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© 2014 Baker & McKenzie
Baker & McKenzie is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an office of any such law firm.
Branded Residences Developments in Asia - exploring the complex and potentially lucrative relationship between developers, residential owners and operators.Graeme Dickson and Roy MelickBaker & McKenzie Hotels, Resorts & Tourism Group14 October 2015
© 2014 Baker & McKenzie
Panelists
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Gaurav BhushanGlobal Chief Development OfficerAccor Hotels
Patrick FinnVice President, Real Estate & DevelopmentHyatt Hotels Corporation
Dan WakelingSenior Vice President Global Hotel Development & AcquisitionsTrump Hotel Collection
© 2014 Baker & McKenzie
Qualifications– Observations limited to Baker & McKenzie experience
and anecdotal feedback– Brand selection for any individual development outside
Baker & McKenzie expertise– This presentation does not necessarily reflect views of
any of our panelists in any respect
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© 2014 Baker & McKenzie
Some of the Branded Residence Operators – Accor – Anantara– Armani– Dunhill– Fairmont– Ferrari’s – Hyatt– InterContinental– Le Meridien– Mandarin Oriental– Missoni – Movenpick– Palazzo Versace– Shangri-la– Ritz Carlton– Rosewood– St. Regis– Starwood – Trump
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© 2014 Baker & McKenzie
High rise
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5The Residences at the St. Regis, Anman
Grand Hyatt, Manila Trump International Hotel & Tower, Vancouver
Trump Chicago Hotel & Residences
Trump Tower, New York
Trump New York, Hotel& Residences
Trump International Hotel & Tower, Vancouver
© 2014 Baker & McKenzie
High rise - interior
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Grand Hyatt, Manila - Living
Trump International Hotel & Tower, VancouverTrump Chicago Hotel & Residences
Trump Chicago Hotel & Residences
Trump Tower, New YorkTrump New York Hotel & Residences
© 2014 Baker & McKenzie
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7Beach garden villa residence, One & Only, Royal Mirage, Dubai
Low Rise / Resort style
Hyatt Regency residence, Danang
Hyatt Regency residence, Danang - Lounge
© 2014 Baker & McKenzie
Technical Services Agreement Operator to render technical services in connection with the planning, building, furnishing, equipping and decorating of the hotel and the residential component
Lease UnitsSell Units
Owners’ Associationappoint
*
Structure of a typical BR project
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Operator HotelCo (associated
with Developer)
Developer
Property ManagementCompany & Resort
Management Company
Appoint HotelCo as agent for common area
Buyers joining the Rental program
Buyers NOT joining the program
Buyers
*1. appoint as agent of his unit2. appoint as agent for common
area3. grant proxy for owners’ meetings
*
Consultancy Agreement + Residential Services & Facilities Agreement
Marketing Licence Agreement Operator permits Developer to use the Residential Trademarks in connection with the sale and marketing of Residential Units
Hotel Management Agreement For management of Hotel and provision of
services to Residential Component
Trademark Licence Agreement Operator grants to HotelCo the right to use the Trademarks in the operation
and management of hotels
© 2014 Baker & McKenzie
What is a Branded Residence Project
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Typically a branded residence development has the following attributes:
“A premium residential product fusing the characteristics of a prime residential development with the service offering and brand profile of a
quality hotel.” *
Luxury product (typically 5 star plus branding) Either high rise apartments (typically city) or low rise
villas (typically resort)
*Colliers Hotel Branded Residences – A Premium Opportunity, 2014
© 2014 Baker & McKenzie
Comprising hotel operated by an international hotel operating company or with prestige global branding residential apartments (or villas) with same brand as hotel and other components (e.g retail)
Apartments or villas can form part of hotel accommodation “pool” (with standardised furniture pack)
Exclusive positioning in the market A range of hotel services available Excellent design Security2601428
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What is a Branded Residence Project
© 2014 Baker & McKenzie
Who buys branded residences – High net worth and Ultra high net worth – Investors – Where do they buy
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© 2014 Baker & McKenzie
Introductory issues– Do relevant land laws permit strata titling. If not what
legal structures available for BRs– Do intellectual property laws in home and marketing
jurisdictions protect operator’s trademark and other IP– Should the governing law of the documents be home
jurisdiction or somewhere else
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© 2014 Baker & McKenzie
What are we going to talk about
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– What do developers need to know about BRs – What do operators need to know about BRs– What are BR issues for residential purchasers– What are BR management issues– Inter-relationship between BRs and Hotel
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What do developers need to know about BRs
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– Where to build BRs– Potentially enhance sale price significantly– Ensure full and accurate disclosure to purchasers– Determining cost and the ability for the operator to provide
services– Complications if apartment rental pool contemplated– Operator will charge sale/letting commission– Operator will want significant control over sale process and use
of operator’s IP– Potential for misrepresentation2601428
© 2014 Baker & McKenzie
What do operators need to know about BRs
Entirely new business with different risk/reward to Hotel Legal risk for developer sale misconduct Control over intellectual property rights vital Issues surrounding “rental pool” What to do about Brand Standards How to regulate what happens inside accommodation unit Do the BRs take away or add to the revenue of the hotel
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© 2014 Baker & McKenzie
What are BR issues for residential purchasers
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Is the BR purchase premium worth it Are the BR maintenance fees worth it Can residents and casual stays co-exist What happens if the BRs are debranded What happens if the services are not an expected level
or are not available
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© 2014 Baker & McKenzie
What are BR management issues– Differences between strata title apartments and
freehold title villas– Should the operator’s branding licence be co-existent
with common property maintenance by operator– What are consequences if operator not property
manager – How does the operator ensure compliance with Brand
Standards for BRs especially where strata title laws not available
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© 2014 Baker & McKenzie
Inter-relationship between BRs and Hotel– What is impact on Hotel if operator terminates BR
branding– What is the best way to treat shared facilities– What restrictions are imposed on accommodation unit
owner to engage short stay letting agent– If operator manages BR common property then does it
use own employees or Hotel employees and who gets fees
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© 2014 Baker & McKenzie
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© 2014 Baker & McKenzie
Baker & McKenzie is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an office of any such law firm.
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