Australian hotels a hot property destination

Australian hotels are emerging as more than just a place to lay your head.

Investors spent about $4 billion on hotels in the past two years – well up on the five-year average of $1.3 billion.

And last year, Savills recorded 69 sales of Australian hotel assets priced at more than $5 million.

Savills expects a good year ahead for the industry because “as the correction of the Australian dollar continues, domestic travel is likely to increase and Australia will become more affordable for international tourists”.

Colliers International National Director, Transaction Services, Hotels, Gus Moors says hotel sales for 2013 were more than $1.867 billion – up 49.4% on 2012.

“The figures are dominated by just two sales, namely the Tourism Asset Holdings Limited portfolio for a reported approximate  $800 million and the Four Seasons Hotel Sydney for $340 million,” Moors says.

“The interesting point about both these transactions is that they represent the first foray into the Australian hotel market for both these purchasers – a key indicator that Australian hotels are viewed as attractive assets for offshore institutional investors.

The year is off to a good start, with China’s Fu Wah International Group buying Melbourne’s Park Hyatt for a reported $135 million.

CBRE Hotels Australia Senior Director Wayne Bunz and CBRE China Executive Director Anton Eilers brokered the off-market sale of Melbourne’s Park Hyatt.

Bunz says Melbourne is considered a priority destination for foreign capital into Australia and the city recorded the strongest revenue per available room growth of any of the Australian CBD markets during 2013.

“The stability of the Australian hotel market and the appeal of Melbourne as an investment destination were key attractions for Fu Wah as was the trophy status of the Park Hyatt, one of the city’s premier five-star hotels,” Eilers says.

Colliers’ Gus Moors believes office-to-hotel conversions and boutique hotels will help drive the sector this year.

“An important investment feature of boutique hotels is that they tend to attract a clientele that is more focused on enjoying the experience of staying at a ‘different’ hotel rather than customers that simply shop for the best room rate,” Moors says.

“This phenomenon has been added by third-party hotel booking sites and the rise of consumer word-of-mouth sites such as Trip Advisor.”