Christophe Vielle, CEO and co-founder of GCP Hospitality (GCPH), the hospitality platform of Hong Kong private equity firm Gaw Capital Group, has built an impressive record acquiring assets with high-yield potential since his appointment in 2008. He talks about what goes behind the investment decisions and how their brands address what guests are looking for.
Hotel G Yangon
GCPH is known for its strategy to reposition underperforming real estate and adding value to them. How have you done so in your existing properties?
In Yangon, we took over a budget 45-key hotel and converted it to the city’s first 85-room lifestyle property complemented by a trendy wine bar. Hotel G Yangon, which opened late 2017, is currently running above 85% in a highly competitive market. In Singapore, we acquired an economic hotel and reflagged it under the Hotel G brand. We reviewed the sense of arrival by relocating the Hotel Lobby, Front Office and Fitness centre and redeveloped the entire F&B offering with two award-winning concepts, Ginett Restaurant & Wine Bar and 25 Degrees Burger & Liquor Bar. The hotel opened early 2017 and was awarded best lifestyle hotel in Singapore. Both restaurants have also earned strong recognition from the local food scene.
What are the key considerations for purchasing a property?
These properties need to possess special key upsides to be taken over, be it a central location, interesting product, outstanding performance or business turnaround possibilities, for instance.
What are some emerging opportunities that are shaping your hospitality investment strategy?
Major hospitality groups have been heavily rolling out their brands and standardised concepts in Asia for the past decade, so we are targeting travellers keen on design and cutting-edge experiences instead. We believe we can fill this market gap with lifestyle products such as Hotel G – a brand that offers unique design, friendly yet professional service, in-vogue restaurants and trendy bars. While Asia is the biggest development market for us, we are also looking at investment opportunities in Europe and the US.
Your portfolio is very diverse - from super luxury to student accommodation. What is attractive about the student accommodation sector?
In recent years, we have noticed a shortage of affordable accommodation in major Asian cities while demand from international students keeps increasing. In parallel, there is a surge in co-living and co-working concepts worldwide, a trend fuelled by the way the young generation wants to interact; they are on the lookout for new experiences and being part of a community. This is what GCP Hospitality is looking at offering with its student accommodation concept CAMPUS and student co-living hub.
In the next 3-5 years, where in Asia will you be looking at splashing your cash? Are you looking at high-growth economies like Vietnam or matured countries such as Japan, Hong Kong?
GCPH will strive at developing a portfolio with double-digit IRR (Internal Rate of Return) assets by being creative in its acquisitions, business turnarounds and re-positioning. We currently have a strong pipeline for the coming few years in Australia, China, Korea and Europe. We aim to continue on our successful path while creating genuine relations with owners and investors alike by acquiring assets with strong leverage opportunities in APAC, Europe and the US.
In 2018, do you see more hotel fragmentation or consolidation happening in Asia and what would that mean for owners going forward?
Large hospitality management groups these days look for big operations that will generate high fees, therefore leaving aside small or independent owners. International brands arrive with their concepts and impose their brand guidelines on owners, making it difficult to them to interact and adapt their needs to those of international groups. They are fees-driven; often partnering with international sales groups like OTAs, which consequently increase fees for owners. Furthermore, they often have multiple operations in one city and prioritise performance according to brand levels, which potentially hinders a property’s opportunity to maximise potential.
We believe that trend will be reversed in the coming years. Owners will want to be heard and will want to partner smaller yet professional hospitality management companies who will work closely with them to market and run a successful operation.
GCPH’s portfolio mix:
• 80% hotels under management
• 20% hotels asset managed
Properties at a glance:
• THAILAND: Pullman Bangkok Hotel G, Pullman Pattaya Hotel G
• HONG KONG & MACAU: Residence G Hong Kong, The Bay Bridge, Hong Kong, Campus Hong Kong, The Macau Roosevelt Hotel
• CHINA: Residence G Shenzhen
• SOUTH KOREA: Residence G Seoul (opening end-2019)
• MYANMAR: Inya Lake hotel, The Strand Cruise, The Strand Hotel, Hotel G Yangon.
• SINGAPORE: Hotel G Singapore
• InterContinental Hong Kong
• Four Seasons Bora Bora
• Hyatt Regency Danang, Vietnam
Joint Venture with Journal Hotels
• United States: The Hollywood Roosevelt, Hotel G San Francisco, The Ambassador Chicago, Mondrian Hotel New York, Two Bunch Palms; The Standard Hotel