Quest Serviced Apartments chairman Paul Constantinou, left, signs with Lee Chee Koon, chief executive of The Ascott

The Ascott, the world’s largest international serviced residence owner-operator, has entered into a strategic partnership with Quest Serviced Apartments.

Under the terms of the deal, Ascott expects to invest up to AUD500 million to acquire new properties that Quest will secure for its franchise in Australia over the next five years.

Ascott will have a right of first refusal to acquire the properties sourced by Quest, which is as the largest serviced apartment provider with 112 properties in Australia.

Quest will then provide a lease for the properties, which will be operated under franchises using the Quest brand.

In addition, Ascott has signed an agreement to acquire a 20 per cent stake in Quest for AUD28.8 million.

As part of the agreement, Ascott has the option to increase its stake in Quest to 30 per cent.

In a separate agreement with Quest, Ascott’s real estate investment trust, Ascott Residence Trust, will acquire three operating serviced residences in Greater Sydney from Quest for AUD83 million.

Quest Sydney Olympic Park, Quest Campbelltown and Quest Mascot will continue to be operated under franchises using the Quest brand.

Lee Chee Koon, Ascott chief executive, said: “Ascott has an established presence in Australia where our serviced residences enjoy a strong demand from travellers to the country, and we see vast potential growth opportunities for serviced residences.

“Serviced apartments represent over 25 per cent share of the accommodation market in Australia where Quest is a leading player.

“Ascott has many global customer accounts and strong global systems to manage our properties.”

Lee added: “The Australian accommodation sector continues to expand with more than 100 properties expected to be opened over the next few years.

“Foreign investment in Australia’s accommodation sector has been on the increase in recent years due to the reliable legislative environment, resilient economy and stable returns in Australia.

“Ascott and Quest have complementary strengths and confidence in providing quality serviced residences as an alternative to traditional hotels to discerning travellers for business or leisure.

“We look forward to closer collaboration with Quest in cross selling, conducting joint marketing initiatives, and jointly exploring opportunities for franchises outside of Australia.”

In Australia, Ascott currently operates five serviced residences with more than 670 apartment units.

Quest has around 150 properties with over 8,000 existing units in Australia, New Zealand and Fiji, and a further 1,500 units under construction.

Paul Constantinou, chairman of Quest Serviced Apartments, said: “Quest is the fastest growing and largest network of serviced apartments in Australia.

“As one of the global leaders in franchising within the accommodation sector, we have opened an average of eight new properties each year.

“There is now the opportunity to accelerate our growth to secure 250 properties across Australia and New Zealand before the end of this decade.”

Constantinou added: “Quest brings franchising experience and expertise to this partnership, whilst Ascott offers a global presence, and longevity in the industry.

“This partnership offers both parties the opportunity to broaden a highly successful franchising model to other parts of the world.”