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Thursday July 3, 4:03 PMFraser & Neave hospitality arm eyes 5,000 new rooms in AsiaSINGAPORE, July 3 (Reuters) - Serviced apartment firm Frasers Hospitality plans to add 5,000 rooms in Asia by 2010 despite a global economic slowdown but most of the new apartments will be under management contracts to reduce investment risks.The unit of beer-to-property conglomerate Fraser and Neave has 3,500 units in Europe and Asia, making it Asia's second-largest serviced apartment business after CapitaLand's Ascott which has 15,000 units globally. "There's a pent-up demand as we see more companies cut back on long-term expatriate postings and focus more on sending teams based overseas for a few months," Frasers Hospitality Chief Executive Choe Peng Sum told journalists on Thursday. The company's two properties in Singapore are now more than 90 percent occupied and have seen average room rates rise 26 percent year-on-year to S$400 ($295) per day, he said. About 80 percent of the new rooms planned in China, India, and Vietnam will be through fee-based management contracts while the rest will be its own projects, Choe said, even as a feared U.S. downturn has caused concerns of a slump in business travel. "We really wanted to invest in key markets that will withstand the U.S. slowdown and still have the potential for growth," Choe said. He did not reveal the amount Frasers is planning to spend but said the expansion will be funded mostly through internal cash flow and loans. Frasers has postponed plans to divest properties through a real estate investment trust this year due to the poor market conditions for new equity offerings. The company is also in talks to set up private equity funds to invest in Asian serviced apartments, and is eyeing distressed property in the United States for potential acquisition, Choe said. (Reporting by Daryl Loo; Editing by Jan Dahinten) |
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