Minor-Khazanah tie-up to build RM243m Anantara resort in Desaru

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This article first appeared in The Edge Malaysia Weekly, on October 19 - 25, 2015.

 

Minor Hotel Group (MHG), the hospitality unit of Thailand-listed Minor International PCL, has teamed up with Khazanah Nasional Bhd’s Themed Attractions Resorts & Hotels Sdn Bhd (TAR&H) to develop a US$58 million (RM243 million) resort in Desaru, Johor.

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For MHG, the venture marks not only its maiden hotel investment in Malaysia and the entry of its Anantara brand into the country but also the expansion of several other brands within the group, including AVANI and Oaks.

MHG, which is a hotel and resort owner, operator and investor, will invest US$34.8 million for a 60% stake in the joint venture to build the Anantara Desaru Resort & Villas. TAR&H will hold the remaining 40%.

In an interview with The Edge, MHG director of public relations and communications Mark Alan Thomson says construction is expected to commence in end-2015 with completion in 2018.

“This is a big investment for us. There will be 123 keys — 103 deluxe rooms and 20 three and four-bedroom pool villas,” he says. Describing Anantara as a laidback luxury brand, Thomson says the new resort will be based on three themes — plantation, kampung and beach. This is also the first time it is building villas of this size as it wants to target the family market.

Thomson says he is confident that the hotel will post a gross operating profit (GOP) within the first month of operation as it will start receiving bookings six to eight months before its opening. GOP is gross revenue (from rooms, food and beverage, laundry and business centre) minus the cost of operation (wages, electricity and amenities). In Malaysia, it is rare to see hotels achieve GOP within the first month of operation, particularly because the country has one of the lowest, if not the lowest, room rates in the world.

Anantara Desaru Resort & Villas is looking at an average room rate (ARR) of RM1,100 before tax for the entry-level rooms and projecting a 60% occupancy for the first month. At RM1,100 per night, the rate is comparable to that in Langkawi, where the ARR is the highest in the country. The resort is targeting long-stay guests from Europe but is also expecting Malaysians and Singaporeans to take up its rooms.

A beach-front accommodation, Anantara Desaru Resort & Villas will form part of TAR&H’s planned Desaru Coast project on a 17km stretch of beach at the southeastern tip of Johor, which is being developed as a luxury destination. Anantara will join several other luxury hotel brands in Desaru Coast, including Aman Country Club and Aman Villas, Westin Desaru Resort, The Datai Desaru and The Desa Hotel.

On competition in Desaru, Thomson says Anantara’s positioning will be one notch below Aman’s and it will not be competing on price points but rather the experiences that it offers.

Desaru Coast will also have a lifestyle village comprising eateries, a retail and entertainment component known as The Riverine, a fully equipped conference centre and two championship golf courses — the 27-hole Els Desaru Coast and 18-hole Els Club Desaru Valley. Prime residences will be built around the golf courses, offering 360° views of the greens. Moreover, Desaru Coast will be home to a 20-acre water adventure park. Malaysia is gradually transforming into the theme park capital of the region, with Johor alone boasting at least 15 theme parks.

On MHG’s future expansion in Malaysia, Thomson says on visiting Desaru, the group had wondered why it had not made an entry into the Malaysian market much earlier.

“Our five-year strategy is, if we have an Anantara, then there will be an AVANI close by and then hopefully, an Oaks as well. Then we have the five-star market, the four-star market and the long-term stay. This is happening in the Middle East and Bali (Indonesia),” he says, hinting at the possibility going forward.

The current focus, however, is getting Anantara Desaru up and running. In the interim, MHG could sign hotel management contracts. Anantara, a 15-year-old brand, has 34 resorts in 10 countries and is moving away from being perceived as just resorts. “Tourism in Malaysia is big. It has nice beaches and fantastic food. AVANI [Sepang Goldcoast Resort] was the first to test the waters and it is doing incredibly well. We are moving away from the resort feel to city properties,” Thomson says, adding that Kuala Lumpur would be a perfect spot.

MHG started managing AVANI Sepang Goldcoast Resort in February last year. The hotel now enjoys an ARR of RM500. Average occupancy on weekends is between 60% and 70% and occasionally touches 80% on extended weekends. On weekdays, it is 40% to 50%.

MHG has a portfolio of 135 hotels, resorts and serviced suites under several brands, including PER AQUUM, Elewana and Tivoli. In Malaysia, MHG also operates six Mandara Spas. The company’s hospitality division contributes the bulk to Minor International’s annual revenue, at 49%. In its financial year ended Dec 31, 2014, Minor International posted a net profit of 

THB4.4 billion (RM518.4 million) on the back of THB39.79 billion in revenue.

The group also operates restaurants like Thaï Express and cafés such as The Coffee Club. In retail, it is a leading distributor of lifestyle consumer products in Thailand for brands such as Gap, Esprit, bossini, TUMI and Charles & Keith.

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