Ambassador Hotels and Restaurants (國賓飯店) has sold its Ambassador Hotel Hsinchu (新竹國賓大飯店) property to Transglobe Life Insurance Co (全球人壽) for NT$5.8 billion (US$204.51 million), a deal that would generate NT$137 million in net profit, the local hospitality provider said on Thursday.
The transactions came 10 days after the Taipei-based group’s board authorized its chairman to sell the property to revitalize its assets and with an agreement to lease the property from Transglobe Life for 20 years.
The revitalization move is in line with an asset-light model that is gaining popularity with Taiwanese hotels, because it emphasizes management and franchise contracts, allowing brands to achieve scale rapidly without exorbitant start-up losses. It also reduces capital intensity and related investment risks.
The conglomerate spent NT$6.4 billion building the 20-year-old hotel, which has 257 guestrooms, a steak house, a buffet restaurant and banquet facilities near Hsinchu Railway Station.
The complex has 28,196.98 ping (93,213m2) of floor space on a 1500.41 ping plot of land, company data showed.
The deal would yield earnings per share of NT$0.37 for Ambassador Hotels and Restaurants, and gives Transglobe a satisfying rental income, the two companies said.
The hospitality company’s combined revenue last year shrank 24.41 percent to a 22-year low of NT$1.52 billion and it reported losses of NT$372 million, or losses per share of NT$0.24.
The group said it would not distribute any cash or stock dividends.
Ambassador Hotel Hsinchu is also taking a hit amid the COVID-19 pandemic due to its dependence on international business travelers.
A level 3 COVID-19 alert last year played havoc on its food and beverage sales, it said.
Shares in Ambassador Hotels and Restaurants yesterday closed down 3.46 percent at NT$33.5, while the TAIEX gained 0.05 percent, Taiwan Stock Exchange data showed.
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