CEBU LANDMASTERS, Inc. (CLI) is teaming up with international serviced residences operator The Ascott Limited to double the number of rooms under its hospitality portfolio by 2022, investing around P5 billion to achieve this goal.
CLI and Ascott on Thursday signed a memorandum of understanding (MoU) to build four to five developments in the Visayas and Mindanao area offering a total of 800 rooms. This will bring the number of CLI’s serviced apartment units carrying the Ascott brand to more than 1,600 by the end of 2022.
“Our confidence lies mainly of the outreach globally for which the Ascott group has been known for, and it… There’s so much for us to grow, and so much opportunity for us to capture. This strategic alliance and partnership with the Ascott group will make things happen faster for us here in VisMin,” CLI Chairman and Chief Executive Officer Jose Soberano III said during the MoU signing in Makati yesterday.
For their part, Ascott Chief Executive Officer Kevin Goh said the partnership will also accelerate its global expansion, as it targets to have 6,000 units in the Philippines alone by 2020 and up to 160,000 units worldwide by 2023. Ascott is part of Singapore-based real estate developer CapitaLand Limited, which has a footprint in more than 150 cities in over 30 countries.
“Leveraging Ascott’s global network and strong hospitality expertise, as well as CLI’s well-established reputation in the Philippine, the partnership will allow us to gain access to a pipeline of quality projects in the country,” Mr. Goh said during the MoU signing.
Under the deal, CLI will be in charge of the capital investment for the development of the property, while Ascott will act as manager and operator. CLI said the management contract with Ascott normally lasts for 10 years, and can be renewable depending on the agreement between the two parties.
CLI has identified Mactan, Cebu, Cagayan de Oro, Iloilo, and Dumaguete as potential locations for the new hotels, noting that it has already acquired the land for two properties.
Mr. Soberano said the additional 800 rooms will strengthen CLI’s recurring income base, which will account for 20% of revenues by 2022.
“As we develop more of our product lines including hospitality business, this will increase contribution (of recurring income) to something like 20%. Of this recurring income base, half of which will be contributed by the hospitality business,” Mr. Soberano said.
Prior to the signing of the MoU, CLI already has five properties carrying Ascott brands in the pipeline. This includes the 180-room Citadines Cebu City in Base Line Center set to open next year, the 250-room Citadines Paragon Davao, 180-room lyf Cebu City, and the 200-room Citadines Bacolod City, all of which will open by 2021.
Room prices in Ascott brands in the VisMin area could range from P4,000 to P6,000 per night, depending on the size of room which could go from 30-40 square meters for one-bedroom units and 60-70 sq.m for two-bedroom units.
CLI’s net income grew 17% to P498.7 million during the first quarter of 2018, lifted by a 14% increase in revenues to P1.26 billion. This year, CLI is looking at a net income of P1.7 billion, after revenues of P5.3 billion.
Shares in CLI climbed 3.1% or 14 centavos to close at P4.66 apiece at the stock exchange on Thursday.