Funds to buy distressed hotels

BANGKOK 21 July 2020: Destination Capital, Bangkok-based private equity real estate investment and asset management company, is set to join forces with its capital partners to acquire hotel assets in the Asia Pacific.

It will start with Thailand employing a strategy of acquiring strategic hotel assets and then adding value through renovation, asset management and rebranding typically with a global hotel brand to boost financial returns and revitalize the hospitality sector.

Destination Capital chief executive, James Kaplan, shared that Destination Capital will focus on prime-located freehold hotels and resorts of approximately 200 rooms located in key urban and resort locations.

Thailand is awash with empty hotel rooms, and most hotels are now in a financially distressed state as travel arrivals plummeted since March due to the ban on commercial international flights that remains in place possibly until September. Tourist arrivals are likely to fall to around 8 million this year compared with 2019 that generated 39.8 million arrivals.

Millions of people are unemployed, and thousands of hotel rooms are now shuttered which has prompted the immediate need for fresh injections of capital necessary for hotels to re-employ and re-open as well as sustain operations during what most industry experts agree will be a more prolonged recovery cycle until a vaccine is available and air traffic returns with regularly scheduled service.

Although the hospitality industry will be slow to recover as a result of the current situation, historically, Thailand rebounds from crisis to become more resilient.

“We believe a similar rebound story will be true with a full recovery in 3-4 years,” said Kaplan. “We will deploy our resources to source and acquire hotels which present a turnaround story during this period of rebound.”

Destination Capital (DC) was recently formed as an investment fund to partner with private equity and institutional Funds to source hotel acquisition opportunities and asset management in the Asia Pacific region with an emphasis on Thailand.

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