Grand Hyatt Melbourne set for mixed-use redevelopment

Tuan Sing Holdings is close to announcing plans to redevelop its 550-room Grand Hyatt Hotel in Melbourne’s Collins St into a major mixed-use development. Picture: AAP

Diversified Singaporean conglomerate Tuan Sing Holdings is close to announcing plans to redevelop its 550-room Grand Hyatt Hotel in Melbourne’s Collins St into a major mixed-use development triggered by the fact the long-held hotel management rights over the complex are drawing to a close.

Grant Hyatt’s contract over the hotel will cease in December but it is understood Hyatt will continue to operate the hotel for at least another year as Tuan Sing continues apace with its plans to demolish the existing hotel to create a mega office tower.

Industry sources close to the deal said the redevelopment would also include a smaller hotel and ground floor retail on the site which is arguably the best position for commercial offices in the country.

“Tuan Sing have been playing around with concepts for years, they have been committed to do this, they have wanted to do this themselves and create a landmark office tower,” said one executive close to the deal.

While the development will effectively pull 550 hotel rooms out of Melbourne’s hotel market stock, hoteliers are not concerned given the plethora of development and hotel openings that have continued apace.

A redevelopment of the Grand Hyatt deal would create a landmark property at the Paris end of Collins St. Picture: Getty Images

Apart from Harry Triguboff’s Meriton Serviced Apartment building, under construction in Melbourne, hotel owner Peter Thomas is about to reopen the luxury boutique Lyall Hotel on September 1.

In South Yarra, the Lyall is fresh from a $10m renovation and has just been accepted into the prestigious Leading Hotels of the World network. It will feature 49 rooms according to Mr Thomas.

Mr Thomas said the hotel in South Yarra’s Murphy St was closed for a year due to Covid and a further 16 months as it underwent a major renovation.

Room sizes vary from 32sq m to the Lyall penthouse suite at 103sq m and prices range from $420 a night to $4000 a night for the penthouse which has a large terrace overlooking South Yarra’s trees and rooftops.

“It was important for us to be able to fit out the hotel with Australian made (products) where possible which has proved beneficial during times of supply shortages,” said Rowina Thomas.

Most rooms have a furnished balcony.

A redevelopment of the Grand Hyatt deal would create a landmark property at the Paris end of Collins St.

But the hotel management contract is yet to be settled. “The Group is in discussion with various international luxury brand operators including the incumbent,” Tuan Sing said.

One industry player said the owners would likely be talking to Marriott and Hilton about their luxury brands. Luxury independent Asian brands could be brought in but sticking with Hyatt is favoured.

“There is always a risk in changing brands on such an iconic hotel and I understand Hyatt have done a very good job over the last 30 odd years. Therefore, Hyatt have to be favoured to hang onto the management,” he said.

Industry players said the Singaporean company called for submissions from agencies earlier this year on advice for pre-leasing a major office tower and finding a capital partner.

Melbourne has seen a jump in hotel rooms even before the latest round of openings. New properties including a W Hotel, a Hilton and a Quincy.

Grant Hyatt’s contract over the hotel will cease in December but it is understood Hyatt will continue to operate the hotel for at least another year. Picture: AAP

A new Hyatt Centric and a Vibe Hotel also opened up. Other hotels to launch include Next Hotel, Mövenpick Hotel and a voco property.

But developers are now showing even more confidence on putting up office schemes in Melbourne.

US player Hines last week launched 600 Collins, which will be a new premium grade office tower in the heart of Melbourne’s CBD. The $1bn project was designed at the height of the pandemic, with the new working conditions in mind.

That 60,000sq m skyscraper also took a hotel project out of the pipeline. The site was bought from Landream, which had planned a 54-storey apartment and hotel tower on the site. The Zaha Hadi-designed project was set to house a luxury Mandarin Oriental hotel.

This week, property major Charter Hall also dealt itself into the future of one of Melbourne’s grandest complexes – Collins Place, which also sits in the Paris end of Collins St – with a fund it manages spending about $65m on the site’s freehold.

It could be in a position to do a deal with the leaseholder, the AMP Wholesale Office Fund, in coming years. Collins Place comprises two skyscrapers – 35 and 55 Collins St – plus the Sofitel Hotel.

Tuan Sing declined to comment further, but in February flagged it was working on a scheme.

“The Group is also evaluating the redevelopment of the Melbourne hotel and investment properties into an iconic mixed use development comprising premium grade office space, luxury retail and dining experiences as well as upper-upscale hotel/serviced residences,” the company said.