DoubleDragon chairman Edgar Sia II plans to build 500,000 hotel rooms across 101 countries by 2040.
Philippine fast food-to-property tycoon Edgar Sia II has a grand ambition. After turning a barbeque chicken restaurant into one of the country’s biggest fast-food chains, the chairman and CEO of real estate developer DoubleDragon Corp. is set on building a global hotel empire in the next decade and a half.
But unlike global hospitality giants such as Marriott International and Hilton Worldwide that operate full-service hotels and resorts, Sia plans to break into the highly competitive industry with a no-frills, three-star chain targeting budget-conscious travelers. To be sure, it’s a big bet, as he’s hardly the first to target the lower end of the market, which includes sprawling budget chains like IHG’s Holiday Inn and Accor’s Ibis.
DoubleDragon, a midsize developer at home, aims to grow its fledgling Hotel101 brand from over 1,000 rooms in two locations in Metro Manila to over 500,000 rooms across 101 destinations worldwide. It is bankrolling the development of its first three overseas sites in Japan, Spain and the U.S., while looking for potential partners—property owners who will sign management contracts or franchise agreements with Hotel101—across Asia, Europe and North America. Sia hopes to fund the global expansion binge through borrowings and a Nasdaq listing this year.
DoubleDragon Meridian Park, a mixed-use property near Manila’s Ninoy Aquino International Airport.
Courtesy of DoubleDragon Corporation
“Just like a budget airline with one class of seat across the fleet, Hotel101 will be the first hotel chain in the world with only one type of room,” Sia, 47, says in a December interview at DoubleDragon’s headquarters overlooking Manila Bay. Priced at $100 a night on average (depending on the location), each 21-square-meter room will have a queen and a single bed and a kitchenette with sink, microwave and mini fridge—fixtures not often found in budget hotels, Sia says.
Singapore-registered Hotel101 Global is slated to become the first Filipino-owned company with its primary listing in New York following its proposed Nasdaq debut later this year. Sia hopes that an extended post-pandemic travel boom will make Hotel101 a growth driver for DoubleDragon, in which he and the family of billionaire Tony Tan Caktiong, founder of Philippine fast-food giant Jollibee Foods, each hold roughly a third stake. (Sia and Tan were both born in the year of the dragon, giving rise to the company name.) Since listing on the Philippine Stock Exchange in April 2014, DoubleDragon has transformed itself into one of the country’s biggest office, shopping mall and industrial landlords with a gross leasable space of over 1.3 million square meters. The company aims to grow its portfolio to 250 billion pesos ($4.5 billion) of assets (excluding overseas properties) by 2030, from 164 billion pesos as of September 2023.
DoubleDragon chairman Edgar Sia II and co-chairman Tony Tan Caktiong at the groundbreaking ceermeony of Hotel101-Niseko in Auagust 2023.
DoubleDragon Photos for Forbes
After tumbling at the height of the pandemic in 2020, the company’s net profit recovered to an all-time high of 12.9 billion pesos in 2022 as rental income and home sales improved. Lower residential sales kept earnings flat at 2.5 billion pesos in the first nine months of 2023 from a year earlier, though the fourth quarter is typically when DoubleDragon’s earnings peak, the company says.
“The pandemic gave us more confidence that we have something that is resilient enough.”
Under its commercial portfolio, it currently operates five hotels in the Philippines with about 1,500 rooms, including properties under China’s JinJiang Inn brand, and the first two Hotel101s, one in DoubleDragon Meridian Park, which opened in 2016, and Bonifacio Global City outside Manila’s Makati central business district. This year, DoubleDragon will add the 300-room Ascott DoubleDragon Meridian Park serviced apartment to its stable. The property was built by DoubleDragon and will be managed by serviced apartment operator Ascott, a unit of Singapore-based CapitaLand.
Sia’s entrepreneurial journey began in 1996, when, at age 19, he dropped out of architecture school to lead a group of classmates to build a hotel for business travelers in his hometown of Iloilo, an island in central Philippines. In 2003, he launched Mang Inasal, a barbeque chicken restaurant in a shopping mall in Iloilo, in which he first sold a 70% stake to Jollibee in 2010 for 3 billion pesos and the remainder six years later for 2 billion pesos. Over the past two decades, Mang Inasal has expanded to more than 570 branches nationwide, making it the country’s third-largest fast-food chain by outlets after Jollibee and McDonald’s. Along the way, Sia and Tan, who co-chairs DoubleDragon, have partnered in other ventures like logistics and online stockbroking. With a net worth of $330 million, Sia ranked No. 39 when the Philippine rich list was published in August 2023.
Healthy Occupancy
Hotel101 Manila has had robust bookings, with a record occupancy of 96% in 2021 as it became a de facto quarantine facility during the pandemic.
Source: DoubleDragon
Though the pandemic was a bane for hoteliers worldwide, it was a boon for Hotel101, fanning Sia’s confidence to build a hotel chain. As international borders shut and returning overseas Filipinos and visitors were required to isolate, the 518-room Hotel101 Manila along the city’s perennially gridlocked main highway became a de facto quarantine facility because its rooms had kitchenettes that health officials required. “When Covid happened, we had our highest-ever occupancy level,” Sia recalls, noting that Hotel101 Manila clocked a record occupancy of 96% in 2021. “The pandemic gave us more confidence that we have something that is resilient enough.”
Since then, DoubleDragon has fast-tracked expansion, funding projects with debt, which has more than doubled in the past five years to 82 billion pesos as of September 2023, according to Bloomberg data. Despite increased borrowings, Sia says the company’s debt-to-equity ratio remains healthy at 0.71 times, lower compared to other midsized Philippine developers such as Filinvest Land and Sta Lucia. In July, it opened its Hotel101 Fort, a 606-room hotel in a 33-story skyscraper at Bonifacio Global City. Nine more Hotel101s are being built in the Philippines, including the biggest, the 702-room Hotel101 Libis in Metro Manila’s northern suburb of Quezon City, as well as on the islands Cebu, Boracay and Palawan.
“We aim to disrupt the global hotel space.”
As the travel boom pushes average room rates to record levels, demand for midscale hotels is growing, according to Bertrand Saillet, managing director of travel management firm FCM Travel Asia. “These three-star hotels are an alternative for business travelers,” Saillet says by email, noting that total hotel occupancy in the Asia-Pacific excluding China jumped 49% in the fourth quarter from the previous year, while it increased 31% on the mainland. Hotel101 is also building its first three overseas projects in the Japanese ski town of Niseko in Hokkaido, Madrid and Los Angeles. “There’s a huge opportunity for Hotel101,” Sia says. “We aim to disrupt the global hotel space.” Overseas hotels will also help the group diversify its revenue base. “Over the long term, we aim that no single country will contribute over 10% of DoubleDragon’s revenue and income,” Sia says.
Hotel 101 offers guests a standard 21-square meter room with a double bed, a single bed and a kitchenette— the first hotel chain.
Courtesy of DoubleDragon Corporation
He envisages Hotel101s across 25 countries, including Australia, Canada and China, by 2026. Through franchising and joint ventures, the company aims to add some 62 hotels every year, each with 500 rooms on average, to reach its goal of becoming a major global hotel chain by 2040. Sia, who says he’s in talks with potential partners but declined to elaborate further, believes this is achievable given the company’s asset-light strategy that turns each property into a so-called condotel requiring minimal capital.
Deploying the condotel playbook that gained popularity in the U.S. in the 1980s, Hotel101 pre-sells rooms before construction for as much as $250,000 apiece, like selling residential condominium units, Sia says. In return, investors get a 30% share of the gross hotel room revenues and can stay for free up to ten days every year, while Hotel101 manages the property and takes care of all hotel operating expenses, repairs, maintenance and renovation. “For the investors, it’s like renting out their condo without the hassle of upkeeping the property or dealing with tenants,” Sia says.
Additional funding for Hotel101 projects is expected to come from its proposed SPAC listing on the Nasdaq that could raise as much as $200 million. Sia says negotiations are still ongoing with a merger partner. Hotel101 is seeking a valuation of about $17 billion from the deal that Sia hopes to announce next month. Even though the valuation target is more than 40 times the $380 million market cap of parent DoubleDragon, Hotel101’s valuation goal looks achievable, says Jonathan Ravelas, managing director of business consultancy eMBM in Manila. “Global tourism is booming,” he says. “It’s a high-growth industry.”
Ravelas says he believes Hotel101 can carve its niche in the global hotel industry. “From a global perspective, there’s room for an affordable hotel chain, particularly for budget-conscious Asian travelers,” he says. “That is where the potential of Hotel101 is.”
With room rates at least 30% lower than bigger rivals, including three-star Holiday Inn Express, Sia hopes to attract both budget-conscious tourists and business travelers. Leveraging digital technology, guests can use the Hotel101 mobile app to book a room, check-in, and enter their rooms, Sia says, adding that the app enables Hotel101 to operate more efficiently with potentially fewer staff. The company also generates cost savings through bulk equipment purchases since its hotels use identical beds, door locks, light bulbs, faucets and toilet bowls. “Our platform will standardize the global hotel space,” Sia says. “Everywhere guests check-in, it will be the same experience.”