The Waldorf's hefty price tag
Updated: 2014-11-14 07:10
By Liu Lian(China Daily USA)
The occupancy rate of the Waldorf was not available. But the average occupancy rate for all Manhattan hotels in this year's second quarter compiled by PwC showed a 3.3 percent increase to 91.6 percent. The average occupancy rate for Manhattan luxury hotels was 87.8 percent; and for hotels on Midtown East, where the Waldorf is located, was 91.9 percent.
As for Chinese travelers to the US, the Office of Travel and Tourism Industries forecast in October that arrivals from China would increase to 2.24 million this year.
"You have a lot tourism coming to the area. At that specific hotel, you have a lot of diplomats staying there like the American ambassador to the United Nations," said Clinton, "Anbang is at a great position to make their return target."
On upgrading the Waldorf, Colen said "there are significant demands with the food and beverage business there which can use some updates," and he said perhaps, the Waldorf can introduce a food hall like the Plaza.
The Plaza Food hall launched in 2010 has been deemed a huge success for its European-style market offering of an extensive array of eateries, and has become a main attraction for locals and tourists.
"Committing to a major renovation alone would involve a whole construction process, selecting contractors, insurance for example. All these can be difficult water for foreign investors who are not versed in the domestic legal climate," said Margolis, the difficulties as such were plenty during the Japanese real estate spree in the 1980s.
Anbang has not yet revealed a funding plan for the Waldorf's acquisition. "Since Anbang is an insurance company, I would assume they use assets on the management from the insurance fees that they collected. Maybe they will bring some partner," said Hanemann.
Companies like to announce big numbers, said Hanemann, "but you have to be careful to take those numbers on a face value. You also have to consider that a lot of these deals are using local financing. There have been several multi-million dollar projects that were announced by Chinese investors over the past 18 months. We have to wait and see how much those projects are actually materialized."
Financing has been an issue for some Chinese projects, said Hanemann, with companies not able to raise funds within the time that they were expected to.
"If Anbang encounters any financial stress, it becomes a problem when they need to sell the property," said Ferreira, "when you need to sell in the situation of stress, that's when you realize you were overpaying."
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