Tycoon Andrew Tan-led conglomerate Alliance Global Group Inc. (AGI) plans to fork out P150 billion this year through next year to support an aggressive expansion program across its property, gaming and fast-food businesses.
This is in line with plans to scale up all businesses through 2020. In office property leasing, where the group is already the biggest landlord in the country to date, gross leasable space is targeted to hit 1.5 million square meters (sqms) by 2020, AGI president Kingson Sian said in a briefing after the company’s stockholders meeting Thursday.
In leisure estate, the group has set an ambitious goal of building a 12,000-room hotel capacity by 2020 from about 3,000 rooms at present, making it one of the leading hotel operators in the country. The additional capacity will come mainly from Travellers International Hotel Group Inc. and Global-Estate Resorts Inc. (Geri), a Megaworld subsidiary.
Geri is undertaking major tourism estate developments in popular destinations: Boracay Newcoast in Boracay, Aklan and Twin Lakes in Metro Tagaytay.
In retail property development, the leasable portfolio is targeted to nearly triple to 630,000 square meters from 236,000 sqms at present.
“We continue to be optimistic about what lies ahead. That is why we have kept an aggressive capex (capital expenditure) plan moving forward. In 2010 to 2015, we spent a total of P270 billion for our expansion projects. We will spend more than half of that amount for 2016 and 2017,” Sian said.
AGI’s quick service restaurant business —through Golden Arches Development Corp. (GADC), the master franchise-holder of American fast-food giant McDonald’s in this market—is also spending heavily to increase the number of McDonald’s stores nationwide. Riding on buoyant consumer spending in the country, GADC is seen to open its 500th store this year and intends to further grow the number to 900 stores.
During the stockholders meeting, AGI chair Andrew Tan said the company’s strong operating performance in 2015 inspired the group to continue to do better to accelerate growth and maintain market leadership. “We have already laid out the foundation and made significant investments across all our business segments, both here and abroad, in order to future-proof our growth,” Tan said.
“Our continued investments have given our group a competitive edge that is difficult to match. With all the pieces already in place, we believe that we have set the stage for a strong long-term growth,” said Sian.
The bulk of the programmed capital outlays through 2017 will be for flagship Megaworld Corp., which is estimated to spend P100 billion, followed by integrated gaming resort developer Travellers International Hotel Group which is developing its second gaming hub along Manila Bay. Another big component of capital spending will be for GADC.
“Our group has come a long way from what we were before. Five years ago, our real estate arm, Megaworld, covered only five townships, all in Metro Manila. Now, we have 21 townships throughout the country, 12 of which are in key growth areas in the provinces,” Sian said.
With 3,000 hectares of land acquired at much lower valuations, Sian said the group had enough resources to develop in the next 15 to 30 years.
In recent years, AGI had also invested in beverage arm Emperador Inc., which completed a string of acquisitions in Europe that gave it access to a global sales network, access to legacy global brands, aged liquid raw material used to make quality liquor as well as vineyards and technology to produce brandy.
“Three years ago, Emperador Inc. was a pure Philippine liquor operation where it maintains market leadership. Now, it has become a global player in the spirits sector with access to about 100 markets around the world. This followed our acquisition of Whyte and Mackay, and more recently, Fundador and the other Spanish assets,” Sian said.