BREAK OUT SESSION F: HOTEL BRANDED RESIDENCES - BALI'S SUCCESS STORIES UP CLOSE AND PERSONAL
Moderator: Bill Barnett, Managing Director, C9 Hotelworks Ltd
Panellists:
Daniel Miller, Head of JLL Bali Office, Jones Lang LaSalle Hotels (Indonesia)
Norbert Vas, VP Sales Marketing, Archipelago International
Steve Dawson, President Director, Prime Resort Services Bali
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IHIC 2014 Break-Out Session: Hotel Branded Residences
1. Bill Barnett, Managing Director
C9 Hotelworks
The 2nd Annual Indonesia
Hotel Investment Conference 2014
Hotel Branded Residences
Grand Nikko Bali
June 6, 2014
2. The Good
• Funding – full development funding to completion irrespective of
unit sales, or an existing property with units as an extension, or
already in progress;
• Ownership – freehold or registered land title;
• Management – branded, international, or otherwise credible/
recognizable. Maintenance of unit inclusive;
• Market – product proactively created to match requirements of
pre-determined end user;
• Investment:
• Opportunity for strong ROI through rental yields and/or capital
appreciation;
• Pricing to comp set and with reasonable developers margins
• Low completion risk due to full developers project funding
• Financing available: bank or developer financing
• Legal Structure – full due diligence pack and clear and thorough
transaction documents;
• Quality – strong partners and stakeholders across the board
(developer, designers, contractors, consultants);
• Tax / Revenue Structure – clear documentation on tax liabilities
and treatment of rental revenues;
3. The Bad
• Often have over reliance on unit sales to complete, but perhaps
have fall back funding if required
• Often are on leasehold tenures;
• No international brand standard management and an only
average attempt to show “new brand” or boutique
management capabilities;
• Product often created “reactively” based on developer or
designers thoughts / ideas / preferences;
• Often not flexible on rental management structure: i.e.
mandatory vs. non-mandatory;
• Often not 100% solid / clear in treatment of rental revenues;
• Often difficult to generate a solid ROI as priced too high;
• Financial Forecasting often done internally - subjective
• Often difficult to derive capital appreciation because of lease
tenure;
• Often high perceived “completion risk” due to lack of clear
developers funding or existing facilities on site;
• Often unclear on tax obligations and rental revenues;
4. The Ugly
• Often try to sell off plan with no funding in place;
• Often utilizing strategy of not starting project until a certain
number of unit sales completed;
• Often are on leasehold tenures;
• Often have poor or no management in place;
• Product often created purely on developer preferences;
• Often very week in Legal Due Diligence and Transaction
Documents – selling on Booking Forms only;
• Often extremely unclear in treatment of rental revenues;
• Financial Forecasting almost exclusively done internally – highly
subjective
• Often high perceived “completion risk” due to lack of clear
developers funding or existing facilities on site;
• Often unclear on tax obligations and rental revenues;
• Often unrecognizable stakeholders (developers, designers,
management companies, contractors, etc.);
• Often lots of hidden fees in transaction costs, taxes, ongoing
maintenance costs, etc.