GIC plans to raise more than USD 583 million for the Hilton hotel
Singapore’s sovereign wealth fund is planning to sell a 1,053-room Hilton hotel in Japan. GIC has been considering offers from potential buyers since late 2023 but has yet to make a decision. The fund hopes to realise at least USD 583 million for the hotel. The maximum expected amount is USD 617 million.
The international chain’s designated hotel is in one of the country’s largest cities – Fukuoka. It is part of a hotel complex acquired by GIC in 2007. In addition to the hotel, the complex includes a shopping mall and a stadium.
The fund and the Hilton’s management company have not confirmed the sale. The process is early, and GIC can reject the buyer’s offer.
The attractiveness of the Japanese hotel sector
In 2023, investment in the Japanese hotel sector was one of the most popular in the region. Hotels were sought after by both local and foreign buyers. Many deals did not stay on the market for long, and activity in the sector was relatively high. A key factor in the popularity of hotel properties was investors’ hopes for developing the tourism sector. In addition, the yen exchange rate remains weak, allowing room rates to be quickly adjusted to inflation.
According to MSCI analysis, Japan accounted for around 50% of all transactions in the Asian market in the third quarter. This has made the country the most sought-after location for commercial property acquisitions.
Hilton Business Overview
Hilton Worldwide is the management company of the designated hotel. As of 2020, its portfolio included:
– 6,215 hotels, including timeshare;
– the company operated more than 983,000 rooms in total;
– it had operations in 118 countries.
The company has 18 brands operating in different markets. US chain Hilton Hotels & Resorts has been identified as a key player. In 2013, the company carried out its second IPO, raising USD 2.5 billion. At that time, the investment holding company Blackstone owned almost 46% of the company’s shares. In 2017, the largest shareholders were:
– HNA Group — 25%;
– Blackstone — 15,2%;
– Wellington Management — 6,7%.
Hilton Hotels is a separate company within the chain. It was the brainchild of businessman Conrad Hilton and has been in operation since 1919. The empire began with purchasing a small hotel in a Texas town. During the Great Depression, the company had to part with 10 hotels, but in 1934, Hilton brought the company back to life.
The Hilton chain revolutionised the hotel industry. Its founder was also the inventor of the labelling system that is now in use around the world. Conrad’s idea was to classify hotels according to their service level. This classification divides objects by the number of stars – from 1-2 to 5.