The luxury of staying in a top-class hotel combined with the comforts and privacy of your own home sounds like an enviable deal anywhere, but in modern-day Manila it seems to be a match made in heaven.
Small wonder then, that all 188 apartments in the new Grand Hyatt South Tower in the Philippine capital have been snapped up before the residential tower even officially opens in December. The new owners, 70 percent of which are local Filipinos, will get generous floorplans, luxurious finishes, use of a large pool, a gym and function rooms and – this being the real differentiator – access to the top-class restaurants and amenities of the Grand Hyatt hotel next door.
The concept of a branded residence is new to the Philippines and the advantages of the ‘apartment plus hotel’ combination needed to be explained to potential tenants. Much more established is the combination that built the South Tower, and indeed the whole Grand Hyatt complex: that between local developer Federal Land and its partner ORIX Group.
“This joint project with ORIX contributes to Manila becoming the modern, global city we want it to be”, says Alfred Ty, Chairman of Federal Land. “The standards of hotels in Asia are the highest in the world and I have studied many Japanese hotels and luxury brands from Japan during my time working in and visiting Japan.”
And this is just the tip of a long-standing alliance that has transformed the business prospects of ORIX in one of Asia’s most dynamic economies.
The right connection
ORIX entered the Philippines in 1977, attracted by the potential of a modernizing economy; a growing population, which at over 114 million is now almost as large as Japan’s; and excellent demographics with an average age of just 25 and hence a rapidly growing labor force.
Given its history of interacting with the West, the Philippines is more open than some other Asian nations; institutional and legal frameworks are well developed; and political risk is relatively low. Add widespread command of English and the country’s success in the business process outsourcing (BPO) sector is not hard to explain.
Above all, notes Yoshiaki Matsuoka, Head of the Global Business Group at ORIX and the executive in charge of its Asian businesses: “Filipinos tend to be energetic and optimistic. And they are natural entrepreneurs.”
Fortunately for ORIX, it connected with one of the most entrepreneurial of them all. George Ty, an ethnically Chinese Filipino, set up Metrobank in the 1960s when he was barely 20, after all the established banks refused to lend him money for the flour mill he was building. As his son Arthur Ty, elder brother of Alfred and Chairman of Metrobank, tells it, his late father then visited the central bank governor year after year until he was finally granted a banking license.
Initially financing Chinese businesses but quickly building links with any expanding Filipino company, Metrobank grew into the country’s largest bank by 1995, with $1 billion in capital and a strong position lending to small and medium-sized enterprises (SMEs). In addition, George Ty branched out into insurance, importing and selling vehicles, real estate and infrastructure.
Partnering for growth
In almost every case, the expansion was based on an alliance with a foreign partner – France’s AXA for insurance, Toyota for cars – and a strong personal relationship, such as the one forged between George Ty and Shoichiro Toyoda in the 1980s. Sometimes there was no business plan, only sheer gut instinct. “I have often heard the story of how our bank had foreclosed on three power plants and they were sitting on the books as idle assets. Without having any prior experience in power generation but sensing an opportunity, my father told his senior executives ‘Let’s go take them over, rehabilitate them and run them. I bet we can do it better’. That was how GT Capital got into infrastructure and utilities,” remembers Arthur Ty.
The collaboration with ORIX started in just this way. Metrobank, today the second-largest financial group in the Philippines, had acquired a smaller rival which had a leasing joint venture with ORIX. After discovering how large and important this Japanese company was, George Ty arranged to meet ORIX’s then CEO Yoshihiko Miyauchi and, having similar values and the same approach to partnering, the two men hit it off.
From 2000, the leasing joint venture was expanded and, as Mr. Matsuoka notes, even though Metrobank owned 60%, it generously allowed ORIX to put its name first. Today, ORIX METRO has 98 branches nationwide, spanning rural areas as well as cities and financing not just cars and office equipment but also construction machinery and medical devices. Its main customers are rural SMEs, and it is helping support the growth of the type of entrepreneurial businesses that are springing up every day from the Philippines’ entrepreneurial population.
That initial JV has become a wide-ranging strategic relationship with GT Capital now one of the largest conglomerates in the Philippines, enabling ORIX to expand into new areas, including infrastructure and real estate – specifically, the Grand Hyatt and neighboring Grand Midori condominiums, with Federal Land, another GT Capital company.
Alfred Ty, Chairman of Federal Land (right) and Yoshiaki Matsuoka, Head of the Global Business Group (left), working in partnership at the Grand Hyatt Manila.
An Asian strategy
This is a perfect example of the wider group strategy, explains Mr. Matsuoka: ORIX was a pioneer of the equipment leasing business in Japan, importing this then-novel concept from the US in the 1960s. Once it became successful in its home market, management decided to roll it out internationally, starting with Asia – initially Hong Kong and Singapore -- more than 50 years ago.
The foundation of ORIX's success lay in the principle of localization. ORIX initiated this approach by identifying local partners for joint ventures, offering their operational expertise and leasing know-how.
In return, the partners provided their local insights and extensive networks. One key goal for a joint venture partner was to ensure smooth funding, which frequently led to the selection of influential local conglomerates and financial institutions. ORIX has fostered trust-based relationships with its partners, driving global expansion by adapting to local environments and customs.
Today, ORIX has a presence in 11 countries across Asia and Oceania under Mr. Matsuoka’s leadership. Eight of those are now majority-owned, as local regulations changed to allow this or the original partners sold out for financial or strategic reasons.
Mr. Matsuoka emphasizes, however, that there is no explicit strategy to take control. Where the joint venture is working, and the local partner is potentially able to help ORIX expand into new business areas – as in the Philippines -- ORIX is perfectly happy with a minority position.
“The core of our strategy is to provide financing for SMEs, whether through leasing, hire purchase, commercial mortgages or other means,” he says. “Where we see such an opportunity, we enter a market. The ownership structure we use in each country is a secondary consideration.”
The real mark of success, he notes, is when such SME clients “grow up” to the point where they graduate to bank lending and the capital markets for their financial needs – as happens routinely in Japan and is starting to happen in some parts of Asia. ORIX management takes this as proof of its contribution to the development of the economies in which it operates.
Forward together
Both ORIX and GT Capital see further potential in their partnership, not only by expanding into new areas but simply by growing their existing joint ventures. Real estate is a good example. Federal Land started by building small office high-rises and apartments. In the 1980s, the 22-storey Metrobank headquarters was one of Manila’s tallest buildings. That was replaced by the 46-storey GT Capital HQ and today the Grand Hyatt stands 66 storeys tall. And Federal Land is building whole towns – the latest being an 88-hectare smart city.
Nor is it just about being bigger. In a market where smaller developers often cut corners to cut costs, Federal Land focuses on using the best materials and most innovative designs. The Grand Hyatt lobby, with its floating platforms modelled on Filipino rice paddies, is truly a place to see and be seen. The hotel’s open spaces made it the most in-demand place in the city during the pandemic, says Alfred Ty – particularly the rooftop bar, designed by a Japanese architect.
Importing world-class expertise and raising standards is good for the Philippines. It is also good business in an economy with a rapidly expanding middle class. Finally, it is core to the values of both ORIX and GT Capital, two partners that seem made for each other.
