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Langham looks to manage projects
NINA SUEBSUKCHAROEN
PHUKET : Phuket's appeal to Hong Kong residents extends beyond holidaymakers and purchasers of upscale villas, with large-scale investors now establishing themselves on the resort island.
Among them is the hotel management company Langham Hotels International, a subsidiary of Hong Kong-listed Great Eagle Holding Limited. After successfully launching Langham Place Eco Resort & Spa on Lanta Yai island in Krabi, the company is now getting ready to manage new developments on Phuket itself.
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| Jessop: Phuket doesn’t seem to catch a cold |
One of these is a hotel in the Kalim Bay area, where an Irish construction company is currently building a project with a residential ownership component, but the developers will be keeping the major portion of the inventory for themselves.
The second development will only be a condo hotel.
Andrew Jessop, Langham Hotels International's vice-president for Thailand, said that the residential component of both hotels would be marketed globally and not just in Hong Kong.
"Phuket has such an appeal that you'll find a lot Europeans, people in the UK will be interested, even North America."
Mr Jessop's previous experience at the Sheraton Grande Laguna shows that the yield at such mixed-use projects has dropped over the past five to eight years. As the Sheraton project was one of the first of its kind on the island, initially unit owners obtained as much as 20% plus per year. This high return has deteriorated in the face of higher competition from similar developments, and today investors would be doing well if they could get 10%.
A portion of these developments offer guaranteed returns ranging from 3% to 6%. While this is a fair arrangement, investors should be getting more at the better projects.
"If it's a non-branded development you are facing more challenges but hopefully with a branded company behind it, it should be able to do better," said Mr Jessop.
Langham Hotels is also looking at five other management opportunities aside from focusing on Bangkok where it would want to be as close to the Skytrain as possible. Mr Jessop also has experience in the capital, having first come to Thailand to open the Sheraton Grande Sukhumvit Hotel in 1995.
"We have three brands and we have potential for each brand. So The Langham is our high-end brand, Langham Place is a cool, hip, chic brand, and Eaton is our four-star brand. We are talking to developers across all three brands because in Phuket there is a lot happening, in Bangkok too, and really Sukhumvit is where it's all happening."
While there is no ignoring the political turmoil in Thailand, Mr Jessop points out that Phuket has proved to be very resilient, having bounced back quite well from earlier upheavals including 9/11, the tsunami, the Bali bombings, Sars and the bird flu.
"Phuket sneezes but it doesn't seem to catch a cold," he said.
"Property prices have not really been affected over the years, which is a good thing. I think at the end of the day Phuket is such a brand name of its own, it's almost divorced from Bangkok to a certain extent in the minds of investors. You can fly in and out of Phuket a hundred times and never go to Bangkok if you don't want to."
He is also optimistic about the island's future, noting that even now, only a few of the international hotel brands are there. Among those that have yet to enter this lucrative market are Four Seasons, Ritz Carlton, Fairmont and Grand Hyatt.
"We're going to see a transition over the next 10 years from owner-operated resorts to branded international chains. I think the customer demands are changing, people's needs are changing. In the past the guests were satisfied with a beautiful smile, a fruity drink on arrival, some exotic fruit in the room and somewhere to sit on the beach and they were happy.
"I think people's needs today are much more immediate, more refined and personal - 'what I want, not what everyone wants' - and that does require a little bit more work behind the scenes to make it happen. So I think we are seeing that transition now."
In his opinion, Phuket, Bali and Samui rank in that order as the premier resorts in Asia. Phuket's advantage is that it now has very good infrastructure and is easily accessible from Hong Kong, Singapore and other gateway cities.
"Samui and Bali have a similar appeal about them whereas Phuket is slightly more cosmopolitan."
But there is a sparkle in Mr Jessop's eyes when one mentions Krabi, where he is currently based. "It's definitely more scenic than Phuket. Certainly the rock formations and the limestone cliffs, even as you are driving through the roads, are just fabulous."
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