Berjaya Hotels wants to hive off some foreign assets

From the Business Times:

Hospitality group Berjaya Hotels & Resorts plans to sell off its properties in Seychelles, Sri Lanka, Singapore and London to concentrate on its more profitable markets in Asia-Pacific.

Chief executive officer Joseph Won said the group wants to sell Berjaya Colombo Hotel and Berjaya Singapore Hotel, exiting entirely from Sri Lanka and Singapore, despite the two being in Asia-Pacific, to focus on bigger markets.

Won said if prices are right, it would also dispose of Berjaya Beau Vallon Resort and Berjaya Praslin Resort in Seychelles and Berjaya Eden Park Hotel in London.

He said the group is in discussions with a few parties for its properties in Seychelles and London and hopes to sell them within the next two quarters.

Locally, the group operates Berjaya Langkawi Resort, Berjaya Tioman Resort, Berjaya Redang Resort, Berjaya Georgetown Hotel, Colmar Tropicale and Berjaya Times Square Hotel in Kuala Lumpur.

The properties, including those overseas, are worth a combined RM900 million.

"We have made a strategic decision to be Asia-Pacific focused. We are transforming ourselves in such a way to become one of the biggest hotel groups in the region," Won said in an interview with Business Times.

He added that the plan for Asia-Pacific would be to open up to 20 new hotels and resorts in Japan, South Korea, Vietnam, Maldives and Malaysia over the next six to seven years.

The list would include Berjaya branded properties, which the group would own and operate on its own, and hotels operated by third parties.

Berjaya Hotels & Resorts will use proceeds from the sale of the foreign properties, and its own reserves and existing cash flow to finance the expansion.

In addition to opening more properties, the group will also be looking for management contracts in Asia-Pacific.

"We are getting offers from China and Vietnam to operate their wholly-owned resorts and hotels, under the Berjaya brand. This is something we would be doing on a big scale," Won said.

The group, in a 70:30 joint venture with a local Vietnamese firm, is currently constructing Berjaya Resorts Phu Quoc Island in Phu Quoc Island for US$45 million (US$1 = RM3.48).

Won said the new resort is targeted for opening in the second or third quarter of next year.

"This is our first property in Vietnam and I wish to do more. I am bullish on the market. We will be expanding there aggressively," Won said.

The group is also looking to open a city hotel in Ho Chi Minh City and a beach resort in Da Nang, within the next four to five years.

Meanwhile, Won said Berjaya Hotels & Resorts may be listed in the future to expedite its expansion and unlock the value of its properties.

"Listing is a possibility that everybody is talking about. My (immediate) aim is to take the group global after we have opened the new properties," he added.

To me, the Berjaya's plans seem a bit all over the place. They want to concentrate on Asia, but yet sell off in Sri Lanka, a potentially extremely prosperous area in the near future due to reconstruction efforts. They want to get rid of the hotel in Singapore, but want to expand to Japan, South Korea. This is a joke. I could argue that Japan and South Korea are tougher places to do business than Singapore.

Berjaya doesn't seem to have a coherent strategy. They could be just selling these places because they are under performing. A hotel in London and Seychelles would likely be pulling some major losses due to the hotel recession in developed economies. In that case, well they might take a loss. If I were a shareholder, I'd be wondering what the hell are they doing over at the company.