There is an opportunity to set up a boutique hospitality fund primarily focusing on developing accommodation sector inline with government strategy to develop new tourism destinations in Indonesia. The Fund will align with this strategy by addressing the development of the accommodation sector in those areas by identifying and acquiring underperforming/undervalued hotel and resort related assets, subsequently upgrading/renovating them, operating and then eventually exiting the fund to deliver the ROI to the general partners through various models such as direct sell/IPO etc.
International tourism arrivals keep growing YOY. Local tourist arrivals also keep growing as Indonesia’s mid segment of population gets wealthier, transport infrastructure improves and travel costs decrease. Most of this demand is for budget and upper budget accommodation segments, especially in undeveloped locations
Currently there are over 300,000 unbranded hotels and resorts in Indonesia, many of which are under-performing/undervalued. Companies such as RedDoors, OYO and big hotel chains take an advantage of this trend to grow their supply pipelines
Indonesia’s government has announced the tourism development strategy for the country which includes infrastructure development for underdeveloped potential tourism locations to developed more “Balis”. There is an opportunity to work with government to address the accommodation development part of this plan by launching the Indonesia's first hospitality fund
An opportunity to bring together interested investors to form a hospitality fund, which will introduce several innovative business models to generate most value for the owners by, for example, as replicating the “Interstate Hotels” model in Asia as hotel owners getting more reluctant to enter long term, restrictive, management contracts with high fees
KEG Resorts is currently in discussion with partners to set up the hospitality fund