branded residences developments in asia - exploring the...

© 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


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


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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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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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


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


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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


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


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


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


Who buys branded residences – High net worth and Ultra high net worth – Investors – Where do they buy

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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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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


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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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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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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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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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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