Singaporeans snap up Melbourne dual branded hotel

A subsidiary of Singapore’s Worldwide Hotels Group has bought Melbourne’s first dual branded hotel, a 472 room behemoth, for $170m. Picture: Paul Jeffers/NCA NewsWire

A subsidiary of Singapore’s Worldwide Hotels Group has plunged into the Melbourne accommodation market, buying the city’s first dual branded hotel, a 472 room behemoth for $170m.

Completed in 2018, the 399 Little Lonsdale St property was used to house covid patients at the height of the pandemic, but has since recovered and has found favour with both budget and upper market guests given it can offer travellers the choice of either budget style ibis-branded accommodation in 259 rooms on the lower floors or four-star Novotel rooms on the higher floors.

Worldwide Hotels Group subsidiary Legend Land Melbourne has acquired the Novotel and ibis Melbourne Central Hotel for $170 million as investor sentiment towards Australia’s hotel market continues to grow, buying it from Well Smart Investment Holdings as part of the group’s capital recycling strategy, which has already seen them acquire Queensland’s Lindeman Island.

399 Little Lonsdale St, Melbourne, Vic Novotel/ibis hotel. Picture: Supplied

Negotiated by CBRE Hotels national director Wayne Bunz, Legend Land’s acquisition of the Novotel & Ibis Melbourne Central represents the largest hotel transaction in Melbourne in more than six years.

Simultaneously, Worldwide Hotels Group has announced its agreement to acquire the Parkroyal on Kitchener Road, Singapore, for US$388 million, the largest ever single-asset Singapore hotel transaction.

The Novotel & ibis Melbourne Central Hotel is Australia’s first dual-branded high-rise hotel with two restaurants, a bar, conference and meeting spaces, recreation facilities and undercover car parking.

Mr Bunz and co-marketing agent Mr Scott Callow secured an off-market deal with Legend Land, which describes itself as an astute long-term, generational wealth investor focused on freehold mid-scale properties in strategic capital city locations globally.

Mr Bunz said the latest Melbourne deal evidenced the confidence international capital sources had in Australia’s hotel market, given its safe-haven status and ability to provide a strong inflationary hedge.

“We have strong confidence in the Melbourne hotel market and its rapid recovery, given it is Australia’s most populated city and the nation’s events capital, which has consistently demonstrated its ability to absorb new supply. The market benefits from robust corporate visitation and tourist demand and boasts the country’s best cultural and sports events calendar,” Mr Bunz said.

“The Melbourne transaction followed a strong recovery in the city’s hotel market, with Melbourne recording the country’s third highest RevPAR (revenue per available room) growth rate in the year to April 2023, growing by 54 per cent compared to the same period through 2022”.

“Importantly, this recovery highlights the strong absorption of the ten hotels that have come online since the start of 2022 in Melbourne, largely supported by a continued recovery in domestic and international tourism”.

“While the city’s elevated, high-quality supply pipeline dampened investment levels over 2021 and 2022, Melbourne is now showing its ability to absorb this new room supply, which is expected to underpin growing investor interest in the market as the year progresses.”