• Kew Green spots Asian opportunity

Third party hotel managers are eyeing up potential new business, as coronavirus lockdowns ease and landlords re-evaluate their hotel investments.
Weaker players are heading into distress, leaving those with well-funded operations ready to move in. And, as the moves around Travelodge in the UK have shown, disgruntled landlords are increasingly ready to look at new ways of extracting profit from their assets, with coronavirus exposing poor practices, weak brands and overly expensive system fees.
At third party manager Kew Green, the group has readied itself for further growth in and around its UK base, as well as signing its first Asian properties to the platform, in a Thai joint venture.
CEO Chris Dexter said he expects opportunities to arise close to home, soon. “The last three to four months of the year will see more opportunities,” he predicted. “I like looking for value – Kew Green has a reputation for looking under the carpet, and removing legacy costs.” He expects lenders to apply pressure, which will prompt a change in direction for hotel owners emerging from the coronavirus pandemic.
Kew Green is also keen to expand into mainland Europe, though he warns that different country cultures need to be respected. “We’re scouting there now – there are opportunities, perhaps for a tranche of hotels….”
Currently, Kew Green has over 55 properties under its management, many of them that it also owns. It is one of the largest operators of IHG flagged hotels, with 41 in the portfolio, but remains agnostic over the brands it manages. The style of operation spans limited service to luxury, ranging from the Glasgow Hampton and Holiday Inn Express Shrewsbury, to the Hilton in Belfast and the Great Northern for Marriott’s Tribute brand.
In Thailand, Kew Green has signed a joint venture with Siamese Asset, with a commercial hub established in Bangkok, and launching with seven properties under management. Four of the hotels will be under Wyndham flags, and the first of these will launch in spring 2021. The Wyndham properties are the Queen Convention Centre, Wyndham Garden Sukhumvit 42, Ramada Plaza Sukhumvit 48 and Ramada Sukhumvit 87.
Siamese Asset was founded in 2010, and has developed out a portfolio of largely residential projects in Thailand. Its larger projects have headed into mixed use, and alongside the Wyndham hotels the company is also developing branded residences under the Wyndham flag.
For CEO Dexter, the move into Thailand was a case of: “The timing was right, all the stars aligned”. Formerly at Wyndham as vice president of operations for South East Asia and the Pacific Rim, he had worked alongside James Kim, who was responsible for operations in China. Kim has now joined Kew Green parent CTG, as well as joining Siamese Asset in Thailand. “I was in Thailand for six and a half years, so I have quite a thorough understanding of how the country works. Now, we have ready-made properties, and a great JV partner there.”
Dexter said the company will be largely deploying a management template that is well established in the UK. “We tend to bring tech to the table, to pass profit to the owner, bringing scale and expertise.”
In 2015, Kew Green was acquired by Chinese travel group HK CTS Metropark, part of the much larger China National Travel Service Group Corporation, China’s largest and oldest state-owned enterprise. The acquisition came after previous joint owners, Goldman Sachs and TPG Special Situations Partners, put the platform up for sale, with the expectation of achieving a GBP400m sale price. HK CTS operates hotels in and around China under Grand Metropark, Metropark and Traveler Inn brands, and has around 140 properties with 30,000 rooms.
At the time of the deal, Jeremy Xu Muhan, chairman of HK CTS Metropark Hotels, hinted that the acquisition could be just a first step: “The purchase of Kew Green Hotels is a tremendous acquisition that provides us with a strategic growth platform within the UK and across Europe. Investing overseas will enable us to bridge Chinese tourism with the rest of the world – it provides a platform to grow from.”
In 2017, Kew Green opened an office in Hong Kong, taking over management of seven HK CTS hotels in Beijing, Macau and Hong Kong, predominantly operating under the Metropark brand. Demonstrating the expectation of growth in the region, Kew Green took its general managers to Hong Kong for their 2017 annual meeting. However, operations in greater China no longer involve Kew Green: “Our practices are quite different – my remit is everything outside greater China,” said Dexter.

HA Perspective [by Chris Bown]: This crisis, being not local but global, has allowed hotel owners around the world to reflect on how they win guests – and what servicing those guests costs them. With doors closed, they’ve had plenty of time to pore over marketing fees, branding contributions, loyalty programme costs and OTA fees – as well as those pesky outgoings on staff, management fees and building operation costs. Which probably means most contracts are under review.

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