Daesung Local government has built and owns hotels by itself Songdo IFEZ New projects lead by developers have halted due to financial pipeline blocked and few weathered the storm Yeoido, Guro, Yeongjongdo, Millennium Hilton hotel deal etc. A few good projects completed during the crisis are looking for new owners who are able to inject cash for operation Yeongjongdo, Songdo, Guro, Busan etc.

20 New trend of hotel development Ibis Ambassador Myeongdong Open: Ga Myeong-dong Jung-gu Seoul Hotel + Retail + Office: B4~18F Retail, Office & Public Area : B4~9F Hotel: 10F~18F No of Rooms: 280 Facility: (1) Restaurant, (1) Bar, Sauna, Business Corner, Satellite lobby at 1 st floor

21 New trend of hotel development Mercure Ambassador Dongdaemun Open: Shindang-dong, Jung-gu Seoul Korea Hotel + Retail shops: B7~18F Retail, Office & Public Area : B7~8F Hotel: 9F~18F No of rooms: 150 Facility: (1) Restaurant, (1) Bar, Sauna, Business Corner, Satellite lobby at 1 st floor Open : Summer 2010 Attached to the Dongdaemun Design Plaza & Park

22 New trend of hotel development Ibis Ambassador Busan Open: Bujeon-Dong Busan, Korea Hotel + Medical Clinics: B4~15F Medical Clinics & Public Area: B4~7F Hotel: 8F~15F No of rooms: 210 Facility: (1) Restaurant, (1) Bar, Sauna, Business Corner, Satellite lobby at 1 st floor

23 New approach to hotel development Strata Introduced by residence type hotel developer Applied to only below mid scale level accommodation Will be tested in the above mid scale hotels Also, may lead to advanced model of REITs Hotel Funds Overseas real estate investment funds have increasing interest in existing hotel into their portfolio as a cash cow Hotel focused fund is investigating for opportunistic deals in the prime location Business hotels including new development are getting attention as a reasonable investment alternative as they approve profitability

24 1. Company profile AA Korea Accor Ambassador 2. Operation Strategy in the financial crisis Performance of AAK Chain hotels Operation Strategy in the crisis 3. Hotel Development Strategy Overall development status in Korea New tremd of hotel development 4. Prospect for hotel development in Korea

25 Prospects for hotel development in Korea To have hotel projects lucrative, hotel in mixed use building can become a major alternative New way of financing to be introduced and tested REITs, Strata More BOT and BTO projects will be launched backed by local governments As many new developers are working on, Asian based luxury hotels will arrive Simultaneously, business hotel to take an initiative in hotel development Top tier international hotel operator to join resort operation including investments Jeju island, Yeongjongdo, Saemangum etc. In the long run, hotel transaction market to grow with producing similar level of profitability to office market

26 Thank you very much