Country for PR: Hong Kong
Contributor: PR Newswire Asia (Hong Kong)
Thursday, March 26 2020 - 16:33
AsiaNet
OUE Group to Rebrand Mandarin Orchard Singapore as Hilton Singapore Orchard
SINGAPORE, March 26, 2020 /PRNewswire-AsiaNet/--

- Transformational rebranding with addition of new income-generating spaces to 
drive growth in sustainable returns and value 
- Rebranding will allow the hotel to leverage Hilton's strong brand recognition 
and global sales and distribution network 
- Hotel set to become Hilton's flagship in Singapore and the largest Hilton 
hotel in Asia-Pacific 
- Major refurbishments to take place from 2Q 2020 onwards to capitalise on weak 
operating environment due to COVID-19 and to position the property to benefit 
from the expected recovery in the Singapore hospitality sector once travel 
confidence resumes 
- Expected relaunch of hotel in 2022 


OUE Limited ("OUE") and OUE Commercial REIT Management Pte. Ltd., in its 
capacity as manager (the "Manager") of OUE Commercial Real Estate Investment 
Trust ("OUE C-REIT") have collaborated to rebrand the landmark Mandarin Orchard 
Singapore to Hilton Singapore Orchard ("Re-branding Exercise"), following a 
comprehensive and strategic review. 

Logo-https://photos.prnasia.com/prnh/20200326/2761482-1LOGO
Logo-https://photos.prnasia.com/prnh/20200326/2761482-1-a-LOGO

OUE, which is the master lessee of Mandarin Orchard Singapore, has entered into 
a Branding and Management Agreement (the "BAMA") with Conrad International 
Management Services (Singapore) Pte. Ltd. ("Hilton") to rebrand Mandarin 
Orchard Singapore into Hilton's flagship in Singapore. 

Under the BAMA, Mandarin Orchard Singapore will relaunch as Hilton Singapore 
Orchard—Hilton's flagship in Singapore and the largest Hilton hotel in 
Asia-Pacific—with product and service offerings aligned with Hilton's brand 
standards. Hilton will have the exclusive authority to operate the property 
upon the opening of Hilton Singapore Orchard. 

Asset enhancement works to add new meeting facilities as well as refreshed food 
and beverage offerings to cater to the growing demand for regional and global 
meetings, incentives, conference and exhibition ("MICE") events have also been 
planned. The planned refurbishment will be conducted in phases and will 
commence in 2Q 2020 to capitalise on the current challenges facing the 
hospitality industry due to COVID-19. The refurbishment is scheduled to be 
completed by end-2021. During the refurbishment period, Mandarin Orchard 
Singapore will continue to operate under the management of Meritus Hotels & 
Resorts, the hotel management company under the Hospitality Division of OUE. 

Upon its relaunch in 2022, the hotel will feature 1,080 well-appointed rooms 
and five restaurants and bars including an all-day dining restaurant. The hotel 
will also boast meeting and function spaces spanning a total of 3,765 square 
metres, including three ballrooms.

"We are presented here with exciting opportunities to tap on the strong brand 
recognition, global distribution network, and industry-leading innovations that 
Hilton brings, as we reposition the property more strategically for the longer 
term within Singapore's landscape of robust tourism growth and at the same time 
increased competition in the hospitality industry," says Mr Brian Riady, Deputy 
Chief Executive Officer of OUE.

Mr Riady added, "The rebranding of Mandarin Orchard Singapore is a fitting 
culmination to its 50-year legacy as the benchmark of gracious Asian 
hospitality in Singapore, following a comprehensive and strategic review by OUE 
in collaboration with OUE C-REIT. For the customer, this new chapter translates 
to exceptional service experiences synonymous with the Hilton brand. For our 
employees, being part of an international hotel chain offers tremendous 
opportunities for career growth and development."

Ms Tan Shu Lin, Chief Executive Officer of the Manager said, "We firmly believe 
in the long-term value of our landmark asset. This strategic partnership 
presents an attractive opportunity to strengthen the property's position as one 
of the premier hotels in the prime Orchard Road segment." 

"The rejuvenation into an upper upscale hotel combined with the addition of 
more income-generating spaces within the property allows the Manager to create 
value and drive sustainable returns in line with our proactive asset management 
approach. The current challenges faced by the Singapore hospitality sector also 
present a timely opportunity for us to carry out the extensive renovations, 
with the rebranded hotel expected to be ready in time to take advantage of the 
sector's anticipated recovery," added Ms Tan. 

Rationale for the Rebranding Exercise 

Prominently located in the heart of Singapore's premier Orchard Road shopping 
and entertainment belt, Mandarin Orchard Singapore, which began operations in 
1971, is part of OUE C-REIT's portfolio, under OUE Hospitality Sub-Trust.  OUE 
and the Manager believe the Rebranding Exercise will significantly enhance the 
property and drive growth in long term sustainable returns and value to the 
Unitholders of OUE C-REIT.  

The benefits of the Rebranding Exercise are as follows: 

(a)  Hilton's strong brand recognition and marketing enhance the property's 
competitive positioning

The rebranding of "Mandarin Orchard Singapore" to "Hilton Singapore Orchard" 
enables the property to tap on Hilton's strong brand recognition and marketing, 
enhancing its competitive positioning alongside other upper upscale hotels 
along Orchard Road. The Hilton brand is the flagship brand of the Hilton 
portfolio and has more than 570 properties across six continents[1]. Based on 
the Brand Finance Hotels 50 2019 Report, the Hilton Hotels & Resorts brand is 
the world's most valuable individual hotel brand. 

(b)  Hilton's strong global distribution network and established partnerships 
complement the property's existing distribution and marketing strategies   

The property stands to benefit from Hilton's strong global distribution 
network, allowing it to tap into the higher yielding luxury market for both 
leisure and corporate segments with the brand's pipeline of global key accounts 
and established partnerships with global travel companies. This complements the 
property's current strength in serving regional guests, particularly in the 
leisure segment, as well as diversifies its business mix and enhancing revenue, 
distribution and marketing strategies. 

(c)  Opportunity to drive more direct booking business on the back of 
established guest loyalty programme

The property, which will be the largest Hilton hotel in Asia-Pacific when it 
relaunches with 1,080 rooms, will also be able to expand its reach to more than 
100 million members worldwide through the highly successful Hilton Honors guest 
loyalty programme, as it drives more direct booking business. 

(d)  Positions the property to better capitalise on long term growth drivers in 
the Singapore hospitality sector 

With the addition of new meeting spaces as part of the Rebranding Exercise, the 
property will be well positioned to cater to growing demand for MICE events, as 
Singapore continues to grow and enhance its profile as the top Asian MICE 
destination for regional and global events. Although the Singapore hospitality 
sector will be negatively impacted in the near term by the COVID-19 situation, 
the Rebranding Exercise positions the property to capitalise on the expected 
recovery in the sector once the situation is under control and travel 
confidence resumes.

Furthermore, with increased vibrancy from the planned revitalisation of the 
Orchard Road shopping precinct, supported by sustained efforts by the 
authorities to amplify the appeal of Singapore as a top global destination to 
business, leisure, and MICE audiences worldwide, the longer term outlook for 
the Singapore hospitality sector is favourable. 

Master Lease Agreement ("MLA")

OUE is the master lessee of the property under a master lease agreement entered 
into between OUE, the trustee of OUE Hospitality Sub-Trust and the Manager (the 
"MLA"). Under the terms of the MLA, the master lease shall be for an initial 
term of 15 years from 25 July 2013, with an option to renew for a further term 
of 15 years. 

In conjunction with the entry into the BAMA, OUE Hospitality Sub-Trust (as the 
owner of the property) has provided an undertaking to Hilton that in the event 
the MLA expires or is otherwise terminated, OUE Hospitality Sub-Trust shall 
nominate an affiliate (failing which, OUE Hospitality Sub-Trust will assume) 
the obligations of OUE under the BAMA. The Manager will, when appropriate and 
in due course, decide and propose the appropriate course of action in such 
event. 

Key commercial terms of the MLA remain unchanged. Under the terms of the MLA, 
there is downside protection from the master lease for OUE Hospitality 
Sub-Trust as the MLA has a fixed minimum rent component of S$45.0 million per 
annum, which will provide income assurance to Unitholders of OUE C-REIT 
throughout the period of phased renovation and ramping-up of operations. 

Financial Impact on OUE C-REIT

OUE C-REIT expects to incur capital expenditure of approximately S$90.0 million 
in the Rebranding Exercise, with a projected return on investment of 
approximately 10% on a stabilised basis. The Manager intends to draw down on 
existing loan facilities to fully fund the Rebranding Contribution 
progressively over the renovation period. As the capital expenditure will be 
expended in phases, the exercise is not expected to have any material impact on 
the aggregate leverage or earnings of OUE C-REIT for the financial year ending 
31 December 2020.

[1] Source: https://newsroom.hilton.com/hilton/page/quick-facts
 
For further information and enquiries, please contact: 

OUE Limited
Adrian Tan
Senior Vice President,
Hospitality Asset Management
Tel: +65 9618 5081
Email: adriantan@oue.com.sg.

OUE Commercial REIT
Elaine Cheong
Senior Vice President, Investor Relations 
Tel: +65 6809 8704 
Email: elaine.cheong@ouect.com

For more information on OUE Limited, visit www.oue.com.sg

For OUE Commercial REIT, visit www.ouect.com

SOURCE: OUE Limited

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