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Huazhu United Securities launches Japanese hotel fund

Huazhu will also "brand" the acquired hotel assets, focusing on its Asian oriental-style hotels such as All Seasons, and will be responsible for operation and management.

With the arrival of the Tokyo Olympics, there are endless opportunities to invest in Japan. Sina Finance learned from the "Huasheng Huazhu Japan Hotel Fund Press Conference" held in Hong Kong on January 3 that Huazhu Group will partner with Huasheng Securities to launch " Huasheng Huazhu Hotel Independent Portfolio Fund" is expected to raise US$100 million. The fund entry fee is US$100,000.

According to Dennis Chung, the person in charge of fundraising for this fund and the chief investment officer of Huasheng Securities, the fund will follow a "stable" route. Although the dividend payout rate is set at 4%, it is optimistic about the potential value increase of hotel assets in the future. Dennis Chung said that the rental return rate of Japanese hotels is very stable, and the rental return rate after leverage can reach 10-11%. He hopes that the overall return rate can reach 20% per year by then.

Naoki Yoshiyama, investment director of Huasheng Huazhu Hotel Fund, said that although there are many B&Bs in Japan, after the implementation of Japan's "New B&B Law", the Japanese government has tightened restrictions on the operation of B&Bs, especially in cities such as Kyoto, and the profit margins have become thinner, so The fund chooses to invest in hotels, and the acquisition targets will mainly focus on newly completed hotels with good locations.

Ye Fei, vice president of strategic investment and capital markets of Huazhu Group, believes that Huazhu is very optimistic about the Japanese market. The market is large and the domestic business travel demand is strong. At the same time, international tourists are rising, with Chinese tourists accounting for more than 30%. A hotel company with around 100 to 150 companies will have a better scale effect, and Huazhu will also "brand" the acquired hotel assets, focusing on its Asian oriental-style hotels such as All Seasons, and will be responsible for operation and management.

Dennis Chung said that many investors wanted to invest in Japan in the past, but lacked channels and could not obtain mortgage loans. However, if operated in the form of a fund, the leverage could be increased to 2.5 times. In terms of fund exit, in addition to buying and selling in the secondary market, if the number of hotels reaches 15 to 17, it can also be considered to list the entire hotel as a real estate fund, or release a second fund to facilitate investors' exit or long-term investment.

Naoki Yoshiyama, Investment Director of Huazhu Hotel Fund, said that the Japanese hotel industry is getting bigger and bigger, and many things that were uncommon in the past have become mainstream, such as dynamic pricing of hotel rooms, online travel agencies, hotel investment funds, and non-recourse equity loans, Japan Real Estate Listed Investment Trust (J-REIT), etc.

He believes that the key word for the future development of Japanese hotels is "integration". Not a single local hotelier has gone bankrupt in nearly a decade, although many operators from other industries - real estate, rail, travel, food, weddings and even pachinko, a Japanese gambling game - have entered the industry. Traditional operators and newbies survive simultaneously. On the other hand, the number of Japanese hotel mergers and acquisitions is small, and the scale of the hotel business is small-even the top three companies only have 200-300 hotels. In this case, only consolidation can compete with international hotel operators.

Source: (Editor: hsadmi）