S’pore-listed Hotel Royal to purchase Royale Chulan
KUALA LUMPUR: Boustead Holdings Bhd (BHB) is disposing of the Royale Chulan Bukit Bintang Hotel here to Singapore-listed Hotel Royal Ltd for RM197 million in cash.
In a filing with Bursa Malaysia on Friday, BHB said the group was expected to gain of RM92 million upon completion of the proposed disposal, thus translating into about 4.5 sen per share.
BHB’s indirect subsidiary, Boustead Hotels & Resorts Sdn Bhd, inked an agreement to sell the 418-room four-star hotel to Hotel Royal’s subsidiary Every Room A Home Sdn Bhd.
A BHB spokesperson said in a statement on Friday that the disposal was part of Boustead group’s overall plan to return to profitability through divesting non-strategic assets.
The Royale Chulan Kuala Lumpur, located along Jalan Bukit Bintang, is facing increased competition within the Golden Triangle of Kuala Lumpur as well as online platforms such as Airbnb.
This had resulted in its relatively low occupancy rate of 52 per cent last year against the average occupancy rate of hotels within the Klang Valley of about 74 per cent, said BHB.
The company said a refurbishment exercise would also be needed for the ageing property to remain attractive and competitive.
The prime location of Royale Chulan Bukit Bintang Hotel enabled the group to dispose of the hotel at a premium over the net book value, it BHB.
However, the proposed disposal is conditional on, among others, the buyer obtaining the approvals of the Economic Planning Unit of the Prime Minister’s Department of Malaysia and the Federal Territory of Kuala Lumpur Land executive committee as well as completing all conditions and listing requirements of the Singapore Exchange Securities Trading Ltd.
The proposed sale is expected to be completed by July this year.