Homegrown hotelier with global ambitions
By Cecilia Chow and Timothy Tay
/ EdgeProp Singapore |
SINGAPORE (EDGEPROP) - From owning a lone Hotel 81 in Geylang, Choo Chong Ngen is now a tycoon with 38 hotels in Singapore and controls 10% of the city state’s hotel inventory. Where will the self-made entrepreneur go and what will he buy next?
From having one Hotel 81 in Geylang back in 1993, Singaporean Choo Chong Ngen has since grown his portfolio of hotels to 38 properties in Singapore and owns another eight hotels in five other countries including Australia, Japan, Malaysia and South Korea.
With 6,500 hotel rooms in Singapore, the chairman of Worldwide Hotels now controls 10.2% of the total inventory of completed hotel rooms, which number 63,850 as at end- 2018, according to the Singapore Tourism Board (STB).
Choo Chong Ngen, chairman of Worldwide Hotels, and his daughter, Carolyn Choo, who is the group’s managing director and CEO (Picture: Samuel Isaac Chua/EdgeProp Singapore)
As Choo’s hotel empire grew, so did his net worth, which increased 2.5 times from US$1.1 billion in March 2014 to US$2.8 billion ($3.9 billion) today, according to Forbes, which ranked him Singapore’s 10th richest man.
The inspiration to enter the no-frills, budget hotel business came while he was holidaying in Japan in the early 1990s. “I saw how a small hotel can still do well,” says the 66-year-old Choo in Mandarin. “At that time, there were not many professionally-managed budget hotels in Singapore.”
Homegrown brands
Choo may have started his Hotel 81 brand of hotels in the red-light district of Geylang. But he has since grown the portfolio of Hotel 81 to 28 hotels across the island. “We have many Hotel 81 outside Geylang,” he says. Most of them are in the city fringe, such as Balestier, Lavender and Bugis, with one each in Kovan and Changi.
The exterior of Hotel 81 Orchid in Geylang Lorong 8, one of 28 Hotel 81-branded properties in Singapore today (Picture: Worldwide Hotels)
Perhaps the most visible Hotel 81 is the one in Chinatown. Located at the junction of Upper Cross Street and New Bridge Road, the row of conservation shophouses in which it is located were formerly tenement houses or living quarters for civil servants during the colonial era. Choo purchased the shophouses at a URA auction in May 2002 and converted them into Hotel 81 Chinatown with 99 rooms.
“That’s our flagship Hotel 81,” says Carolyn Choo, managing director and CEO of Worldwide Hotels. Carolyn is Choo’s only daughter. A father of four, Choo has three sons, two of whom are in the business too: his eldest son is involved in the human resources department, while one of his younger sons is a director of sales. Choo is also a grandfather of eight, with his grandchildren ranging in age from six to 17.
Carolyn joined the company in 2002 – “after the Asian Financial Crisis”, she says. At that time, Choo had 12 hotels, all branded Hotel 81. “The management team was very lean then,” she recounts. It was made up of her father, her cousin and herself. Having spent three years in commercial banking after graduating from university, Carolyn was made the financial controller.
The 342-room Hotel Mi on Bencoolen Street is targeted at millennial travellers (Picture: Worldwide Hotels)
Since 2009, Choo has increased his portfolio of homegrown brands to six: Besides Hotel 81, there’s Hotel Boss, Hotel Mi, V Hotel, Value Hotel and Venue Hotel. To achieve economies of scale, Choo has focused on the econ- and mid-tier segments. Room rates range from under $100 to about $150 per night. Average occupancy rate (AOR) has been consistently in the “mid-80s” over the years, says Carolyn.
In Singapore, the group has 1,100 staff today, excluding contract staff. “Manpower constraints is one of the key challenges in the hotel business, especially with the lowering of the foreign manpower quota next year,” concedes Carolyn.
Regional footprint
The group celebrated its 25th year in business and incorporated Worldwide Hotels in October last year. “It also marked our second phase of growth, which will see us expanding further overseas,” says Carolyn.
The Holiday Inn Perth City Centre is one of eight overseas properties owned by Worldwide Hotels (Photo: Worldwide Hotels)
Choo has been venturing abroad since 2017. He now owns eight hotels in five countries, including Ibis Budget Osaka Umeda in Japan; the Travelodge Dongdaemun in Seoul, South Korea; Swiss Garden Kuala Lumpur, Malaysia; and Holiday Inn Perth City Centre, Australia. “Our aim is to have 20 hotels by our 30th anniversary,” says Carolyn. “For overseas assets, we are very particular about location and we will buy only if we can secure 100% ownership and freehold tenure.”
While the hotels in Singapore are wholly- owned and managed by Worldwide Hotels, the overseas properties are managed by international hotel management companies. “This is because we don’t have a competitive edge there yet,” she adds. So far, the group has invested $500 million in acquiring overseas assets and is projecting to double its capital investment to $1 billion for further acquisitions.
The economy and mid-tier segments in Singapore have proven to be more resilient than the luxury and upscale hotels: The AORs for luxury and upscale hotels were 91.4% and 92.2% respectively in July, while the mid-tier segment achieved AOR of 96.1% and the economy segment, 93.1%, over the same month. This July, hotels in Singapore enjoyed an occupancy rate of 93.8% – the highest since 2005, when the STB began compiling such statistics.
Venue Hotel is a line of budget hotels located within shophouses in heritage areas such as Joo Chiat (Picture: Worldwide Hotels)
First PPVC-constructed hotel
That could explain Worldwide Hotels’ record bid of $562.2 million ($2,148.5 psf per plot ratio or ppr) for the Government Land Sales (GLS) hotel development site at Club Street at the close of the tender in January this year. “The location in Club Street was a main factor – strategically located in the CBD as well as the Chinatown cultural district,” says Carolyn. “This is a very rare hotel site; the last time a hotel site was put up for sale in the GLS programme was in 2013.”
The group intends to launch a new brand for the upcoming hotel at Club Street, adds Carolyn. The new hotel will be in the economy to mid-tier segment, and will have over 900 rooms.
Source: URA
Read the story here: Worldwide Hotel Group submits top bid of $562.2 mil for Club Street hotel site
The 20-storey building on Club Street will be the first hotel in Singapore to be constructed using full concrete PPVC (Prefabricated Prefinished Volumetric Construction) method. It will be built by listed construction company, Tiong Seng Holdings, which was awarded the $130.5 million contract on Aug 27. The hotel rooms will be on the second to 20th levels, with the first level to be occupied by shops and restaurants. There will also be basement parking. The hotel will be linked underground to the Telok Ayer MRT Station on the Downtown Line.
Big, bigger, biggest
Last November, Worldwide Hotels purchased the freehold Golden Wall Centre, off Rochor Canal Road near Little India, in a collective sale for $276.2 million ($2,331 psf ppr). A stratatitled commercial complex, Golden Wall Centre has received approval for redevelopment into a hotel. However, the collective sale has been stalled, following some objections raised by one of the subsidiary proprietors. The case is pending a High Court hearing at the end of the month.
If the collective sale is successful, the new hotel on the Golden Wall Centre site will not be as big as the upcoming property on Club Street, says Carolyn. With more than 900 rooms, the new hotel on Club Street will be the second biggest in Worldwide Hotels’ portfolio when completed at the end of 2021. The Hotel Boss, located at the junction of Jalan Sultan and Victoria Street, is the biggest with 1,500 rooms.
The 888-room V Hotel Lavender is the second biggest hotel in Worldwide Hotels’ portfolio today (Picture: Worldwide Hotels)
The second biggest hotel is currently the V Hotel Lavender on Jellicoe Road, which has 888 rooms. It is linked to the Lavender MRT Station and opposite the ICA (Immigration & Checkpoints Authority) Building on Kallang Road.
Over the years, Choo has been approached by interested investors about his portfolio, but he has never considered selling any of his hotels. “My dad is very steadfast,” says Carolyn. “Throughout the cycles and even during the economic downturns – from Asian Financial Crisis, SARS [severe acute respiratory syndrome] outbreak and Global Financial Crisis – he never sold a single hotel. When you have been holding a hotel for 25 years, there is significant capital appreciation.”
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