Hotel demand drives historic highs

Australian hotel sales are on track for a second consecutive record-breaking year, after a rush of deals in the first half of 2015.

More than $2 billion in hotel properties changed hands last year – the most in history – and sales have already topped $1 billion in the six months to June, according to CBRE Hotels research.

A demand-driven hotel price boom has also seen investment yields tighten, with a number of major deals in the past 12 months recording yields below 6.5%.

This trend reinforces the shift in Australia’s economic activity away from a reliance on mining to a services based economy

CBRE Hotels strategic solutions senior director Oscar Westerlund says investor interest in hotels is booming.

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“The fundamentals for new projects are beginning to align with investor expectations and we are receiving high levels of enquiry for new developments across Asia Pacific,” Westerlund says.

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The latest data also showed an increase in hotel patronage, with a 3.4% jump in the average revenue per available room Australia wide in the first half of the year, in comparison to the same period last year.

CBRE Hotels Pacific regional director Ken Smith says he expects the hotel outlook to improve further in the latter half of the year.

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“The accommodation sector is forecast to continue to benefit from growth in both international and domestic visitor room night demand due to a lower Australian dollar, tourism initiatives and significant hotel development pipeline,” Smith says.

“This trend reinforces the shift in Australia’s economic activity away from a reliance on mining to a services based economy.”