Red Planet Japan to Acquire Thailand Hotel Portfolio From Parent Company Red Planet Hotels LImited for $60 Million
Red Planet Japan Inc. (3350:JP) today announced that it will acquire the Thailand-based hotel operations from its parent company Red Planet Hotels Limited. The acquisition is expected to be completed by the end of the first quarter of fiscal year 2019.
Red Planet Japan will acquire six hotel-owning companies in Thailand from its parent company for a total acquisition consideration of 6,585,130,000 yen. The acquisition includes five operating hotels, located in Surawong (Bangkok), Patong (Phuket), Asoke (Bangkok), Pattaya, and Hat Yai, and a sixth property under development in Sukhumvit Soi 8 (Bangkok). The operating hotels being acquired in Thailand recorded sales equating to 692,960,064 Japanese yen in 2017 and 787,122,058 Japanese yen in 2018.
As a result of this acquisition, Red Planet Japan's portfolio will increase to a total of 15 hotels in Japan, Thailand, and the Philippines, including five hotels under development.
"We are delighted to announce the significant expansion of Red Planet Japan's hotel portfolio across Asia. Bilateral tourism is showing sustained growth, particularly among millennial customers who are Red Planet's core customer base," said Red Planet Japan's Chief Executive Officer, Tim Hansing. "This acquisition allows us to spread our geographical coverage and, in particular, penetrate key source markets for inbound visitation to Japan," Hansing added.
With the expansion of low-cost carrier routes, the liberalisation of visa requirements, and a growing affinity for Japanese culture, there has been a substantial increase in the number of tourists travelling from Southeast Asia to Japan in recent years, especially from Thailand. Thai visitors to Japan have more than doubled over the last five years to 1.13 million in 2018. Correspondingly, the number of Japanese visitors to Thailand continues to rise, exceeding 1.4 million visitors in 2016, 1.5 million in 2017, and 1.6 million in 2018.
The acquisition of Red Planet's Thailand hotels follows a series of expansion announcements by Red Planet Japan, including the planned opening of Red Planet Hiroshima Nagarekawa in the summer of 2020 and acquisition of two flagship properties in Manila in June 2018. Further, the fast-growing brand opened Red Planet Sapporo Susukino South, its fifth hotel in Japan, in June 2018, and expects to open its second property in Sapporo, Red Planet Sapporo Susukino Central, in October 2019.
Simon Gerovich, Chairman of Red Planet Japan, added, "Red Planet Japan is now a regional leader in the Asian budget hotel space with properties in Japan, the Philippines, and Thailand. Not only does this expanded network drive revenues and profit margins due to the economies of scale, but also underlines our regional operational expertise. As witnessed by our recently-announced joint venture which enables us to invest up to 22 billion yen in six new hotels over the next two years, we have the scale to attract new growth drivers such as franchising, management contracts, and joint ventures in both existing and new markets."