Hotels the hot ticket for investors

The following is a TAA (Vic) summary of the article “Hotels the hot tickets for investors”

This news article appeared in Melbourne’s ‘The Age’ newspaper on Thursday January 11, 2018.

  • In 2017, a lack of investment grade assets and concerns about “slowing overseas capital inflow” contributed to a drop in investment in hotels nationally, down 50 per cent on 2016 levels to $1.4b.
  • The record sale price for the year was received for the 140 room IHG InterContinental Sydney Double Bay Hotel – achieving $1m per room.
  • Three new Sydney hotels currently under development include the Ritz Carlton at the Star in Pyrmont; The W Hotel at Darling Harbour and the Crown Resort, Barangaroo.
  • Hotel transaction sales have “fallen back to the long-term average” after stronger than usual performance over the past five years.
  • Cairns and Canberra were some of the strongest trading markets.
  • Tourism growth in Melbourne and Sydney is underpinning an appetite for new hotel developments
  • Consumers are demanding “a greater focus on in-room design and technology.
  • “Disruptors” are evident, “but the hotel sector has a proven track record of resilience, that should absorb this inventory over time.”
  • In Sydney, Average Daily Rates have “been increasing sharply over recent years, as owners capatalise on the continuing strength of the market”.
  • AccorHotels has opened the 590 room Sofitel Sydney at Darling Harbour and will also operate the 250 room, $130m MGallery by Sofitel property at Chadstone Shopping Centre, set to open in 2019.
  • Accor is also due to open The William Inglis MGallery by Sofitel on 22 January 2018.
  • Accor’s expansion will also include the takeover of the Mantra Group.
  • The InterContinental Hotel Group has 47 hotels operating across Australasia (under InterContinental Hotels & Resorts, Crowne Plaza, Holiday Inn and Holiday Inn Express brands)
  • 15 further hotels are planned, including under the ‘Hotel Indigo’ and EVEN Hotels brand.
  • A 170 key Hotel Indigo will open in Melbourne’s Docklands precinct in 2019, a project built by Salta Properties and managed by IHG.
  • It will focus on “Age of I” travelers, who are interested in “local, inspiring and unique experiences”.
  • Sydney’s StayWell Hospitality Group will soon be acquired by Tokyo-based Prince Hotels Inc.
  • StayWell operates the Park Regis and Leisure Inn brands and, through strategic partnerships, boasts a portfolio of 71 properties across 14 countries, with $300m in managed turnover.
  • Melbourne’s Lancemore Group is planning expansions, including their recently opened property, Larmont Sydney Hotel in Potts Point.
  • The “uptake of lifestyle brands hasn’t been as strong in Australia, as other regions,” however lifestyle brands recognise the changing preferences of travelers, particularly millennials and Generation Z, who “have preferences for experiences, highly social spaces, constant connectivity and availability of food and beverage services.”
  • Marriott’s W Hotel chain is one of the world’s most well-known lifestyle brands
  • New W Hotels are planned across Australia in Melbourne, Sydney and Brisbane.
  • Marriott’s ‘Moxy Hotels’ aim to appeal to a younger demographic, with communal public spaces, 24/7 ‘grab and go’ food and beverages, “amped up bar experience,” “furiously fast and free Wi-Fi.”
  • ‘Wellness’ hotels are also becoming more popular with a wider demographic
  • IHG’s EVEN brand focusses on hotels “equipped with fitness facilities, healthy eating options, and an environment that promotes the feeling of well-being.
  • Investment in new lifestyle brands maybe slower than in other regions, as investors defer to already established brands, with previous experience and existing supply chains in place.”

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