The Ascott Limited, the lodging business unit of CapitaLand Investment, has set its sights on doubling its fee revenue over the next five years. FY2022, a record high for the business, will provide the base for the target to reach at least $500 million. This substantial growth was spurred by 36% year-on-year (y-o-y) growth, resulting from new property openings and other signings.
Not only has Ascott succeeded in securing 160,000 units by 2023, it has already established a goal of netting an additional 4,000 units in the first quarter of FY2023. In order to accomplish these targets, the business plans to offer service residences, hotels, co-living and senior living options, and range from mid to luxury scale.
Continued openings of properties and new signings are expected to contribute to the business’ fee revenue growth at an estimated annual rate of 8%-10% over the next five years.
Thanks to the company’s asset-light strategy, Ascott has seen a steady increased in units of late, as it went from having 20,000 units in 2008 to its current 160,000 units. This growth has had a rather positive financial impact, which Ascott hopes to amplify in the coming five years.
Kevin Goh, CEO of Ascott and CLI Lodging, commented: “Over 80% of our total units are under management and franchise contracts, up from 43% ten years ago. These management and franchise contracts typically have sticky recurring fee revenue and long tenures.”
To meet the lofty goals it has set, Ascott will seek to sign management and franchise contracts for higher-quality, more profitable properties. Furthermore, the business plans to further leverage its direct distribution channels to deliver greater value to both property owners and customers.
Ascott’s ambitious plans tie in its recent development around Singapore, with the launch of its third co-living property, as well as the opening of the Citadines Connect City Centre hotel on Orchard Road, along with acquisitions of properties in China and the Netherlands to the tune of $190 million.