StayWell JV with Novel Investment Secures China Launch Pad

Australia’s StayWell Hospitality Group has teamed up with the Hong Kong-based Novel Investment Company Limited to spearhead growth of its hotel brands into Greater China.

Under the joint venture agreement, the rapidly expanding Sydney-based accommodation company will establish its Park Regis and Leisure Inn brands in some of China’s key cities, at prime properties to be procured by Novel.

“We have entered an important joint venture partnership to form a hotel management company that will operate all StayWell-branded properties in China,” said StayWell CEO and managing director, Simon Wan. “It provides a vital platform for StayWell’s expansion into a market with a population four times that of the US, and an $8.22 trillion economy with double digit growth. Using this platform, we will deliver proven hotel management, hospitality service and training skills, and position our new joint venture company to capitalise on lucrative opportunities as China’s hotel market grows and matures.”

The StayWell-Novel joint-venture is targeting properties in Beijing, Shanghai, Hong Kong, Guangzhou, Shenzhen and Chengdu and is anticipated that within 18 months, StayWell will be appointed to manage a minimum of three 200-plus-room hotels in tier one cities in Greater China.

The China launch pad is another leap forward for the privately-owned Australian operator that started in 2006 with five hotels and now runs an international portfolio of 33 properties in Australia, New Zealand, India, Indonesia, Singapore, the Middle East and the UK.

“It is a significant development in StayWell’s strategy to grow to at least 100 hotels in three years, with a balance sheet approaching A$500 million,” Mr. Wan said.

One of the Novel’s founders, Alan Feng said negotiations on several hotels to operate under the StayWell joint venture were already underway.

“China’s hotel market will be facing the challenge generated from re-integration and asset securitization opportunities in the next 5 to 10 years. Investment funds will need to partner with a professional hotel management company to catch this excellent opportunity. For many years of investment experience in the international and domestic asset market we have, it tells us that commercial real estate projects, in particular hotel assets, shall become a huge burden for investors if it cannot be securitized. While China liberalised the policy on this and the market is getting more mature, we are confident in the success in this development opportunity,” Mr Feng said. “We invest in good potential projects and have been looking for the right professional partner who shares the same vision with Novel to manage the hotels ... We shall have our first 200+ keys hotel opening in Beijing in 2014 and it shall be branded under the Park Regis brand.”

The China deal follows StayWell’s recent five-hotel entry into New Zealand and its expansion in India, where it now has eight hotel agreements.

Earlier this year, StayWell opened its first Indonesian property, Bali’s new Park Regis Kuta, and next year (2014) it will open its first UK hotel, Park Regis Birmingham.