Nicholas Rockefeller in the New York Times

August 3, 1999
INTERNATIONAL BUSINESS
INTERNATIONAL BUSINESS; Asian Luxury Hotel Is Near a Rare Sale

By WAYNE ARNOLD
SINGAPORE, Aug. 2— In a relatively small deal with broad implications, an investment firm connected with the Rockefeller family appears set to buy a luxury hotel on the island of Bali from a company controlled by one of Indonesia’s own wealthy industrial dynasties, according to people close to the buyer and seller.

Surya Semesta Internusa, a company controlled by the Suriadjaya family of Indonesia, plans to sell the 500-room Melia Bali hotel to Trenwith Holdings Ltd. for approximately $50 million, one of the informants said. Trenwith is a joint venture 70 percent owned by Rockvest Development, a Rockefeller trust controlled by Nicholas Rockefeller, a California lawyer.

More than the names of the buyer and seller, the deal is important because big real estate transactions in Asia, particularly any involving prominent hotels, have been extremely rare, even with the Asian economic crisis severely hurting the hotel business.

Luxury hotels are considered business trophies that symbolize success, and Asian owners try to keep them regardless of their own financial problems. From that perspective, the sale of the Melia Bali may signal the sales of other big hotels in Asia.

Reached by telephone, a spokeswoman for Surya Semesta said the company had not signed any agreements, and she rejected requests for interviews.

One person said Surya Semesta had already signed a sales agreement and another said other prospective buyers who met with the company’s vice president and director, Johannes Suriadjaya, last week in Jakarta were told that the hotel had already been sold.

Trenwith also did not respond to repeated requests for interviews, and Mr. Rockefeller could not be reached for comment.

Despite Asia’s financial difficulties, the real estate market has been remarkably slow. Hotels are a good example.

According to the Singapore office of the real estate brokerage firm Jones Lang LaSalle, only eight hotel transactions took place last year, $300 million in deals that represent just two-tenths of 1 percent of the entire Asian hotel market. In the United States, by contrast, more than 15 percent of the market changed hands last year. Would-be investors and brokers say hotel owners are hanging on to their properties, often defaulting on loans, in hope that the market may recover.

”They’re pulling a Qaddafi,” said Robert Stiles, managing director at the real estate investment bank Sonnenblick-Goldman, alluding to practices of the Libyan leader, Col. Muammar el-Qaddafi, of moving from place to place to elude attack.

Hotel owners, Mr. Stiles says, typically play potential buyers against their bankers in a bid for time.

”You have this constant shuttling between the tents,” he said. ”The hope is that conditions will improve so you don’t have to sell.”

The noisiest complaints about such tactics have come from potential buyers, who say that this reflects the underlying cronyism and favoritism still permeating Asian economies. Economists are less critical, though. Speaking in Bangkok last week, the World Bank’s chief economist, Joseph Stiglitz, praised the progress he said Asia had made in recovering from the deep crisis that began in the summer of 1997, saying criticism was coming largely from foreigners disappointed that they had failed to pick up cheap assets.

Hotels have occupied a special place in Asia’s corporate firmament. Where hotels in the United States tend to be owned by institutional investors who put a priority on profit, Asian hotels are typically owned by family-run conglomerates and managed by foreign companies, serving as glamorous testaments to corporate achievement.

Among these, the Peninsula Hotel in Hong Kong is owned by the Kadoorie family. Singapore’s Ritz-Carlton belongs to four Indonesian brothers named Kwee. The Shangri-La hotels are controlled by the Malaysian magnate Robert Kuok. And the Meridien President in Bangkok is owned by a former Deputy Prime Minister and prominent businessman, Chalermphan Srivikorn.

The 26-acre, now $200-a-night Melia Bali, situated on the beach north of the town of Nusa Dua, is no exception. With its plunge pools and personal butlers, it is the property of the Suriadjaya family, whose patriarch, William Suriadjaya, an ethnic Chinese trader, started an automobile company called Astra in 1957. Today, Mr. Suriadjaya remains one of the most respected figures in Indonesian business and Astra International is the country’s largest auto maker, a $1.7 billion company with diversified interests ranging from palm oil to running shoes.

Only the Suriadjayas no longer own all that. While it was trust-busters who spelled the end of the Rockefeller empire — if not its riches — in 1911, the Suriadjaya family’s nemesis came in the form of William’s son, Edward. In 1992, Edward ruined the family bank, forcing his father to sell the Astra stake to cover his losses.

Surya Semesta Internusa is a holding company in which William had a stake when it was founded in 1971, but which is now controlled by William’s brother Benjamin Suriadjaya and his son Johannes. It has interests in construction, building material, real estate and the Melia Bali, which is managed by Sol Melia S.A. of Spain. Industry executives said the $50 million price for the Melia Bali is high, but they hope it will encourage other property owners in the region to sell.

Map of Bali showing location of the Melia Bali hotel: The Melia Bali is being readied for sale at a price around $50 million. Some see more such transactions.

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Nicholas Rockefeller in the New York Times

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