OUE to rebrand Mandarin Orchard as largest Hilton hotel in Asia-Pacific

PROPERTY group OUE and OUE Commercial Reit (OUE C-Reit) will spend about S$90 million to rebrand Mandarin Orchard Singapore as Hilton Singapore Orchard, OUE said on Thursday.

It will be Hilton's flagship hotel in Singapore and its largest in the Asia-Pacific.

OUE is the master lessee of Mandarin Orchard, while OUE C-Reit owns the hotel under its portfolio.

As part of the rebranding, the hotel will add new meeting facilities and food and beverage offerings to meet growing demand for regional and global MICE (meetings, incentives, conferences and exhibitions) events.

The asset enhancement works will commence in the second quarter of 2020 to capitalise on the current challenges in the hospitality industry due to the novel coronavirus.

The challenges "present a timely opportunity for us to carry out extensive renovations", said Tan Shu Lin, chief executive officer of OUE C-Reit's manager. "The rebranded hotel is expected to be ready in time to take advantage of the sector's anticipated recovery."

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The refurbishment is scheduled for completion by end-2021. Meanwhile, Mandarin Orchard 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 have 1,080 rooms and five restaurants and bars. Its meeting and function spaces will span 3,765 square metres and include three ballrooms.

OUE C-Reit expects a projected return on investment of roughly 10 per cent on a stabilised basis from its S$90 million expenditure.

Its manager intends to draw down on existing loan facilities to fund the exercise 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 Dec 31, 2020, OUE said.

Besides giving the hotel the ability to cater to more MICE events, the rebranding allows it to tap Hilton's "strong brand recognition and marketing" to enhance its competitive positioning.

The hotel will also benefit from Hilton's global distribution network and established partnerships, and receive more direct bookings through Hilton's loyalty programme.

OUE shares were down S$0.03 or 2.9 per cent to S$1.01 while OUE C-Reit units slipped S$0.01 or 3 per cent to S$0.32 as at 9.48am on Thursday, after the announcement was made.