performance of asia pacific hotel investment markets · • as at december 2012, annual total...

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Performance of Asia Pacific Hotel Investment Markets IPD Australia and New Zealand

3 July 2013

IPD Asia Pacific Hotel Index sponsors:


• Hotel Index construction

• Performance hotel investment markets

Outline




Outline


Motivation for Index

• Provides a tool to appropriately measure hotel investment return performance

• Benchmark performance for hotel investment against competing core property sectors

• Increased transparency of the hotel sector to more effectively attract institutional investment

Index Profile

• Corporate hotels, where business is skewed towards commercial travellers

• Hotel properties where the owner is exposed to operating risk

• Institutional quality grade hotel assets

• Index excludes resorts and motels

Focus of the Hotel Property Return Index


Hotel Index construction

Data Acquisition

Return Calculation

Engine

Index Segmentation

Asset level dataset

Income return

Capital return

Capital expenditure

(including FF&E)

Cash flow less outgoings

Asset valuation

Confidentiality Agreement

Quality

Market type

Space market

3, 4 & 5 Star

Country

RevPAR

Occupancy

Region

CBD / Non- CBD

ARR

Asset Owner

Fund Manager

Public Domain

Stage 1

Stage 3

Stage 2

A three stage process


Components of investment return performance

Income Return

Total Return

Capital Return

Food & Beverage

Other (leisure) income

Gross Income

Room Night Sold (RNS)

Total Operating Expenses

Capital Expenditure

Capital expenditure

in the quarter (inc FF&E)

Gross purchases

Net Receipts

Capital receipts in the

quarter

Asset Revaluation

Change in capital value between two periods

Total statutory charges

Net sales

Wages & management

Other outgoings


Japan17%

Singapore11%

Other10%

Australia42%

New Zealand1%

Hong Kong19%

Asia Pacific Hotels split by countrybased on asset values

Abacus Property Group

Auckland Airport

Amalgamated Holdings Ltd

AMP Capital Investors

Colonial First State GAM

Eureka Funds Management

Grand Hotel Group

IBA (Indigenous Business Australia)

IHG (Intercontinental Hotel Group)

LaSalle Investment Management

Mirvac

Arena Investment Management

Schwartz Family & Co

Tainui Group Holdings

Thakral

Tourism Asset Holdings Ltd (TAHL)

Note: not all data providers are shown.

IPD Asia Pacific property database

Significant representation of securitised property market players

COMMERCIAL PROPERTY INDEX DATABASE

AUSTRALASIAN HOTELS

SOURCE

REITs

Direct Data Providers

ASIA HOTELS

PARTICIPANTS: 22

SIZE: 77 assets

VALUE: cA$8 .1 bn

FREQUENCY: quarterly

PARTICIPANTS: 17

SIZE: 102 assets

VALUE: cA$5.0 billion

FREQUENCY: quarterly

REGION

SOURCE

(China, Malaysia, Thailand)

ASIA PACIFIC HOTEL PROPERTY

INDEX DECEMBER 2012

HONG KONG: cA$2.6bn (c$188 HKD)

JAPAN: cA$ 2.7bn (c¥244.0 JPY)

SINGAPORE: cA$1.3bn (c$1.5SGD)

OTHER: cA$1.2bn




Outline


Asia Pacific hotel investment performance

Property market investment cycle softening

• As at December 2012, annual total return was 11.1% comprised of a 6.7% income return and 4.1% capital return.

11.1%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Dec-06 Jun-08 Dec-09 Jun-11 Dec-12

Return performance for Asia Pacific hotelsrolling annual return on quarterly periods

Capital Return Income Return Total Return


Hotel return performance across markets

All markets moderating except Japan

7.0%

13.5%

11.1%

6.6%

11.1%12.2%

10.4%

24.6%23.0%

6.2%

12.0%

6.0%

1.0%0.7%

5.5%7.9%

16.7%

9.5%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

5yr 11 12 5yr 11 12 5yr 11 12 5yr 11 12 5yr 11 12 5yr 11 12

AP Asia HK Singapore Japan Australia

Performance across hotel markets

capital return income return total return

average annual return ending December

Note: 5yr indicates average annual return over 5 years to December 2012


Income return premium across markets

Hotel investment offers an attractive premium over bonds

3.1%

2.8%

5.7%

5.4% 5.3%5.0% 4.9%

3.9%

0%

1%

2%

3%

4%

5%

6%

7%

1yr 3yr 1yr 3yr 1yr 3yr 1yr 3yr

Hong Kong Japan Singapore Australia

Income return premium across hotel markets

Source: RBA, MAS, MF, HKMA & IPD Research.

relative spread against 10 year bond rate as at December 2012


Hotels continue to outperform industrial & office

All sectors moderating with the exception of the retail sector

-10%

-5%

0%

5%

10%

15%

20%

25%

Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13

Asia Pacific total returns by sector annualised return March 2013

Hotels Retail Industrial Office


Global markets and the macroeconomy

Moderating property returns linked to lower global economic growth

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13

Economic growth for selected marketsannualised real GDP growth ending March 2013

Euro JPN

US AUS

HK CHN

SGP

Source: RBA, OECD and IPD Research.

GFC

Lehman Bros collapse


Investment returns linked to GDP growth

Returns moderating with softening GDP growth

• Note: Japan & Singapore Nominal GDP is real GDP adjusted by CPI

Australia

Japan

Hong Kong

Australia

Japan

Hong Kong

Singapore

Singapore

0%

5%

10%

15%

20%

25%

30%

-2% 0% 2% 4% 6% 8% 10%

ann

ual

retu

rn

annual nominal GDP growth

GDP growth versus hotel returnsannual values as at December

Source: censtad Hong Kong, BA and IPD research

2012

2011


Risk-adjusted return performance

Strong case for more capital allocated to hotels

Retail Office

Industrial

Hotels

0%

2%

4%

6%

8%

10%

12%

0% 1% 2% 3% 4% 5% 6%

av

era

ge

an

nu

al

retu

rn

annual volatility

Risk-reward trade-off for property quarterly observations on a 7 year period ending Dec 2012

Asia Pacific

Australia


Where IPD is taking the Asia Pacific Hotel Index

Providing value to the hotel industry

COMMERCIAL PROPERTY INDEX DATABASE

INFORMATION TOOLS (INDICES)

GAUGE MARKET SIZE AND

GROWTH

IDENTIFY MARKET CYCLES

AND TRENDS

UNDERSTANDING DRIVERS OF

HOTEL INVESTMENT

FORECASTING

HOTEL DATABASE

ANALYTICAL TOOLS

PORTFOLIO BENCHMARKING

PORTFOLIO ATTRIBUTION

ANALYSIS

ASSET ALLOCATION

RISK MODELLING & ASSESSMENT

ASSET PRICING

ENHANCED TRANSPARENCY and

ACCESS TO CAPITAL


Enquiries +61.2.9248.1900 www.ipd.com

Anthony De Francesco +61.2.9248.1901 [email protected]

Mitchell McCallum +61.2.9248.1905 [email protected]

Contacts at IPD Australia & New Zealand

http://www.ipd.com/

mailto:[email protected]

mailto:[email protected]


THANK YOU

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