Singapore-based Ascott Acquires 70% of Tauzia in Indonesia

Hospitality industry, Indonesia, Singapore

Harris hotel property in Jakarta

Ascott acquired 70% of hospitality company TAUZIA in a bid to capitalize on the rapid surge of the Indonesian middle class. This is the first move of Ascott into a purely hotel-related business.

CapitaLand’s wholly owned serviced residence business unit, The Ascott Limited (Ascott), is advancing in the fast-growing middle-class business hotel segment by investing about US$26 million for a 70% stake in Green Oak Hotel Management, the holding company for TAUZIA Hotel Management (TAUZIA). This is Ascott’s first major move into the lodging segment beyond its core serviced residence business and existing business in apartments for corporate lease.

TAUZIA is one of Indonesia’s top five hotel operators. With its investment in TAUZIA, Ascott will get an instant boost of close to 20,000 units spanning 122 hotels across Indonesia, Malaysia and Vietnam, half of which are under development. This puts Ascott’s portfolio at more than 94,000 units globally, surpassing its 2020 target of 80,000 units well ahead of time.

The majority of TAUZIA’s portfolio are well-located in Indonesia, with close to 60% in key cities such as Jakarta, Bali, Bandung, Surabaya and Yogyakarta. About 70% of TAUZIA’s hotels cater to business and convention travellers, while 30% are targeted at leisure travellers.

Mr Kevin Goh, Ascott’s Chief Executive Officer, said: “While Ascott’s serviced residences continue to see strong demand from expatriates and corporate travellers, we can capitalise on significant opportunities in the middle-class business hotel segment which is expanding at an unprecedented rate. This is brought on by the rise of the gig economy, super commuters, infrastructure builders, other project-based workers, and tech-savvy, self-sufficient, and value-conscious leisure travellers. With our investment in TAUZIA, we look forward to accessing this market, which is one of the fastest growing segments of the hotel industry.”

“We are also looking to expand beyond serviced residences where we can leverage Ascott’s over 30 years of experience managing properties globally. Scaling up the lodging business will allow Ascott to address these new segments of customers by widening our offering of products and services. It will allow us to achieve greater synergies in cross-selling and operational efficiencies as well as better customer outreach; essentially anchoring Ascott’s position as a dynamic chain player in the lodging industry.”

TAUZIA has six in-house lifestyle brands, comprising the mid-tier HARRIS Hotels, which promote business, leisure and healthy lifestyles, and FOX HARRIS Hotels, which are decked in contemporary design; YELLO Hotels for young, tech-savvy entrepreneurs who seek novel experiences and community-bonding; as well as the economy POP! Hotels for smart and ecofriendly travellers. TAUZIA’s Préférence brand are upscale boutique hotels while HARRIS Vertu Hotels are high-end business hotels. TAUZIA’s brands will widen and complement Ascott’s brands given their different product offerings targeted at different customer segments.

Mr Goh added: “TAUZIA’s fastest growing mid-tier business hotels will enable us to capture the ballooning middle-class segment in Asia, which will be home to two-thirds of the world’s middle-class by 2030. Besides strengthening TAUZIA’s presence in Indonesia, we will be leveraging Ascott’s global network of about 100,000 corporate clients to bring TAUZIA to international markets. Markets with immediate demand include Malaysia, the Philippines, Thailand and Vietnam, as well as secondary cities in Cambodia, Laos and Myanmar. Prior to our investment in TAUZIA, we have 10 business hotels with about 2,000 keys in our portfolio. On top of the units under TAUZIA, we see potential to add another 20,000 keys over the next five years across Southeast Asia. This will increase our hotel portfolio to over 41,000 keys, constituting about 25% of our 160,000-unit target by 2023.”

Mr Marc Steinmeyer, Founder of TAUZIA, said: “Ascott is one of the leading international serviced residence owner-operators in the world and the largest in Indonesia. The strategic partnership with Ascott will elevate TAUZIA to an international platform, bringing us to more geographies beyond Indonesia. With a focus on the Indonesia market in the past 17 years, we have used our edge in design and branding to grow six well-known lifestyle brands, targeting different traveller segments ranging from those who prefer luxurious hotels, homely environments, stylish and social spaces to economy accommodation. Many of our hotels are ideal for business as they come with meetings and convention facilities, and food & beverage outlets. As the current management continues in the running of TAUZIA’s hotels and the integration with Ascott’s network, we strongly believe our combined expertise will accelerate TAUZIA’s growth to become a leading hotel operator in the region.”

The hospitality sector in Southeast Asia region is expected to grow with the region’s rapid economic expansion, flourishing tourism industry, rising consumption, and huge influx of foreign investments. The ASEAN Economic Community will also generate more investment and job opportunities in the region, thus fuelling greater demand in the region’s hospitality business.

In Indonesia, Ascott has a 22-year track record with 17 serviced residences and more than 3,000 units across Jakarta, Bali, Bandung, Karawang, Makassar, Surabaya and Yogyakarta.

Ascott has been accelerating its expansion in recent years. In May 2018, Ascott announced its joint venture with one of China’s leading hotel operators, the Nasdaq-listed Huazhu Hotels Group, and Huazhu’s subsidiary and an apartment rental firm, CJIA Apartments Group, targeting to sign 16,000 units under Ascott’s Citadines brand in China by 2025. Last year, Ascott acquired a majority stake in Synergy Global Housing, a leading accommodation provider in the U.S., and upped its stake in Quest Apartment Hotels from 20% to 80%, propelling Ascott to become the biggest serviced residence player in Australasia.