TOURISM AND HOSPITALITY IN ASIA PACIFIC

February 2018

2 CBRE | CAMBODIA

• Trends in the hospitality sector in SE Asia / Global• Demand• Occupancy and room rates• Supply• Infrastructure• Challenges & opportunities of hotels in a frontier market• What makes hotels work – or fail• Hotel Design and Operation• Operator Selection - what to look out for• Lessons learnt from the Vietnam experience

AGENDA

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ARRIVALS

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

2010 2011 2012 2013 2014 2015 2016 2017

International Visitor Arrivals

Cambodia Myanmar Vietnam Indonesia Laos

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ARRIVALS

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

2010 2011 2012 2013 2014 2015 2016 2017

International Visitor Arrivals

Cambodia Myanmar Vietnam Indonesia Malaysia Thailand Laos

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GROWTH IN ARRIVALS

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

2011 2012 2013 2014 2015 2016 2017

Annual Changes in International Visitor Arrivals

Average Cambodia Vietnam Indonesia Malaysia Thailand Laos

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OCCUPANCY

50%

55%

60%

65%

70%

75%

80%

85%

Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17

Hanoi Ho Chi Minh City Bangkok Kuala Lumpur Manila JakartaSource: STR Global, CBRE Hotels

Occupancy (MAT)

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ROOM RATES IN USD

60

70

80

90

100

110

120

130

140

Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17

Hanoi Ho Chi Minh City Bangkok Kuala Lumpur Manila Jakarta

U

Source: STR Global, CBRE Hotels

United States - DollarAverage Daily Rate (MAT)

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ROOM RATE GROWTH

80

90

100

110

120

130

140

150

Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17Hanoi Ho Chi Minh City Bangkok Kuala Lumpur Manila Jakarta

Source: STR & CBRE Hotels

Local currencyAverage Daily Rate (MAT) Indexed

Source:STR Global, CBRE Hotels

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REVENUE PER ROOM IN USD

40

50

60

70

80

90

100

Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17Hanoi Ho Chi Minh City Bangkok Kuala Lumpur Manila Jakarta

United States - Dollar

Source: STR Global, CBRE Hotels

RevPAR (MAT)

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GROWTH IN REVENUE PER ROOM

80

90

100

110

120

130

140

150

Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17Hanoi Ho Chi Minh City Bangkok Kuala Lumpur Manila Jakarta

Source: STR & CBRE Hotels

Local currencyRevPAR (MAT) Indexed

Source:STR Global, CBRE Hotels

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INFRASTRUCTURE

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PoliticalInformation

Access and cost of financeSecurity

LegalLanguage

People

SOME CHALLENGES

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WHAT MAKES HOTELS WORK OR FAIL?

The operator• Reputation (guests and

owners)

• Track record

• Marketing

• Financial

• Flexibility

• Relationship with owners

The development• Design

• Size

• Facilities

• Cost

All four need to match

The market• Demand

• Competition

• Gap

• Positioning

• Financials

The owner/developer• Aspirations

• Financial

• Long or short term

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• Needs input from range of skills• Architect• Engineer• Interior Designer• Operator• Project Manager• Quantity Surveyor• Developer

They all have different agenda

Some key issuesHOTEL DESIGN AND OPERATION

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What is appropriate?HOTEL DESIGN AND OPERATION

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Some key issuesHOTEL DESIGN AND OPERATION

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• Meet or beat the market• Future proofing• Efficiency v luxury• Essential features• Understanding the guests• Site issues• Operational issues• Feng shui• Market position• Branding• Highest and best use v ego

Some key issuesHOTEL DESIGN AND OPERATION

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• They are experts – most owners and developers are not• Use a lawyer experienced in management agreements• Put them in competition• Key money and sliver equity• Control• Its not just about the management fees• Experience

Matching the market, the property, the brand and the owner’s requirements

What to look out forOPERATOR SELECTION

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• Rapid Development• Infrastructure• Reliance on a single source of business• Condotels• Build for the future not today• Choose good partners• Quality pays• It will be cyclical

SOME LESSONS FROM VIETNAM

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CBRE HOTELS SERVICESHOTEL BROKERAGE &INVESTMENT SALESFor single and multiple asset transactions, CBRE Hotels offerscomprehensive capital markets services includingacquisition/disposition and advisory across all hospitalityproduct segments.

INVESTMENT & MARKET ADVISORYWe provide advice for existing and prospective hotel owners,investors and lenders on the wider hotel industry, as well asspecific assets and markets in order to maximize investmentreturns.

VALUATION SERVICESCBRE Hotels’ global Valuation teams complete appraisal andadvisory work led by MAI, RICS, or appropriately qualifiedvaluers with specialist hotel-sector knowledge.

FEASIBILITY STUDIESOur teams advise on the appropriate development scheme andhelp optimize returns offering solutions, strategies andalternatives to strengthen your hotel business decision process.

OPERATOR SELECTIONOur teams work closely with hotel owners to assess theirbusiness and legal requirements in order to select the mostappropriate operating structure and brand.

LEISURE & ALTERNATIVEINVESTMENTSWe offer unparalleled consultation, brokerage, financing andappraisal services to specialized industries such as golf and resortproperties, gaming, pubs, bars

and clubs.

PROJECT MANAGEMENT SERVICESProject Management partners with clients to deliver projectsfrom “concept to completion” by implementing cost efficient,industry leading processes to optimize projects, minimize riskand create value.

Rob McIntoshExecutive Director, CBRE Hotels Asia PacificT +61 2 93333 3250M +61 (0) 449 587 023robert.mcintosh@cbrehotels.com