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The Ascott Limited: Pioneer in serviced residences

Key Figures
  • CEO: Lee Chee Koon (as of June 2013)
  • Properties: 200+ Units: 22,000+ (10,000+ in pipeline)
  • Brands: Ascott The Residence, Citadines Apart'hotel, Somerset Serviced Residence
  • Founded: 1984
  • Parent Company: CapitaLand

The Ascott Limited (Ascott) was a pioneer in the world of serviced residences, Asia Pacific's first international-class serviced residence. In three decades, it has grown to become the world's largest international serviced residence owner-operator. Currently, Ascot's portfolio has more than 33,000 apartment units in over 200 properties. Its portfolio spans 82 cities across 22 countries in Asia Pacific, Europe and the Gulf region. The group still maintains its position as an important innovator in the industry, a finalist in the Best Innovation in-Room in the 2013 Worldwide Hospitality Awards.The Ascott Group began in 1984 with the opening of the Ascott Singapore serviced residence, while the concept was just gaining momentum in Asia Pacific. The company was then known as Scott's Holding, a well-known Singapore corporation with business interests in serviced apartments, shopping centers and property investments. In fact, the group only became residence-focused relatively recently, around the year 2000, when Scott's Holding merged with several other residence branches. Through these mergers, the holding company officially became the Ascott Group, the largest serviced residence company in Asia Pacific. Ascott's serviced residences cater to the growing demand from expatriates and travellers for a spacious and homely accommodation.The Ascott Limited came into existence relatively recently in 1999. Until then, Scotts Holdings had been dabbling in serviced residence since the opening of the Ascott Singapore in 1984, with interests also including shopping centers and property investments. It was not until the new millennium that the company started to define its interests to serviced residences, highlighted when Scotts Holdings merged with Stamford Group to form The Ascott Limited. The joint portfolio had more than 1,700 keys in eight cities. Although growth had been relatively slow for the past fifteen years, the company quickly took up expansion efforts.The Ascott Limited made another major expansion to its network when it officially became the Ascott Group upon merging with Somerset Holdings Limited in 2000. It thus became the largest serviced residence company in Asia Pacific, with a combined portfolio of 6,000 residence units in 16 cities spread over 10 countries. The decision to merge began yielding positive financial results as early as the next year. The merger also helped Ascott diversify its portfolio geographically, extending its network into Europe and the United States. According to Ascott's former managing director and CEO, Mr. Kee Teck Koon, a new era began for Ascott, marking its transformation from an Asia Pacific brand to a global brand. "As market leaders in the Asia Pacific, we already have significant presence and brand equity in most of the countries we operate in. This is an excellent platform from which to compete for international leadership and establish global brands", said then the Ascott Group's former chairman, Mr. Lim Chin. The Ascott Group was listed several months later, in 2001. Dominance through merger & acquisitionAscott further pursued further international dominance through the acquisition of a 50 percent stake in Citadines in 2003; in 2004 it exercised its call option to acquire the remaining 50 per cent interest in the pan-European serviced apartment chain for 74.3 million euro. Thus, Ascott acquired full ownership of the 5,100 serviced apartments under Citadines in 18 major European cities. With the Citadines portfolio, Ascott reached a group portfolio of over 13,800 serviced apartments in 39 cities across Europe and Asia Pacific. As highlighted by executives at Ascott, this was not just a financial operation: "By acquiring the remaining stake, Ascott will be able to fully integrate the European chain with the rest of its operations to achieve greater economies of scale", stated Mr. Liew Mun Leong, Ascott's former deputy chairman, and former president and CEO of its parent company, CapitaLand Limited. "It will also be able to leverage a combined larger customer base to cross-sell and accelerate sales growth. Citadines is expected to contribute significantly to the group's profitability, going forward", he speculated at the time of 100% acquisition.That year, through investment and management contracts, Ascott added 18 properties with more than 2,900 apartment units to its portfolio. These include properties that marked its entry into cities such as Hefei, Nanjing and Wuxi in China, Gurgaon in India, Riyadh and Jeddah in Saudi Arabia and Sri Racha in Thailand. Ascott also enhanced its profile in the North American market through the formation of a marketing partnership with AKA, a luxury brand of serviced residences, and the appointment of Serviced Apartments Worldwide as its sales representative in the United States. This further extended Ascott's international reach. The Ascott Residence TrustIn 2006, The Ascott Group marked another major development by listing the Ascott Residence Trust on the Singapore stock exchange. The Ascott REIT (real estate investment trust) was the first Pan-Asian serviced residence REIT. The Ascott Residence Trust was established with the objective of investing primarily in real estate and real estate-related assets for use as serviced residences, rental housing properties and other hospitality assets. It enables Ascott to divest assets with stable yield to the REIT and reinvest the proceeds to grow its business. The initial portfolio was valued at 504 million euro with 12 of Ascott's serviced residences in key high-growth Pan-Asian gateway cities where Ascott held a leadership position. The 12 properties, with a total of 2,068 units, were located in Singapore, China, Indonesia, the Philippines and Vietnam, countries which still enjoy rising GDP and foreign direct investments.In April 2009, the trust had a combined portfolio of 0.9 billion euro, with 38 serviced residences and rental housing properties across seven countries. By March 2010, The REIT's asset size reached about 1.7 billion euro, more than tripled its original size when it started being listed on the Singapore Exchange. Mr. Lim Chin Beng, former Chairman of Ascott, said at the time of the listing: "the setting up of ART is an innovative initiative that will unlock shareholder value and propel Ascott towards its objective of growing its global portfolio from the current 15,500 serviced residence units to 25,000 units by 2010. With an integrated business model, Ascott will also be in a better and stronger position to achieve its next level of growth beyond 2010".The Group's BrandsToday, the Ascott Group's acquisition-based growth strategy has resulted in three brands: Ascott The Residence caters to top business executives with efficient business support services in an exclusive environment. Citadines provides independent travelers with the flexibility to choose the services they require. For guests with children, Somerset-branded properties come with facilities such as playgrounds, indoor playrooms and children's swimming pools.The Ascott Group set out in the direction of serviced residences when the sector was only just gaining momentum in Asia Pacific. It began early to consolidate its interests in that sector as mergers with the Stamford Group and Somerset Holdings, two other Asia Pacific leaders in serviced residences, transformed the company from Scotts holdings to the Ascott Group, the largest serviced residence company in Asia Pacific. Interest in Citadines helped the group expand into Europe. The Ascott Group can now boast an internationally recognized business brand with 20,000 keys over 40 cities throughout Asia and Europe.Ascott currently has more than 50 properties under development in the key gateway cities of China, Germany, India, Indonesia, Malaysia, Oman, Saudi Arabia, Singapore, the Philippines, Thailand and Vietnam. The company sees strong potential for further growth in Asia Pacific, London, Paris and key cities in Germany and will continue to look for expansion opportunities in these markets to achieve its target of 40,000 apartment units globally by 2015.


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