SYDNEY'S tightly held hotel market is set to lose one of its solid performers, The Menzies, which will be swallowed up by Brookfield's billion-dollar plan to reconfigure Wynyard station and build an office tower above it.

Under Brookfield's plan, the 500-room hotel would be converted into office space - a move which could create room shortages in the CBD, given there have been few new accommodation developments since the Sydney Olympics in 2000.

Brookfield declined to comment yesterday but sources said the company did have plans to include a boutique hotel on the Wynyard site.

Hotel analyst Dean Dransfield, of Dransfield Hotels & Resorts, yesterday called for government intervention to stop developers converting hotels into office blocks.

"There's a shortage of hotels, there is not a shortage of offices," he said. "We will lose nearly 500 rooms and that's why it is so important that other sites in the Sydney CBD be designated for hotel use.

"It's an old hotel and this highlights the need for the state government to select other sites to replace it with hotel use."

Mr Dransfield was also critical that the state government had not declared whether it would provide incentives for hotel use for the government's looming sale of the historic Department of Lands and Department of Education Buildings in the heart of Sydney's financial district.

"The government needs to make specific plans for hotel use. This is what they do in Singapore, it does require government intervention," he said.

Tourism Accommodation Australia NSW director Carol Giuseppi said the loss of The Menzies would be disappointing for the Sydney hotel sector, but if it was not replaced it would be a reflection of the fact that hotel profits have not grown fast enough to justify the capital invested.

"The reality is that in the past year Sydney hotels have seen a limited level of real growth (2.9 per cent adjusted for inflation) in both rate and revenue," she said. "A recent Horwath report concluded that with rising costs, profit margins for three- to five-star metropolitan hotels have failed to grow in the past five years, despite higher room occupancies.

"The success of hotel investment in NSW is reliant on co-ordinated investment in marketing, events and infrastructure. It is this that will improve investor confidence and generate sustainable supply."

The Menzies, opened in 1963, is named after Sir Archibald Menzies, the nation's pioneer hotelier. By the mid-1970s it was the state's largest liquor licensee, with more than 18 bars in and around Wynyard.

The acquisition of Shell House, next to the hotel, in 1979 added a further 196 rooms to the hotel.

French chain Accor took over the management of the hotel in 2000.SYDNEY'S tightly held hotel market is set to lose one of its solid performers, The Menzies, which will be swallowed up by Brookfield's billion-dollar plan to reconfigure Wynyard station and build an office tower above it.

Under Brookfield's plan, the 500-room hotel would be converted into office space - a move which could create room shortages in the CBD, given there have been few new accommodation developments since the Sydney Olympics in 2000.

Brookfield declined to comment yesterday but sources said the company did have plans to include a boutique hotel on the Wynyard site.

Hotel analyst Dean Dransfield, of Dransfield Hotels & Resorts, yesterday called for government intervention to stop developers converting hotels into office blocks.

"There's a shortage of hotels, there is not a shortage of offices," he said. "We will lose nearly 500 rooms and that's why it is so important that other sites in the Sydney CBD be designated for hotel use.

"It's an old hotel and this highlights the need for the state government to select other sites to replace it with hotel use."

Mr Dransfield was also critical that the state government had not declared whether it would provide incentives for hotel use for the government's looming sale of the historic Department of Lands and Department of Education Buildings in the heart of Sydney's financial district.

"The government needs to make specific plans for hotel use. This is what they do in Singapore, it does require government intervention," he said.

Tourism Accommodation Australia NSW director Carol Giuseppi said the loss of The Menzies would be disappointing for the Sydney hotel sector, but if it was not replaced it would be a reflection of the fact that hotel profits have not grown fast enough to justify the capital invested.

"The reality is that in the past year Sydney hotels have seen a limited level of real growth (2.9 per cent adjusted for inflation) in both rate and revenue," she said. "A recent Horwath report concluded that with rising costs, profit margins for three- to five-star metropolitan hotels have failed to grow in the past five years, despite higher room occupancies.

"The success of hotel investment in NSW is reliant on co-ordinated investment in marketing, events and infrastructure. It is this that will improve investor confidence and generate sustainable supply."

The Menzies, opened in 1963, is named after Sir Archibald Menzies, the nation's pioneer hotelier. By the mid-1970s it was the state's largest liquor licensee, with more than 18 bars in and around Wynyard.

The acquisition of Shell House, next to the hotel, in 1979 added a further 196 rooms to the hotel.

French chain Accor took over the management of the hotel in 2000.n, the 500-room hotel would be converted into office space - a move which could create room shortages in the CBD, given there have been few new accommodation developments since the Sydney Olympics in 2000.

Brookfield declined to comment yesterday but sources said the company did have plans to include a boutique hotel on the Wynyard site.

Hotel analyst Dean Dransfield, of Dransfield Hotels & Resorts, yesterday called for government intervention to stop developers converting hotels into office blocks.

"There's a shortage of hotels, there is not a shortage of offices," he said. "We will lose nearly 500 rooms and that's why it is so important that other sites in the Sydney CBD be designated for hotel use.

"It's an old hotel and this highlights the need for the state government to select other sites to replace it with hotel use."

Mr Dransfield was also critical that the state government had not declared whether it would provide incentives for hotel use for the government's looming sale of the historic Department of Lands and Department of Education Buildings in the heart of Sydney's financial district.

"The government needs to make specific plans for hotel use. This is what they do in Singapore, it does require government intervention," he said.

Tourism Accommodation Australia NSW director Carol Giuseppi said the loss of The Menzies would be disappointing for the Sydney hotel sector, but if it was not replaced it would be a reflection of the fact that hotel profits have not grown fast enough to justify the capital invested.

"The reality is that in the past year Sydney hotels have seen a limited level of real growth (2.9 per cent adjusted for inflation) in both rate and revenue," she said. "A recent Horwath report concluded that with rising costs, profit margins for three- to five-star metropolitan hotels have failed to grow in the past five years, despite higher room occupancies.

"The success of hotel investment in NSW is reliant on co-ordinated investment in marketing, events and infrastructure. It is this that will improve investor confidence and generate sustainable supply."

The Menzies, opened in 1963, is named after Sir Archibald Menzies, the nation's pioneer hotelier. By the mid-1970s it was the state's largest liquor licensee, with more than 18 bars in and around Wynyard.

The acquisition of Shell House, next to the hotel, in 1979 added a further 196 rooms to the hotel.

French chain Accor took over the management of the hotel in 2000.

- See more at: http://www.theaustralian.com.au/news/loss-of-the-menzies-a-wake-up-call-on-cbd-shortage/story-e6frg6n6-1226722220038#sthash.sdWKYHc9.dpuf