Hotel rooms in short supply
The industry is booming but hotel rooms are now in short supply.
A lack of saleable hospitality assets and a tightening of overseas capital has seen national hotel investment levels dropping nearly 50 per cent this year to $1.4 billion
Hotel owners across the country might be enjoying strong trading, particularly in Sydney, Canberra and Cairns but the lack of stock is prompting investors to look to the northern hemisphere to “deploy frustrated capital”.
JLL Hotels Australasia chief executive Craig Collins said there’s no doubt there’s pent-up demand and interest in institutional-quality assets.
As an example, he cited the recent sale of the 140-room InterContinental Sydney Double Bay hotel at $1 million per room to an offshore Chinese investor, achieving one of the highest rates on record in the region.
“Given the lack of available assets in tier-one markets, investors continue to look for assets in metropolitan and regional locations,” Mr Collins told The Australian.
“The Sydney market has had another sensational year in terms of trading, with revenues per available room growth recorded at 9.6 per cent for the year to October 2017, led mostly by a large rise in average daily rates.
“Due to constrained supply and a compressed pipeline across the city, the already high occupancy rates in central Sydney are allowing hoteliers to really drive room rates throughout the year.”
As a result, average daily room rates for the year to October were $256, up from $237 the previous year. And the big growth area lay with Sydney’s fringe markets, such as the airport precinct, which reported 8.2 per cent growth in revenue per available room for the year to October.
“This fringe market benefits significantly from the overflow from the Sydney centre and, despite a substantial rise in room supply over the course of the year, the area has shown significant increase in occupancy rates at 89.8 per cent as travellers begin to realise the benefits of staying in Sydney CBD’s closest secondary market and in proximity to the airport,” Mr Collins told The Australian.
14th December 2017
