APA enters Canadian market via acquisition

VANCOUVER, BC—By continuing to bring the spirit of Japanese hospitality and service to North America, APA Hotel Group has committed itself to venturing outside of a market it’s been acquainted with for more than 30 years. Its acquisition of Coast Hotels & Resorts has revealed its determination to place its stake in the Canadian market. 

The Coast Coal Harbour Hotel officially renamed itself the Coast Coal Harbour Hotel by APA following Japan’s largest hotel network’s acquisition of Coast Hotels & Resorts in September. This name change marked APA’s first branded property in Canada.

New features are being added to the guestrooms. These signature APA brand amenities include Japanese automatic bidets, 55-in. televisions and welcoming origami cranes. These additions are an attempt by APA to bring its urban-style hotel concept to the city.  

Victor Komoda, president at Coast Hotels, told Hotel Business that approximately 55% of the property’s guestrooms have already been updated, adding that the enhancements to the remaining rooms are expected to be completed within a month. All necessary upgrades have already been ordered for all of the guestrooms. 

Komoda acknowledged that even though the property can’t be categorized as a “pure APA hotel,” its influences are derived from APA’s concept of warmth and comfort. He noted how APA’s business model in Japan cannot be immediately adopted in Canada.

For example, the rooms in Japan tend to be much smaller than the ones in North America. This recent round of upgrades is one way Coast Hotels can move toward high-quality, highly functional and environmentally friendly APA-style hotel rooms.

Guests staying at Coast Coal Harbour Hotel by APA will be able to earn points through APA’s rewards program, which now has more than 11 million members. 

Acquiring Coast Hotels increased the number of properties worldwide in APA’s portfolio to more than 400. In Japan alone, the hospitality group’s network includes 348 hotels. APA has plans to inject new capital in its properties in 2017, Komoda acknowledged.

Immediately after the deal closed, APA invited some of Coast Hotels’ senior team members to Tokyo to tour hotel operations and introduce cultural expectations. While there are differences between the two entities culturally, fundamental common ground can be found in the way both companies tackle business through similar principles.

“It’s been a really positive experience,” said Sarah Kirby-Yung, executive director of marketing and communications at Coast Hotels, during an interview with Hotel Business. “We feel like we have a lot in common, and if you look at the stated company values for APA and the values for Coast Hotels, there’s a lot of overlap there, in terms of valuing the employees, ensuring the guests are well taken care of, trying to ensure that the brand is differentiated, and continuing to be competitive and relevant.”

APA’s acquisition of Coast Hotels is more than just a hospitality group purchasing another hotel chain’s 37 branded properties; the deal signifies the hotel chain’s full commitment into the North American market, Kirby-Yung said. “APA has chosen North America over other markets,” she said. “They had the opportunity to expand in Asia, in either China or India, and have chosen not to do so at this time, in favor of emphasizing North America. Additionally, it’s not just offshore operations. They’ve chosen to locate their North American head office here in Vancouver.”

It’s not a surprise APA would want to expand its global reach, shifting its focus away from Asia. “APA is known for taking bold steps to increase its footprint and awareness,” said Robert D. Kline, CEO and founder at Chartres Lodging Group, during an interview. 

“The business of hospitality is in a tremendous state of flux right now as a confluence of influences is creating major rifts,” he said. “These issues are technology, social media, globalization, a growing economy and low interest rates. Large hotel companies are struggling to reconcile their decades-old refrain around the power of the brand with the dominant growth in consumer demand for individuality and unique travel experiences. There’s a race to become known as the global hotel company that can service the individual customer. APA appears to be aspiring to meet these market expectations.”

While this is a further move into the North American market for APA, it’s not the group’s initial one. APA entered the U.S. market back in November 2015. The hospitality company partnered with NJ-based Friendwell Group of Companies to introduce and develop the APA Hotel Franchise across the country. APA’s new venture into the space began with the 200-room APA Hotel Woodbridge at Metropark, NJ.

Komoda said many of Coast Hotels’ “franchisees are showing strong interest” in the APA brand, and he “would like to show the success with Coast Coal Harbour Hotel by APA” in the next six months and after a year to “reveal the power of APA.” Converted hotels will be able to directly connect guests with APA Group’s network, especially the 31-year-old hospitality company’s point program and reservation system. 

He acknowledged the importance of upholding the Coast Hotels’ “well-recognized brand” in North America. “We are keeping the Coast brand but adding the additional value from APA—that’s our strategy,” he said, noting the curiosity of franchisees. The goal is to “keep Coast Hotel brand equity, and grow and develop as a Canadian brand.”

In the New Year, at least two or three Coast Hotels will be rebranded to include the APA name, Komoda said. He will also be directing his efforts and focusing on acquiring new management and franchise agreements in the upcoming year, as well. 

“APA has a strong history of driving very healthy profit margins, and I think from a Canadian market perspective that’s going to be APA’s focus,” Kirby-Yung said. “If they’re successful in delivering what they did in Japan, then I think there’s going to be a lot of market interest here in Canada and in North America.”