The big picture: Kevin Goh, The Ascott Ltd

George Sell By George Sell
Uploaded 26 October 2017

Kevin Goh, who takes over as CEO of the world's biggest serviced apartment operator in 2018, gives SAN a comprehensive overview of Ascott's future plans.

• Which countries and regions do you think will be the ones where Ascott will see the most growth over the next three to five years?

"We focus on key gateway cities in markets such as Singapore, China, Australia, capital cities in south-east Asia, Seoul, Tokyo, Paris, London, key cities in Germany and the US. As we scale up rapidly through acquisitions, management contracts and franchises, we are confident of exceeding our target of 80,000 units globally by 2020.

China is Ascott's fastest-growing and largest market, with more than 18,000 units in over 100 properties across 29 Chinese cities. We have secured 16 properties with more than 2,900 units this year, and expanded Ascott's footprint to four new cities - Handan, Kunming, Xuzhou and Yichang. We are confident of achieving our target of 20,000 units in China well ahead of 2020 as there are significant opportunities for Ascott to expand in the world's second largest economy. China's rising incomes are driving domestic travel and making it the world's biggest outbound travel market. In 2016, over four billion domestic trips were made in China, while the number of Chinese outbound travellers rose six per cent to 135 million. China's growing middle class segment, with its increasing affluence, is projected to reach 800 million by 2025."

"In addition to catering to the demand from expatriates in China, awareness of Ascott has also grown significantly amongst the Chinese. In 2016, more than 60 per cent of our guests in China are Chinese. The Chinese are also amongst Ascott's top customers at our properties globally with revenue surging by 35 per cent year-on-year. Besides expanding in China through investments, securing management contracts and forming strategic alliances with some of the biggest property developers and construction firms in China such as Vanke, Yuexiu and Dongfu, we will continue to leverage our collaboration with China's new economy leaders such as Tujia and Fliggy to expand our reach to more Chinese customers."

Several south-east Asian markets present strong growth potential for serviced residences, with the region's young population, rising middle-income group, growing export figures and various economic policies in place to attract foreign capital. The ASEAN Economic Community is expected to boost its competitiveness and connectivity, as well as increase business activities and foreign direct investment, driving demand for serviced residences. In Singapore, demand for our serviced residences remains strong as our properties are in prime locations. For example, our latest property, Ascott Orchard Singapore, is getting high occupancy of close to 80 per cent."

"This year, we have added about 1,000 units across four properties in Singapore, making Ascott the largest and fastest growing serviced residence operator in Singapore with close to 2,000 units in 12 properties. We acquired a site where we will develop the Singapore flagship of Ascott's millennial-focused lyf brand. The property to be named lyf Funan Singapore is slated to open in 2020. We also secured contracts to manage Citadines Balestier Singapore, lyf Farrer Park Singapore and a prime serviced residence as part of CapitaLand's landmark integrated development in Raffles Place on the site of former Golden Shoe Car Park. The three serviced residences are slated to open in 2021."

"Vietnam, in particular, hit a record high foreign direct investment of US$15.8 billion in 2016 and it is where Ascott's biggest south-east Asian portfolio is located. We have 22 properties with close to 5,000 units in Vietnam. Emerging markets such as Myanmar, Cambodia and Laos are also presenting opportunities for serviced residences. As the government in these markets push for more economic reforms and attract more foreign companies to set up offices in their country, the number of corporate travellers are expected to increase, generating demand for our serviced residences. We have one operating serviced residence in Vientiane, Laos, three properties to open progressively in Phnom Penh, Cambodia between this year and 2019, as well as two in Yangon, Myanmar that are slated to open in 2018 and 2020."

"Europe is a key market for Ascott's global expansion. Last year, we boosted Ascott's €1.2 billion-plus asset size in Europe with the acquisition of Citadines Islington London, which is scheduled to open in 2019. Next year, we will be opening La Clef Champs Élysées Paris, our third property in Europe under The Crest Collection of unique luxury serviced residences. We see strong growth potential for serviced residences in Europe. International tourist arrivals to Europe increased by four per cent to almost 500 million or 40 per cent of the world's total in 20164. Both inbound and outbound travel have grown at a steady average rate of 3.7 per cent and 3.5 per cent year-on-year in recent years. Ascott is one of the largest international serviced residence owner-operators in Europe with more than 5,500 units in 46 properties. Our properties are located across 20 key cities in seven countries - Belgium, France, Georgia, Germany, Ireland, Spain and the United Kingdom. We will continue to deepen our presence in gateway cities and explore new markets to achieve Ascott's target of 10,000 apartment units in Europe by 2020. We plan to expand through acquisitions of turnkey developments or existing buildings which Ascott can convert into serviced residences, management contracts and franchises."

• How has the lyf brand been received? Do you have plans to bring it to Europe and other regions?

"We have received very strong interest in lyf, our new co-living concept designed by millennials for the growing wave of millennial and millennial-minded travellers such as technopreneurs, start-ups and creatives from the music, media and fashion industries. lyf provides these global jetsetters and trendsetters with the opportunity to 'live your freedom' in a dynamic environment and network with like-minded travellers to bring more ideas to life. It provides the stage for guests to bond through social spaces and activities such as workshops and talks. Ascott has secured four lyf properties, namely lyf Wu Tong Island Shenzhen and lyf DDA Dalian in China are scheduled to open in 2018, followed by lyf Funan Singapore in 2020 and lyf Farrer Park Singapore in 2021. Besides Singapore and China, Ascott is actively looking to secure more contracts in other potential markets in Asia Pacific including Australia, Indonesia, Japan, Malaysia and Thailand. For Europe, we are looking at markets such as France, Germany and the United Kingdom. Ascott's target is to achieve 10,000 units under the lyf brand worldwide by 2020."

• Are there any other new brand launches in the pipeline?

"We will continue to increase our scale by expanding our current brands - Ascott, Citadines, Somerset, The Crest Collection, our new lyf brand as well as Quest. We acquired an additional 60 per cent stake in Quest Apartment Hotels in July, which increased Ascott's stake in Quest to 80 per cent and leapfrogged Ascott to become the largest serviced residence provider in Australasia. We see the potential for its highly scalable business format franchise as a key driver of growth for Ascott."

• Looking at your global coverage, North America is the only obvious gap - do you have plans to expand your presence there?

"The US will continue to be an economic powerhouse and its potential for long-term returns is attractive. It is our third largest source market for guests and we expect this to grow.

"In October this year, we announced that we are investing S$81.5 million to acquire and refurbish The Domain Hotel, a freehold hotel in Silicon Valley, California, to capture the fast-growing demand from global technology companies and multinational corporations. The 136-unit hotel will continue to operate as it undergoes refurbishment in phases before being rebranded to Citadines Cupertino Sunnyvale in 4Q 2018. This will be Ascott's second Citadines-branded property in the US, following its acquisition of Hotel Central Fifth Avenue New York in May. The property is our fourth acquisition in the U.S. within five months. Ascott has more than tripled last year's portfolio to over 2,900 units in the country."

"In July 2017, we announced the acquisition of an 80 per cent stake in Synergy Global Housing, a leading accommodation provider in the U.S. The acquisition has expanded Ascott's footprint in the U.S. and strengthen our extensive range of international-class serviced residences for corporate customers worldwide. This acquisition is yet another move to transform Ascott's global operating platform, better understand customers' needs and thereby improving our service and product offerings to them.

"Earlier in May 2017, Ascott's real estate investment trust, Ascott Residence Trust, announced the acquisition of DoubleTree by Hilton Hotel New York - Times Square South, adding to its two properties in Manhattan - Sheraton Tribeca New York Hotel and Element New York Times Square West hotel. In the same month, Ascott acquired Hotel Central Fifth Avenue New York, which will be rebranded to Citadines Fifth Avenue New York in 2018. Bringing our Citadines brand to the U.S. will enhance our engagement with American customers, and reinforce the cross selling of our other properties in Asia Pacific, Europe and the Middle East. Besides strengthening our foothold in New York and California, we also see opportunities for Ascott to expand in other U.S. cities such as Boston, Los Angeles, San Francisco and Washington DC."

• With the recent launch of numerous new aparthotel brands globally, how do you envisage the Citadines brand evolving, and where will its expansion focus be?

"Citadines is Ascott's fastest growing brand having more than tripled its portfolio since our acquisition of the Citadines Apart'hotel chain in Europe in 2004. We currently have 124 Citadines-branded properties with close to 20,000 units globally. This includes 41 Citadines-branded properties with over 8,000 units under development in Asia. In the Middle East, we will be opening four Citadines with over 360 units in Dubai, United Arab Emirates; Abha and Al Khobar in Saudi Arabia as well as Muscat in Oman.  In addition to Citadines Fifth Avenue New York, Ascott marked its foray into South America in April this year through franchise agreements for two Citadines serviced residences in São Paulo, Brazil. Meanwhile, Citadines Islington London, which was acquired through Ascott's serviced residence global fund, is scheduled to open in 2019. We will continue to seek opportunities to build on the strong brand reputation of Citadines. We started a refurbishment programme in 2010 and invested S$450 million to renovate 65 properties globally, 32 of which are Citadines properties in Europe."

• How is the Tujia collaboration working? Would you ever consider a similar arrangement with the likes of Airbnb or HomeAway?

"Ascott's investment in Tujia in 2015 has spurred our growth in China and expanded our reach to more customers through online and offline channels. Our bookings in China have increased through Tujia's website and we have also listed our properties worldwide on the website to cater to the rapidly growing outbound Chinese travellers. We also formed a joint venture with Tujia to operate serviced residences under the Tujia Somerset brand of serviced residences to cater to the booming segment of middle class travellers in China. There are now 12 Tujia Somerset properties in 10 cities throughout China. Of these, four are operational in Chongqing, Shenyang and Haikou, and we will be opening eight in Shanghai, Hangzhou, Handan, Nanjing, Tianjin, Xiamen and Xuzhou."

"Ascott was also the first serviced residence company to partner Fliggy, Alibaba's online travel service platform, to further deepen our access to over 200 million Chinese travellers. To date, Ascott has listed about 15,000 serviced apartments on Fliggy, covering our properties in more than 20 destinations most popular amongst Chinese travellers, such as Singapore, Bangkok, Tokyo, Paris and London. On whether we will work with other sharing economy providers, we will review the opportunities as they arise."

Be in the know.

Subscribe to our newsletter »

Our Events

Subscribe to our Newsletter »