Investors snap up domestic accommodation assets

With domestic tourism back on the agenda sale volumes and investor demand for local accommodation assets are growing.

From ecotourism resorts to luxury and boutique hotels, investor demand for holiday accommodation assets are making a comeback as domestic tourism rebounds post-pandemic.

Hotels have been amongst the strongest commercial assets to bounce back after the sector was arguably the hardest hit by the pandemic, PropTrack economist Anne Flaherty said.

“It wasn’t just the loss of international tourists but there were significant restrictions on domestic tourism as well and that actually saw sales activity plummet and values decrease but we have really started to see a bounce back,” she said.

“For the second quarter of 2022 –  so the March to June quarter – we actually saw the strongest sales volumes in the hotel market since back in 2015.”

Regional assets in demand

Regional NSW has seen more hotel assets change hands than any other sector this year, closely followed by Queensland, Ms Flaherty said.

“When it comes to regional hotel assets, it’s domestic groups that are pretty much the main investors there,” she said.

“Regional assets perhaps have a bit of an edge in the sense that airfares are more expensive now and those are the kind of locations that locals are more likely to travel rather than international tourists. Given domestic tourism has really picked up, those are the locations that are really going to benefit,” she said.

Domestic tourism drives growth

Within the resort and holiday hotel accommodation sector, there had been a new strong push to that market in response to the boom in inbound travel due in part to fewer Australians travelling overseas, Savills Hotels Brisbane national director Leon Alaban said.

“Accommodation assets and resorts have enjoyed an increase in activity in terms of patronage and people staying there, and revenues and profits have generally gone up and they have become darlings of the market again,” he said.

Colliers International hotels transaction services Asia Pacific national director Karen Wales said hotel travel and tourism spend was accelerating as consumers shifted from spending on goods to spending on experiences.  

“Resorts and regional Australia are providing opportunities with immediate upside as the recovery continues,” she said.

Domestic and international investors seize opportunity

Historically, offshore investor groups had dominated investment in Australian hotels, Ms Wales said.

“But I think there’s probably just a lot more interest across a range of capital sources as the international investors were locked out for a number of years unless they had somebody with boots on the ground,” she said.

“So definitely some of the offshore groups are coming back, but there is also domestic capital being attracted to the sector because it is rebounding so strongly,” she said.

Meanwhile, Colliers predicts total annual transactions for 2022 will reach $2.4 billion, with more large single assets and portfolios currently in play or mandated for sale during the second half of the year.

“Accelerating performance in cities presents an opportunity to bank future growth with multiple catalysts for investment. Asset location as opposed to demand segment is now the focus for investors,” Ms Wales said.

“We expect to see a flight to quality in key locations and strong brands or operators high on the investors’ list.”

Holiday accommodation assets currently up for grabs

770 Beach Shacks, Queensland

The award-winning accommodation is on the market for in excess of $5.5 million. Picture: realcommercial.com.au/for-sale

Comprising four self-contained bungalows, this boutique holiday stay has been owned and operated by the current owners for more than 24 years.

It is set across two adjoining titles spanning 1585sqm.

The business is for sale for $5.5 million plus.

Mansfield Estate, New South Wales

There is future development scope for the new owner of this popular venue. Picture: realcommercial.com.au/for-sale

This Grants Beach eco tourism resort and function centre features function and conference facilities and accommodation amongst ocean, forest and hinterland views.

It is just over 30km from Port Macquarie Airport.

It is being offered for sale via an Expression of Interest campaign, which closes Monday October 17.

Langsford Luxury Suites, Grampians Region, Victoria

This boutique accommodation is located in the heart of the popular Stawell. Picture: realcommercial.com.au/for-sale

Built circa 1907, this boutique accommodation building features two suite apartments in a building where no expense has been spared in its restoration.

It is priced at around $2 million.