Australia: The Ascott Limited and Quest Serviced Apartments have formed a strategic partnership.
Under the terns of the partnership, Ascott expects to invest up
to AUS$500 million to acquire new properties that Quest will secure
for its franchise in Australia over the next five years.
Ascott will have a right of first refusal to acquire the properties sourced by Quest. Quest will then provide a lease for the properties, which will be operated under franchises using the Quest brand.
In addition, Ascott has signed an agreement to acquire a 20 per cent stake in Quest for AUS$28.8 million, with the option to increase its stake in Quest to 30 per cent.
In a separate agreement with Quest, Ascott's real estate investment trust, Ascott Residence Trust (Ascott Reit), will acquire three operating serviced residences in Greater Sydney from Quest for AUS$83 million. Quest Sydney Olympic Park, Quest Campbelltown and Quest Mascot will continue to be operated under franchises using the Quest brand.
Ascott CEO Lee Chee Koon said: "Ascott has an established presence in Australia where our serviced residences enjoy a strong demand from travellers to the country, and we see vast potential growth opportunities for serviced residences. Serviced apartments represent over 25 per cent share of the accommodation market in Australia where Quest is a ￼leading player. Ascott has many global customer accounts and strong global systems to manage our properties. Through our strategic partnership with Quest, we can leverage each other's knowledge and contacts in Australia to rapidly extend our presence in the growing market for international quality serviced apartments. We also expect a stronger pipeline of properties in Australia for Ascott to acquire."
"The Australian accommodation sector continues to expand with more than 100 properties expected to be opened over the next few years. Foreign investment in Australia's accommodation sector has been on the increase in recent years due to the reliable legislative environment, resilient economy and stable returns in Australia. Ascott and Quest have complementary strengths and confidence in providing quality serviced residences as an alternative to traditional hotels to discerning travellers for business or leisure. We look forward to closer collaboration with Quest in cross selling, conducting joint marketing initiatives, and jointly exploring opportunities for franchises outside of Australia," he added.
Paul Constantinou, chairman of Quest Serviced Apartments, said: "Quest is the
fastest growing and largest network of serviced apartments in Australia. As one of the global leaders in franchising within the accommodation sector, we have opened an average of eight new properties each year. There is now the opportunity to accelerate our growth to secure 250 properties across Australia and New Zealand before the end of this
decade. Quest brings franchising experience and expertise to this partnership, whilst Ascott offers a global presence, and longevity in the industry. This partnership offers both parties the opportunity to broaden a highly successful franchising
model to other parts of the world."
"More than 80 per cent of our customers are corporate travellers from some of Australia's biggest companies and our properties are located in underserved regions with high demand for quality accommodation. We are stringent in selecting our franchisees and are actively involved in the operations and growth of every property. Having a global brand like Ascott partner with us is further affirmation of the strong reputation Quest has built
over the last 25 years," he added.