Waterfront spending P5B to buy hotels

GATCHALIAN-OWNED Waterfront Philippines, Inc. is allotting some P5 billion for the acquisition of up to four hotels within the next two years, a top company official said. "We’re always in that process of expanding our hotel business. We’re in talks with various parties and exploring ways to develop our brand in the first-class business hotel and casino [segment]," Waterfront President Kenneth T. Gatchalian in an interview. "We’re looking at three or four [hotels to acquire] but nothing is final yet. We’re considering some in Iloilo, Ortigas, the Bay area [on Roxas Boulevard] and Cagayan de Oro," he said. Mr. Gatchalian said the company wants to purchase properties that will only need refurbishments. Funding will be sourced internally. The hotel acquisitions will be executed through Waterfront’s affiliates as the company wants to insulate its books from any transaction. "Waterfront would not be the lead party in those transactions. We want to improve our revenue base without adding more debt to the company," Mr. Gatchalian said. The company hopes to be free of debt by early 2009 after repaying its remaining obligations, which stood at P900 million last year. Waterfront is finishing the facilities upgrade of the Manila Pavilion Hotel and Casino beside Rizal Park. Manila Pavilion is the trade name of publicly listed Acesite (Philippines) Hotel Corp. in which Waterfront bought 74.89 million shares or 75% through a cross-sale in the local stock exchange in 2003. "We’re renovating our facilities and conducting management services. We target to finish the renovations within the next two years, after which we can [change the name] into a Waterfront brand," Mr. Gatchalian said. Waterfront has close to 1,550 rooms in all of its hotels, employs 1,560 employees, and has over 41,000 square meters of convention and casino space. It houses the country’s biggest gaming facilities. Aside from Manila Pavilion, the hotel chain includes Waterfront Cebu City Hotel and Casino, Waterfont Airport Hotel and Casino Mactan, and Waterfront Insular Hotel Davao. These hotels enjoyed an occupancy rate of between 65% and 75% last year with rates ranging from P2,800 to P3,000, Mr. Gatchalian said. This year, he said, the company aims to increase hotel occupancy rates to between 70% to 75% along with a rate increase to between P3,000 and P3,500. Waterfront is 60% controlled by The Wellex Group, Inc., which is owned by plastics king William Gatchalian. Waterfront’s subsidiaries include Waterfront Promotions Ltd., Waterfront Entertainment Corp., Mayo Bonanza, Inc., Grand Ilocandia Resort Development, Inc., Waterfront Food Concepts, Inc., Waterfront Management Corp., and W Citigyms and Wellness, Inc. At Tuesday’s trade, Waterfront shares closed by 4.17% higher at three centavos to 75 centavos apiece. — Lovely Nica P. Lee, BusinessWorld