 2015-02-26 |
|
|
YC Expands into Hotel Business to Boost Revenue
Economic Daily News, February 26, 2015
By Reporter Pan Yi-Ching
YC Group (4306) is aggressively entering the hotel market this year. Two of its own properties, one on Chongqing South Road and the other in Shilin Chengde, are scheduled for renovation in April and May to launch a youth hostel and a business hotel, respectively. These will be operated by its subsidiary Wangzhou, targeting the influx of international tourists to Taiwan.
YC first ventured into the hotel industry in 2008, investing NT$700 million in a five-star hybrid hotel in Linkou called "Youguan." The first to third floors function as a motel, while the fourth floor and above serve as a business hotel, with an average occupancy rate of around 70%. On February 25, YC’s stock price closed at NT$15.3, down NT$0.05.
YC considers its initial foray into the hotel industry to be satisfactory. With the number of international tourists to Taiwan consistently reaching new heights—nearly 10 million last year, mostly from China, Hong Kong, Macau, South Korea, and Japan—the domestic hotel market still holds growth potential. While Chinese tourists often travel in groups, visitors from other regions generally prefer independent travel, leaving room for growth in the hospitality sector.
YC owns idle properties on Chongqing South Road and Shilin Chengde, which were initially leased out. However, prospective tenants requested long-term leases, conflicting with YC’s preference for short-term agreements. As a result, YC shifted its strategy to operating hotels. The company plans to invest around NT$150 million in renovations.
The Chongqing South Road property is a six-story building located relatively far from the MRT station, which YC plans to turn into a youth hostel with rates under NT$1,000 per night, aiming to attract backpackers. The hostel is expected to open by the end of this year, with projected monthly revenue of NT$2 million in its first year.
Meanwhile, the lease for the Shilin Chengde property expires in May, after which renovations will begin. This 10-story building will be converted into a mid-sized business hotel with 60 to 70 rooms, priced between NT$3,000 and NT$6,000 per night. YC aims for monthly revenue of NT$6 million to NT$7 million, with the hotel expected to open in the first half of next year and break even within three years.
In addition to expanding into the hotel industry, YC’s subsidiary, Wangzhou Construction, is launching the "Wangzhou More" residential project in Xinzhuang, with completion and handovers scheduled for the end of this year. Despite Taiwan’s recent housing market restrictions, analysts estimate that "Wangzhou More" will contribute approximately NT$0.4 to NT$0.5 to YC’s EPS.
YC Group operates three major companies: Wangzhou Construction, ACHEM, and Xinzhou Global, focusing on real estate development, adhesive tape and petrochemical products, and tape distribution, respectively.
With nearly 90% of the units in the first phase of the "Wangzhou More" project already pre-sold, the total sales are expected to reach NT$1.1 billion, contributing more than NT$0.4 to YC’s EPS, potentially as much as NT$0.5. |
|
