Finally, after years of being vacant, the former Syuen Hotel was bought over, renovated and was relaunched under AC Hotel Ipoh in January 2025.
My wife and I were excited with its reopening.
To my wife, who is from Ipoh, the former Syuen Hotel was a symbol of class and prestige. To me personally, I remember attending my elder cousin’s wedding dinner in this iconic hotel as a teen. Since we planned to visit our families in Ipoh, we decided to book one night at the revitalised AC Hotel Ipoh for its experience.
Now, with a sip of hot chocolate at its lounge, I’ll like to blog about our shared experience and as I do so, reveal 3 different business models that generate income from AC Hotel Ipoh. To which, I believe you’ll understand how each party wishes to benefit from this hotel.
1. The Property Owner: YTL Hospitality REIT
YTL Hospitality REIT (YTL REIT) invests in hotels and resorts in Malaysia, Japan, and Australia. On 8 April 2024, YTL REIT acquired the Syuen Hotel, a 13-storey, 4-star hotel, which consists of 290 rooms located on a 999-year leasehold land at the heart of Ipoh for RM 55 million which is a RM 3 million discount from the property’s market value of RM 58 million.
Then, YTL REIT invested another RM 55 million to renovate the hotel. What I could see now is it has retained the building’s architecture, including the iconic staircase at the front of its lobby and had revitalised the hotel with a massive repainting work, replacement of furnishing, fittings and a remodelling of swimming and sports facilities, which includes a pickleball court located at the top of the hotel.
The pickleball court is the coolest that I had ever seen. It has a 270 degree, panoramic view of a range of beautiful hills that surround the city of Ipoh beneath. Currently, the court is operated by 002 Pickeball Club & Academy. Based in Ipoh, it is possibly the first registered pickleball academy in Malaysia that offers certified coaching and training on the sport and exposures to pickleball tournaments both locally and abroad. Probably, it is a fantastic idea to be organising a 2D1N Pickleball and Food Trip in Ipoh with Pickleball Kakis as a fun getaway.
Operator: 002 Pickleball Club & Academy
Contact Details: 018-623 0328
Facebook Page: 002 Pickleball Club & Academy
Now, with AC Hotel Ipoh operating in full swing, YTL REIT would lease this hotel to Prisma Tulin Sdn Bhd, a 100%-owned subsidiary of YTL Corporation Bhd for 15 years starting 1 April 2025 at the following rates:
Source: Bursa Malaysia
Hence, a quick maths would allow us to figure out that YTL REIT would earn a 7% rental yield in Year 1-5 from its RM 110 million investment as its property owner. That’s its gross yield. From its quarterly reports, YTL REIT stated that it funds the acquisition and renovation works with debt. It would incur interest costs from its debts. According to its presentation slides Q2 2025, its cost of debt from its borrowings in Ringgit Malaysia is 5.1% a year. So, YTL REIT shall earn a net yield, which is derived from the spread of its 7% rental yield and interest costs.
Plus, it would either benefit or incur any capital appreciation or loss from this property over the long-term.
2. The Hotel Operator: YTL Corporation Bhd
YTL Corporation Bhd owns two subsidiaries: Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd and Prisma Tulin Sdn Bhd.
Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd (SPYTL) is a construction firm. It has undertaken the RM 55 million project to renovate the former Syuen Hotel into AC Hotel Ipoh. Therefore, YTL Corporation Bhd generated its first income from undertaking this project.
Prisma Tulin Sdn Bhd is a hotel operator. It earns revenues from providing accommodations and food & beverages to hotel guests. Hence, the amount of revenues earned would be reliant on its occupancy rates and room rates. The higher these rates are, the more revenues it would earn. It would incur operating costs to run AC Hotel Ipoh, which include rental payments to YTL REIT as stated above and as well as to fees to the owner of the “AC Hotels by Marriott” brand. Hence, its net profits would be the second income source to YTL Corporation Bhd.
In addition to these two subsidiaries, YTL Corporation Bhd owns 56.94% stake in YTL REIT. So, YTL Corporation Bhd earns income distributions from YTL REIT. Such distributions would be the third source of income to YTL Corporation Bhd.
3. The Brand Owner: Marriott International, Inc
Marriott International, Inc (Marriott) owns more than 30+ hotel brands worldwide. One of these is the “AC Hotels by Marriott” brand. From its annual report, third-party hotel owners can franchise, license or through other arrangements the use of Marriott’s hotel brands for fees. The fees could be a combination of initial application fee and continuing royalty fees which comprises 4%-7% of room revenues and (for certain brands: 4% of food and beverage revenues). These agreements are generally for periods of 10-20 years.
Put Them Together:
In brief, the flow of income / expenses of AC Hotel Ipoh could be summarised as follows:
YTL REIT would earn rental income as a landlord. Inherent to its nature of business, YTL REIT’s risk lies in the fluctuation of interest rates as it raises borrowings to finance its acquisition and its renovation works at AC Hotel Ipoh.
YTL Corporation Bhd had already earned revenues from the renovation works at AC Hotel Ipoh. Now, it earns variable income that is dependent on room and occupancy rates as an operator of the hotel. Its net profit is also dependent on how well it controls its operation costs. But still, as a REIT owner, it would earn income distribution from YTL REIT.
Marriott International, Inc earns franchise fees for the use of AC Hotels by Marriott brand. It shall earn royalty income that is dependent on room and occupancy rates of AC Hotel Ipoh.
All in all, I had fun studying the related companies and their respective business models that are contributing to the revitalisation of AC Hotel Ipoh. Each business model has their pros and cons. Upon studying them, I’m positive you’ll find business models within the supply chain which you’ll prefer and others that you don’t. The key is to be observant and invest the time to study them.
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