Hotels CAPITAL MARKETS INVESTMENT REVIEW - 2017/18 | ANZ - Colliers International
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
CAPITAL MARKETS
INVESTMENT REVIEW
2017/18 | ANZ
hotels
Accelerating success.
HOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 1
Introduction
Australian hotel transaction activity slowed in more dominant sources of inbound capital, accounting For the first time for more than a decade, the number FY2018 TRANSACTION VALUES
FYE2018 with volumes easing to $1.338 billion, for only 1 per cent of transactions over the year, as of rooms opening throughout the year surpassed
capital restrictions continued to bite. Continuing the the number traded with investors focussed on the
$1.34bn
after a record three years, with a reduction in
big-ticket sales. Deal flow increased however trend of FYE2017, Middle Eastern investors remained development of new rooms. In FYE2018 almost 6,500
active, as well as groups from Germany, Hong Kong, new rooms came on line in the ten major markets with
with 35 transactions (above $10 million)
Singapore and the United States. an estimated value of more than $2.0 billion. This has
concluding throughout the year. This compares Australian hotel transaction
also resulted in more hotel development site sales
to 30 transactions in FYE2017. Queensland was one of the more active hotel activity slowed in FYE2018
with projects offered in Sydney, Melbourne, Canberra
investment markets as investors made counter cyclical
Fewer big-ticket sales also saw a shift in the capital and the Gold Coast over the year. Offshore groups
plays, ahead of improving fundamentals in Brisbane and
base with locally domiciled funds stepping to the fore. continue to take a lead role in the development of new Deal flow increased
35
as the key leisure markets continued to boom (aided by
Australian investors accounted for 63.7 per cent of accommodation rooms, accounting for 40 per cent of
the Gold Coast playing host to the 2018 Commonwealth
asset trades in FYE2018, considerably higher than the rooms opening in FYE2018 and almost two thirds of
Games). Whilst the Sunshine state topped the number
16.5 per cent recorded in FYE2017. Investors from rooms currently in the pipeline.
of deals with nine assets transacting over the year,
Mainland China fell behind the rest of Asia as one of the volumes were higher in NSW and VIC with the totals for We trust you find the Capital Markets Hotel Investment
both boosted by a few CBD sales. Review an insightful read and, as always, we welcome Transactions
your feedback.
Gus Moors, Head of Hotels
Karen Wales, Director, Transaction Service, Hotels Australian investors
accounted for
63.7%
of asset trades in FYE2018
HOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 2
KINGFISHER BAY
RESORT & VILLAGE
QLD
Key Findings
Proudly sold by
Colliers International
Australian Hotel
Transaction volume
($10 million plus) – FYE2018
35
Transactions
$1.34bn
47% Down from
FYE2017
transactions
Australian Hotel Transaction by State Australian Hotel Transactions
Average price per key FYE2009 to FYE2018 (A$5 million plus) by Purchaser Type – FYE2018
$326,663
down 36% on FYE2017
4,500 (Millions $AUD)
4,000
3,500
Corporate
Developer
Institution
3,000
Investment Fund
Average ticket-size 2,500
Private
$38.2m
2,000 Owner Operator
1,500 Other
1,000 Unknown
55%
500
0
Down on Source: Colliers International
FYE2017 FYE09 FYE10 FYE11 FYE12 FYE13 FYE14 FYE15 FYE16 FYE17 FYE18
NSW VIC SA QLD WA ACT TAS NT PORTFOLIO Source: Colliers International
HOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 3
Key Findings (cont.)
MOST ACTIVE INVESTMENT MARKETS Australian Hotel Transactions
by Source of Capital (A$10 million plus)
NSW FYE17
$350m FYE18
0 500 1,000 1,500 2,000 2,500 3,000 (Millions $AUD)
QLD
$347m Australia China Hong Kong Japan Middle East South East Asia United States Global Other
VIC Major Markets Accommodation Pipeline
by Source of Capital – FYE18
$343m Approved
Proposed
Under
Construction
7-23 SPENCER STREET,
MELBOURNE Complete
VIC FYE18
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000
Colliers International Number of rooms
is proudly undertaking
an operator search on Domestic Offshore
behalf of CGA
Source: Colliers International
HOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 4
Trading Performance
Accommodation Development Pipeline
Financial Year 2017/18 in Review Percentage Increase on Base Stock
Darwin
Australia’s accommodation pipeline kicked up almost Gold Coast
5,000 new rooms
a gear in FYE2018 with the opening of almost Cairns
5,000 new rooms across the ten major markets
and a further 1,500 rooms in Sydney and Canberra
Melbourne’s sub-markets. This is the highest opened across ten major markets
Sydney City
number of new rooms which has opened in any
9m 6.2%
Brisbane
year since 2000 and represents a marked shift
in the trading backdrop. Perth
Brisbane and Perth recorded the lion’s share of activity, inbound arrivals Up from FYE2017 Adelaide
accounting for almost half of new rooms with notable
openings including the Pullman and Ibis at Brisbane Melbourne City
Airport, W Brisbane, Westin Perth and InterContinental
Hobart
Perth. More broadly, we note that hotel development
is focussed on the luxury and upper upscale -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%
Notwithstanding, hotel construction activity provides a
segments, reflecting the high proportion of mixed-
good barometer for where demand is growing (perhaps Completed FYE18 Under construction Proposed Mooted – Approved Source: Colliers International
use developments and prevalence of Asian capital in
with the exception of Perth). With a strong economic
the accommodation development market. Australia
backdrop and significant investments in tourism and
is also playing catch-up with many global luxury
transport infrastructure, demand is expected to absorb
brands not currently represented in the key Australian
accommodation markets.
the additional supply over the medium term, particularly Major Markets Inbound Arrivals to Australia
as Australia’s appeal as a premium destination for 12-month Rolling Average FYE2000 to FYE2018 (to May)
Colliers estimates that there is a weighted visitors continues to grow.
Accommodation Pipeline
by Star Grading 800 Arrivals thousands
accommodation pipeline of around 27,000 rooms
Inbound arrivals to Australia topped 9 million for the 700
with almost half of these new rooms currently under
first time ever in FYE2018 with the number of visitors 600
construction and 7,000 rooms proposed, thought likely
surging 6.2 per cent over the previous year (to May). Luxury 500
to commence construction in the next six months or are
Whilst leisure travel (holiday and VFR) accounted for Upper Upscale 400
government mandated projects.
three quarters of total inbound visitation, the business 300
All markets, except for Darwin and the Gold Coast, are and convention segments recorded the strongest Upscale
200
seeing an accelerated pipeline with openings expected growth up 12.2 per cent and 32.6 per cent respectively Midscale 100
to peak in 2019 and 2020. Development activity is throughout the year. Growth in convention travel is
Budget 0
greatest in Hobart, Melbourne, Adelaide and Perth being supported by investments in infrastructure with
Jun 00
Jun 04
Jun 06
Jun 08
Jun 09
Jun 05
Jun 02
Jun 03
Jun 07
Jun 01
Jun 10
Jun 12
Jun 14
Jun 16
Jun 15
Jun 13
Jun 17
Jun 11
with increases set to expand the existing supply base new or expanded facilities available in Sydney, Adelaide,
by more than one third. The likelihood that projects Melbourne and Perth. The recent launch of a new
in planning will proceed has moderated with some $12 million fund by Tourism Australia to support the Leisure Total arrivals
projects being offered for sale, put on hold or shelved Australian business events industry is also expected Source: Colliers International Source: ABS, Colliers International
altogether, particularly as development debt has to improve Australia’s competitiveness to secure large Note: Please refer to page 26
become constrained. global events.
HOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 5
Trading Performance Top Inbound Source Markets
Financial Year 2017/18 by Visitors – FYE2018 (to May)
in Review (cont.)
CHINA
Chinese visitors to Australia outnumbered New
Zealanders for the first time in FYE2018, with UNITED KINGDOM
$1.42m
$0.74m
more than 1.42 million visitors from China over
the year to April 2018, up 13.7 per cent on the JAPAN
$0.44m
previous year. The number of visitor nights
sourced from China spent in hotels has more
than doubled over the past ten years. The
ability for hoteliers to capture growing demand
from China will in part be dependent on the
UNITED STATES
$0.79m
availability of mobile-payment systems (e.g.
Alipay) and Mandarin speaking staff.
NEW ZEALAND
$1.37m
Against this backdrop, Sydney and Melbourne
retained their mantle as the two strongest hotel
markets in Australia with both ranked highest Source: ABS, Colliers International
for occupancy and room rates in FYE2018. Key
leisure markets – Cairns and Gold Coast – also
ranked highly against the backdrop of growing
inbound leisure arrivals. Growth however was
strongest in the smaller state capitals of Darwin
and Adelaide. Perth was the only Australian Top Performing Australian Hotel Markets
hotel market to record a marked decline in all FYE2018
three key performance indicators.
HIGHEST OCCUPANCY HIGHEST ARR RevPAR GROWTH
SYDNEY CITY 87.8% SYDNEY $264 DARWIN 8.6%
Source: STR Global, Colliers International
MELBOURNE CITY 85.7% MELBOURNE $206 ADELAIDE 6.6% Occ = Occupancy
ARR = Average Room Rate
CAIRNS 84.6% GOLD COAST $196 CAIRNS 6.4% RevPAR = Revenue Per Available Room
HOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 6
Key Accommodation Markets Overview
Sydney
STRONG UPWARD TRAJECTORY The opening of around 900 rooms in the CBD in
The strong performance of Sydney’s hotel the FYE2018 and a further 1,200 rooms in the
metropolitan sub-markets was not without impact
sector continued through FYE2018 with
with occupancy levels moderating, proving that the
RevPAR increasing 3.2 per cent over the year,
city hotel market is not immune to supply impacts.
supported by a strong economic backdrop and Whilst moderating, occupancy levels still averaged 88
significant investments in infrastructure. There per cent over the year and remain the highest in the
is an unprecedented number of funds being country. This indicates that many hotels are operating
directed towards delivering major transport close to full throughout the week and on Saturdays.
and infrastructure projects. The opening of the
ARR growth maintained its strong upward trajectory,
new International Convention Centre in late delivering strong returns to owners, and constraining 233 CASTLEREAGH STREET,
2016 has also provided an ongoing boost to the investment activity as a result with owners reluctant SYDNEY
hotel sector. to sell whilst income returns are increasing at NSW
such a strong rate. Only two CBD hotels transacted
CBD in Sydney in FYE2018 with the sale of the Four Colliers International is
Points by Sheraton Hotel, which is currently under proudly undertaking an
approximately operator search on behalf
900
construction and the Breakfree on Clarence. The of Hans Group.
Mercure Sydney International Airport also sold for
$76.4 million. Two out of the three were acquired
new rooms by domestic investors which represents a marked
change to prior years.
There are new rooms coming into the Sydney city
Sydney – 12 month rolling occupancy and ADR
hotel market but the pace of openings is considerably $270 Average Daily Rate Occupancy 95%
METRO/SUB MARKETS slower than in other major state capitals and projects
260 93
approximately in the pipeline now face a changed development
1new,200
250 91
environment which may see fewer progress than
89
previously anticipated. Many approved hotel projects 240
87
are being offered for sale as developers look to exit. 230
rooms Of those approved hotel rooms, more than two thirds
have been or are being marketed for sale. Whilst
220
85
83
210
81
some projects may proceed under a new owner,
200
3.2%
the timing will be delayed pending the outcome of 79
190 77
a successful sale and subject to any changes to the
proposed hotel scheme. The strong performance of 180 75
Dec 09
Dec 09
the commercial office segment has also resulted in
Mar 10
Sep 10
Mar 18
Jun 10
Dec 16
Dec 12
Dec 14
Dec 15
Sep 16
Mar 16
Mar 12
Sep 12
Sep 14
Mar 15
Sep 15
Jun 18
Dec 13
Mar 14
Mar 13
Sep 13
Jun 16
Jun 12
Jun 14
Jun 15
Dec 17
Sep 17
Jun 13
Mar 17
Jun 17
Dec 11
Sep 11
Mar 11
Jun 11
Increase of RevPAR
some hotel projects being put on hold indefinitely.
supported by a strong economic backdrop and ADR ($) Occupancy (%) Source: STR Global, Colliers International
significant investments in infrastructure
HOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 7
50%
Key Accommodation Markets Overview Melbourne’s long-term fundamentals remain strong The supply outlook is also posing headwinds with over
as the city has shown strong appeal with growth 3,000 rooms currently under construction and a further
Melbourne from inbound segments with a large Asian resident 7,000 rooms in planning. A large portion of these new
population, dynamic dining scene and easy access to rooms are luxury standard and will see the entry of
WEAKENING EVIDENT many of the desired attractions and activities across new brands to the Australian hotel market, including International passenger
the state. International retailers have often targeted Ritz Carlton, Mandarin Oriental, Le Meridien and W movements through Melbourne
Melbourne was one of the more active hotel Airport have increased by 54
Melbourne as a first port of call as a result. Growth for example. In a marked contrast to previous years,
investment markets in FYE2018 with four percent over the past five years.
from China is expected to continue following the open development activity in the metropolitan sub-markets
major hotel transactions including the Mercure skies agreement in late 2016 and given the lack of has also increased with a further 3,000 rooms under
Melbourne Treasury Gardens ($70 million), an airport curfew, which presents as a significant construction or proposed.
Adina Melbourne ($43 million), the Royce Hotel advantage over Sydney. International passenger
($55 million) and the Sheraton Melbourne movements through Melbourne Airport have increased
($126.9 million). Only one of these hotels was by 54 percent over the past five years. This compares
bought by an offshore group with Qatar Air’s to just 30 per cent in Sydney.
purchase of the Sheraton. Notwithstanding, the performance of Melbourne’s
accommodation market has been lacklustre over the SERVICED APARTMENTS
past couple of years with RevPAR declining 1.2 per MOONEE PONDS,
cent in FYE2018. Only one hotel opened in Melbourne VIC
city (347 rooms) during the year and the soft demand
MAJOR TRANSACTIONS backdrop remains a concern, particularly during Proudly marketed by
4
major events. Colliers International
Melbourne – 12 month rolling occupancy and ADR
$220 Average Daily Rate Occupancy 90%
210
85
200
190
80
180
170 75
Dec 09
Dec 09
Mar 10
Sep 10
Mar 18
Jun 10
Dec 16
Dec 12
Mar 12
Dec 14
Dec 15
Mar 16
Sep 16
Sep 12
Mar 15
Mar 14
Sep 14
Sep 15
Jun 18
Dec 13
Mar 13
Sep 13
Jun 16
Jun 12
Jun 14
Jun 15
Dec 17
Mar 17
Sep 17
Jun 13
Jun 17
Dec 11
Mar 11
Sep 11
Jun 11
ADR ($) Occupancy (%) Source: STR Global, Colliers International
HOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 8
Key Accommodation Markets Overview
Brisbane THE WESTIN NOVOTEL,
BRISBANE SOUTHBANK
QLD
TRADING APPROACHING STABILISATION
Brisbane was one of the more active hotel
Opening Nov-18, Opened May 2018,
transaction markets in FYE2018 with counter- 286 rooms 238 rooms – Asset
Management
cyclical buyers strategically acquiring assets
for repositioning across the CBD as trading
performance nears stabilisation. RevPAR
increased 1.7 per cent over the year to average
$116. Notable sales included the Mercure &
Ibis Brisbane, the Emporium Brisbane, Metro
Hotel Tower Mill and the Watermark Hotel
Brisbane with offshore investors dominating the
landscape.
Brisbane is the most advanced in the development
cycle with half of rooms in the pipeline having now
opened. Although there are some signs that the trading
market has bottomed, there are still 1,000 rooms under
construction slated to open over the coming year which
may see trading decline again albeit only marginally.
The medium-term outlook looks strong with more than
$30 billion of infrastructure investments planned. The
new Brisbane International Cruise Terminal and Queens
Wharf Development are underway which will boost the
$220 Average Daily Rate
Brisbane – 12 month rolling occupancy and ADR
Occupancy 90%
1.7% $116
Increase of RevPAR Average
appeal of Brisbane as a destination for both domestic 210
and international visitors. The airport expansion, slated 85
200
for completion in 2020, will double the number of
passengers that can be accommodated by 2033. More 190
80
recent mooted proposals include the $2 billion Brisbane 180
Live entertainment precinct, redevelopment of the Eagle
1,000
Street Pier and the redevelopment of the Roma Street 170
75
Transit Centre which will result in the Hotel Jen being 160
removed from the market.
150 70
rooms
Dec 09
Dec 09
Mar 10
Sep 10
Mar 18
Jun 10
Dec 16
Dec 12
Mar 12
Dec 14
Dec 15
Mar 16
Sep 16
Sep 12
Mar 15
Mar 14
Sep 14
Sep 15
Jun 18
Dec 13
Mar 13
Sep 13
Jun 16
Jun 12
Jun 14
Jun 15
Dec 17
Mar 17
Sep 17
Jun 13
Jun 17
Dec 11
Mar 11
Sep 11
Jun 11
under construction
ADR ($) Occupancy (%) Source: STR Global, Colliers International
HOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 9
WATERMARK HOTEL,
AVERAGE ROOM RATE GOLD COAST
QLD
$195 Price
Confidential
Date
June 2018
Key Accommodation Markets Overview
Gold Coast
The Gold Coast has also experienced a major boost
in infrastructure and public transport in the lead up to
Vendor the Commonwealth Games, with an estimated $2.5
NATIONAL RANK HIS International
Purchaser
billion spent on upgrading infrastructure. Further
3rd
SB&G Hotel Group INSPIRED BY THE COMMONWEALTH GAMES developments are also underway with the construction
Proudly sold by of a new amphitheatre and Art Gallery as part of the
Colliers International The Gold Coast’s accommodation market has been on
a strong growth trajectory over the past seven years 17-hectare Cultural Precinct.
and reached a pinnacle in April 2018 when the city This strong performance is attracting more investors to
played host to 2018 Commonwealth Games. With its consider the market but opportunities to acquire hotels
favourable subtropical climate, surfing beaches, theme remain limited given the high proportion of strata-
parks, nightlife, and rainforest hinterland, the Gold Coast titled stock. In FYE2018 there was one transaction
hotel and tourism market has recorded strong growth with SB&G acquiring the Watermark Hotel which was
against a backdrop of improving tourism demand. This brokered by Colliers International. The hotel will be
has resulted in consistent ARR growth with room rates rebranded to Voco which is IHG’s new upscale lifestyle
averaging $195 in FYE2018 with the city ranked third brand. New development also remains limited with
behind Sydney and Melbourne. many mooted projects not proceeding, outside of those
at the casino. As a result, we expect the market to
continue perform well in the coming years.
Gold Coast – 12 month rolling occupancy and ADR
$200 Average Daily Rate Occupancy 80%
190 78
76
180
74
170
72
160
70
150
68
140 66
130 64
Dec 09
Dec 09
Mar 10
Sep 10
Mar 18
Jun 10
Dec 16
Dec 12
Mar 12
Dec 14
Dec 15
Mar 16
Sep 16
Sep 12
Mar 15
Sep 15
Mar 14
Sep 14
Jun 18
Dec 13
Mar 13
Sep 13
Jun 16
Jun 12
Jun 14
Jun 15
Dec 17
Mar 17
Sep 17
Jun 13
Jun 17
Dec 11
Mar 11
Sep 11
Jun 11
ADR ($) Occupancy (%) Source: STR Global, Colliers InternationalHOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 10
RYDGES ESPLANADE
RESORT, CAIRNS
QLD
Key Accommodation Markets Overview
Cairns Proudly marketed by
Colliers International
GOING FROM STRENGTH TO STRENGTH Investment activity has remained limited, despite the
Cairns has been one of Australia’s strongest performing strong fundamentals, with few quality assets offered
hotel markets over the past three years with near for sale. Whilst a few hotels are under construction or
double digit RevPAR growth each year. RevPAR gains planned, new hotel development remains generally held
moderated slightly in FYE2018, increasing 6.4 per cent back by the lack of feasibility, particularly for large-
year-on-year. scale projects. Investments in infrastructure such as
the proposed Global Tourism Hub (GTH) are expected
Cairns is benefiting from increasing tourist numbers to give the local tourism industry a major boost in
with the destination attracting renewed interest from the coming years and are being complemented by
domestic and international tourists alike. Inbound wider government infrastructure spending including
visitation has received a major boost from direct the adjoining Trinity Inlet upgrade and the Convention
flights from mainland China, which has helped smooth Centre expansion.
traditional seasonality patterns throughout the year.
Occupancy levels reached 84.6 per cent in FYE2018,
which represents a very high level for a leisure
market, and provided a good basis for hoteliers to
yield. ARR increased 6.0 per cent over the year – one
of the strongest rates of growth for any Australian
hotel market.
Cairns – 12 month rolling occupancy and ADR
$160 Average Daily Rate Occupancy 90%
150
85
140
80
130
75
120
70 RevPAR OCCUPANCY
110
100 65
6.4% 84.6%
Dec 09
Dec 09
Mar 10
Sep 10
Mar 18
Jun 10
Dec 16
Dec 12
Mar 12
Dec 14
Dec 15
Mar 16
Sep 16
Sep 12
Mar 15
Mar 14
Sep 14
Sep 15
Jun 18
Dec 13
Mar 13
Sep 13
Jun 16
Jun 12
Jun 14
Jun 15
Dec 17
Mar 17
Sep 17
Jun 13
Jun 17
Dec 11
Mar 11
Sep 11
Jun 11
ADR ($) Occupancy (%) Source: STR Global, Colliers International Increase year on yearHOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 11
RevPAR
Key Accommodation Markets Overview The commencement of direct international flights by
4.0%
Qatar Airlines in 2018 and Singapore Airlines in 2016,
Canberra has made it easier for tourists to visit Canberra and
increased the opportunities for hoteliers to yield. The
BROADENING BASE OF DEMAND Government’s commitment to major infrastructure
Increase on FY2017
Canberra’s overall tourism environment remains investments such as the ACT Light Rail project and
positive with RevPAR increasing 4.0 per cent in City to Lake project are also very positive for the
FY18, continuing the upward trend of the year prior. Canberra region.
Canberra ranked fourth for ARR in FYE18 with room The Canberra hotel market is also quite unique in that it
ARR NATIONAL RANK
rates averaging $175 throughout the year. has many local owner operator groups with the market
4th While Canberra will always have a steady flow of
corporate travellers, it is also emerging as a favourable
destination for leisure travellers with its selection of
museums, galleries, historic buildings and a burgeoning
tightly held. Local developers were behind the majority
of site acquisitions in FYE2018 including Geocon’s
acquisition of 70 Bunda Street in the city and West
Block in Barton. Notwithstanding, there were three
food, wine and arts scene. Performance over the hotel transactions in FY18 including the sale of the
coming year however remains subject to the timing of Quality Hotel Woden ($16 million), as well as Ibis Styles
the Australian federal election. Canberra ($27.5 million) and Aria Hotel (now Adina
hotel) for $35 million. All three assets were acquired by
domestic investors.
Canberra – 12 month rolling occupancy and ADR
$190 Average Daily Rate Occupancy 85%
180 80
170 75
160 70
LITTLE NATIONAL HOTEL, 150 65
CANBERRA
ACT
140 60
Dec 09
Dec 09
Mar 10
Sep 10
Mar 18
Jun 10
Dec 16
Dec 12
Mar 12
Dec 14
Dec 15
Mar 16
Sep 16
Sep 12
Mar 15
Mar 14
Sep 14
Sep 15
Jun 18
Dec 13
Mar 13
Sep 13
Jun 16
Jun 12
Jun 14
Jun 15
Dec 17
Mar 17
Sep 17
Jun 13
Jun 17
Dec 11
Mar 11
Sep 11
Jun 11
120 rooms - Asset
Management
ADR ($) Occupancy (%) Source: STR Global, Colliers InternationalHOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 12
ADELAIDE CONVENTION
CENTRE,
HIGHEST LEVEL EVER RECORDED SA
Key Accommodation Markets Overview Adelaide BioMed City precinct, as well as major
upgrades to the Adelaide Festival Centre and Adelaide
Adelaide Oval. Works are also now underway for the $330 Opened in August
2017 after expansion
million expansion of the Adelaide Casino into a world- works completed
REACHES NEW HEIGHTS class integrated entertainment destination, scheduled RevPAR
The Adelaide market performed well in FYE2018 with for completion by 2020.
RevPAR increasing 6.6 per cent to be at the highest
level ever recorded. Increased flights from Asia, a
vibrant CBD and a booming convention precinct are
underpinning the strong hotel performance in the
Against this backdrop, investment activity has increased
with a strong forward pipeline of rooms across the
city and with two notable transactions occurring over
the year. Transactions included the first large-scale
6.6%
Increase on FY2017
South Australian capital and attracting new entrants to investment by an offshore group in Adelaide’s CBD
the sector. hotel market for almost a decade with the sale of the
The Adelaide Convention Centre will complete a $400 Mercure and Ibis Styles Grosvenor Hotel for $43 million
million expansion in August 2018. The Centre opened and Corus Grosvenor Hotel to Singapore’s Chip
in 1987 as the first purpose built convention centre in Eng Seng.
Australia. The Government is committed to growing
convention business in Adelaide with a focus on
bio-medical and space industry events. This follows
infrastructure investments such as the AUD$3.6 billion
Adelaide – 12 month rolling occupancy and ADR
$170 Average Daily Rate Occupancy 82%
80
160 78
76
150 74
72
140 70
Dec 09
Dec 09
Mar 10
Sep 10
Mar 18
Jun 10
Dec 16
Dec 12
Dec 15
Mar 12
Dec 14
Mar 16
Sep 16
Sep 12
Mar 15
Sep 15
Mar 14
Sep 14
Jun 18
Dec 13
Mar 13
Sep 13
Jun 16
Jun 12
Jun 14
Jun 15
Dec 17
Mar 17
Sep 17
Jun 13
Jun 17
Dec 11
Mar 11
Sep 11
Jun 11
ADR ($) Occupancy (%) Source: STR Global, Colliers InternationalHOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 13
RevPAR
7.6%
CITY/METRO
approximately
2,258
Decrease on FY2017
818
new rooms
rooms
under construction
Key Accommodation Markets Overview
Perth
Investments in infrastructure and nascent signs of
an improving state economy are expected to benefit
but are unlikely to be sufficient to offset the near-
term downward trend. Over the medium term, the
DOWNWARD TREND YET TO REVERSE city is expected to see increased demand from
Perth hotel performance continues to wane with Perth more international flights such as Qantas’ non-stop
the only hotel market in Australia to report a marked connection to London, as well the proposed $2.5 billion
decline for all three key performance indicators in expansion of the airport.
FYE2018. Whilst the rate of RevPAR decline has slowed Notwithstanding, there were four hotel transactions
over the past year, RevPAR in Perth hotels is now 33 in Perth in FYE2018 with counter-cyclical plays by
per cent below the 2012-peak and with considerable offshore groups. With assets trading for the most part
new supply yet to impact. at a significant discount to replacement costs and a
Colliers estimates that 818 rooms opened across much lower level on a price per key basis than in home
the city metropolitan in FYE2018 including the markets, offshore groups see value in Perth’s hotel
InterContinental Perth (238 rooms) and Westin Perth market over the long term. The sale of the Holiday
(362 rooms). We are aware of a further 2,258 rooms Inn City Centre was the largest hotel transaction in
which are under construction due for completion Perth with Legend Land purchasing the property for
over the next two years, putting additional downward $63.88 million.
pressure on occupancy levels and room rates.
Perth – 12 month rolling occupancy and ADR
$250 Average Daily Rate Occupancy 86%
84
82
230 80
78
210 76
74
72
190 70
68
170 66
64
62
150 60
INTERCONTINENTAL
Dec 09
Dec 09
HOTEL, PERTH
Mar 10
Sep 10
Mar 18
Jun 10
Dec 16
Dec 12
Mar 12
Dec 14
Dec 15
Mar 16
Sep 16
Sep 12
Mar 15
Sep 15
Mar 14
Sep 14
Jun 18
Dec 13
Mar 13
Sep 13
Jun 16
Jun 12
Jun 14
Jun 15
Dec 17
Mar 17
Sep 17
Jun 13
Jun 17
Dec 11
Mar 11
Sep 11
Jun 11
WA
ADR ($) Occupancy (%) Source: STR Global, Colliers International
Opened in 2018 after
extensive renovation
and repositioningHOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 14
Key Accommodation Markets Overview
Darwin
RevPAR
8.6% 200
rooms
REBOUNDS STRONGLY The $200 million luxury hotel development by the
Lowest number of rooms
After a difficult few years, Darwin’s hotel market Landbridge Group is progressing and pending relevant Increase on FY2017 in the pipeline
rebounded strongly in FYE2018 with the northernmost approvals, construction will commence later in 2018
capital taking out the top spot for RevPAR growth, with the hotel expected to open to guests in 2021. The
increasing 8.6 per cent over the previous year against Hotel’s Precinct Plan proposes connections within the
a backdrop of improving demand. Waterfront to enable the precinct to function as an
integrated whole, anchored by the Darwin Convention
The introduction of SilkAir and Donghai Airlines’ new Centre at one end and the Hotel and Cruise Ship
direct flight routes between Singapore and Broome, Terminal at the other end.
and Shenzhen and Darwin is expected to boost visitor
numbers into northern Australia further over the
coming year. Notwithstanding, RevPAR remains well-
short of the 2014-high with low levels of investment
activity as a result.
Darwin – 12 month rolling occupancy and ADR
$200 Average Daily Rate Occupancy 90%
190 85
WESTIN HOTEL,
180 80 DARWIN
NT
170 75
160 70 Recently approved Westin
Hotel in Darwin
150 65
140 60
Dec 09
Dec 09
Mar 10
Sep 10
Mar 18
Jun 10
Dec 16
Dec 12
Mar 12
Dec 14
Dec 15
Mar 16
Sep 16
Sep 12
Mar 15
Sep 15
Mar 14
Sep 14
Jun 18
Dec 13
Mar 13
Sep 13
Jun 16
Jun 12
Jun 14
Jun 15
Dec 17
Mar 17
Sep 17
Jun 13
Jun 17
Dec 11
Mar 11
Sep 11
Jun 11
ADR ($) Occupancy (%) Source: STR Global, Colliers InternationalHOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 15
CRADLE MOUNTAIN,
GATEWAY PRECINCT
TAS
Key Accommodation Markets Overview
Hobart Colliers International
is proudly undertaking
an Expressions
of Interest (EOI)
WEIGHED DOWN BY NEW SUPPLY CBD campaign on behalf of
Tasmanian Government
Hobart hotel market’s bull run came to a halt in approximately
410
FYE2018 with the market proving it wasn’t bullet proof
to increases in room supply. Two major hotels opened
in the city over the year, introducing an additional 410
rooms including the luxury MACq1 and the midscale Ibis
Styles. Occupancy levels reduced 5.2 per cent over the
new rooms
year to average 79.0 per cent. This is the first time that
annual average occupancies have dipped below 80 per
cent in Hobart for more than four years.
New stock is of a higher grade and quality than existing
ARR NATIONAL RANK
rooms which resulted in ARR increasing marginally
$170
over the year. At $170, room rates in Hobart ranked fifth
in Australia for ARR in FYE2018 with room rates at a
higher level than Brisbane and Perth. This is attracting
more investors to the market.
Colliers estimates that a further 511 rooms are currently
under construction scheduled to open over the next two
years and an additional eight projects in planning. With
such a strong forward pipeline of new rooms, investors
5th
highest in Australia
remain cautious with respect to the acquisition of Hobart – 12 month rolling occupancy and ADR
established stock, despite growing tourism demand.
The introduction of international air services in the $180 Average Daily Rate Occupancy 90%
coming years has the potential to shift the demand floor 88
once again which is likely to attract more investors in 170 86
the medium term. 84
160 82
80
150 78
76
140 74
72
130 70
Dec 09
Dec 09
Mar 10
Sep 10
Mar 18
Jun 10
Dec 16
Dec 12
Dec 14
Dec 15
Sep 16
Mar 16
Mar 12
Sep 12
Sep 14
Mar 15
Sep 15
Jun 18
Dec 13
Mar 14
Mar 13
Sep 13
Jun 16
Jun 12
Jun 14
Jun 15
Dec 17
Sep 17
Jun 13
Mar 17
Jun 17
Dec 11
Sep 11
Mar 11
Jun 11
ADR ($) Occupancy (%) Source: STR Global, Colliers InternationalHOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 16
Key Accommodation Trading Performance
FYE2018 compared with FYE2017
Markets Overview CAIRNS
Occ: 84.6% up 0.4%
DARWIN
ARR: $153 up 6.0%
Occ: 74.8% up 7.6%
RevPAR: $129 up 6.4%
ARR: $145 up 1.0%
RevPAR: $109 up 8.6% GOLD COAST
BRISBANE Occ: 72.7% up 0.5%
Occ: 73.7% up 1.2% ARR: $196 up 6.5%
ARR: $157 up 0.5% RevPAR: $142 up 7.0%
RevPAR: $116 up 1.7%
SYDNEY AIRPORT
CANBERRA
Occ: 88.7% up 2.5%
Occ: 78.0% up 1.8%
ARR: $167 down 0.2%
ARR: $175 up 2.2%
PERTH RevPAR: $148 up 2.3%
Occ: 75.1% down 2.7% RevPAR: $136 up 4.0%
SYDNEY CITY
ARR: $167 down 5.1% Occ: 87.8% down 1.2%
RevPAR: $125 down 7.6% ADELAIDE ARR: $264 up 4.5%
Occ: 80.8% up 2.8% RevPAR: $232 up 3.2%
HOBART
ARR: $157 up 3.6% MELBOURNE CITY
Occ: 79.0% down 5.2%
RevPAR: $127 up 6.6% Occ: 85.7% down 0.8%
ARR: $170 up 0.8%
ARR: $206 down 0.4%
RevPAR: $135 down 4.4%
RevPAR: $176 down 1.2%
Source: STR / Colliers International
Occ= Occupancy, ARR- Average Room Rate, RevPAR – Revenue Per Available RoomHOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 17
QUEENSTOWN RevPAR
CQ HOTELS,
17. 1%
WELLINGTON
New Zealand
Investment Market
Price Increase on FY2017
Confidential
Date
The New Zealand hotel market continues December 2017
Vendor
to perform at historically high levels on the back Private Domestic
of the 5th consecutive year of a tourism boom, Purchaser ROTORUA RevPAR
Naumi Hotel Group
6.4%
which has seen a record 3.8 million international
visitors visit the country in the past 12 months.
This has culminated in positive RevPAR growth in all
the major hotel markets over the past 12 months. In Increase on FY2017
particular Queenstown which has experienced 17.1 per
cent RevPAR growth for the YE June 2018 followed by
Rotorua at 6.4 per cent.
Demand continues to outstrip supply, with a
fundamental shortage of hotel inventory in most key
regions, with minimal new stock entering the market in
recent times. In the past 12 months, we have seen just
693 rooms completed corresponding to a 3.1 per cent
increase in total supply. This compares to international
visitation numbers which grew at 4.0 per cent for the 12
months ending June 2018.
Whilst we continue to see an increasing number of
projects being proposed, we have seen very few new
projects commence construction in the past 12 months
(circa 600 rooms) due to a range of factors including
high land and construction costs, the recently imposed
Auckland Council targeted rate on hotels, delays in
consenting, and challenges with resources in the
construction sector. This will result in limited new
hotels being delivered until post 2021 (other than those
already under construction).
The announcement that New Zealand’s largest
construction company will no longer partake in any new
vertical construction projects; is another critical factor
in the challenge of delivering new hotel developments
moving forward.HOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 18
Key Performance Indicators ROTORUA
FYE2018
BEST WESTERN
PRESIDENT HOTEL, ADR: $134.38 5.9% Change
AUCKLAND
New Zealand Occ: 79.3% 0.5% Change
Investment Market (cont.)
Price
Confidential
Date
RevPAR: $106.55 6.4% Change
June 2018 In the meantime, the New Zealand International
Vendor
Convention Centre (NZICC) is on track to open in late
Various AUCKLAND
Purchaser 2019 with an anticipated 33,000 delegates annually
Pandey Hotel
Corporation together with Auckland hosting the APEC summit and
the Americas Cup in 2021; which will create even
ADR: $211.45 5.7% Change
more stress on existing hotel inventory until more
stock is built.
Occ: 84.5% (2.9%) Change
On the transaction front, while there continues to be RevPAR: $178.63 2.6% Change
strong investment demand from both offshore and
domestic investors, there have been very few sales of
major hotels in the past 12 months, as existing hotel
investors continue to enjoy buoyant trading conditions,
and hold onto their assets. This being said, in the past WELLINGTON
six months there have been several major hotels in
key markets offered to the market which are likely to
be met with strong levels of interest.
ADR: $174.88 0.8% Change
We note below the recent sales completed in New Occ: 79.4% 0.0% Change
Zealand over the past 12 months;
Best Western President Hotel: - The first FHGC
RevPAR: $138.90 0.9% Change CHRISTCHURCH
hotel in the Auckland CBD in the past five years has ADR: $160.50 0.3% Change
attracted significant interest. The majority interests
in this hotel were sold to New Zealand’s largest hotel Occ: 77.2% 2.5% Change
owner, Pandey Hotel Corporation, for an undisclosed
sum and set a record investment yield of under 7.0
per cent. QUEENSTOWN
RevPAR: $123.96 2.8% Change
CQ Wellington - The 177 room CQ Hotels in Wellington
has been conditionally sold to Singaporean Naumi
ADR: $241.12 15.2% Change
Hotel Group for an undisclosed sum.
Occ: 83.3% 1.6% Change
VR Queen Street – comprising an 80 room hotel
which sold for $25.0 million in March 2018 at a RevPAR: $200.78 17.1% Change
passing yield of 3.82 per cent and a value per key of
$312,500. The hotel is subject to a 30 year lease from
TOTAL NZ
2014 with structured annual rental increases and a
% %
market review next occurring in 2022. ADR CHANGE OCC CHANGE REVPAR % CHANGE
$184.47 6.1% 80.7% 0.3% $149.76 6.4%HOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 19
Lifestyle Hotels – the Next Big Thing
The growth of the boutique and Driven by the chains, lifestyle hotels are the next
lifestyle hotel sector has been one generation of boutique hotels. They borrow the
of the most watched global hotel best elements of boutiques – small, intimate and
trends in recent years. After decades modern – and throw in advantages only a chain
can offer, like loyalty programs, distribution and
of standardisation, there is growing
economies of scale. As a result, lifestyle hotels
attention to more differentiated product
are generally more affordable and accessible than
and boutique & lifestyle hotels have boutique hotels but acknowledge that travellers are
emerged as a considerable segment not singular in their wants and needs.
of the global hotel market.
MORE AFFORDABLE
AND ACCESSIBLE
ACKNOWLEDGE THAT
TRAVELLERS ARE NOT
SINGULAR IN THEIR
WANTS AND NEEDS
M GALLERY BY
CHADSTONE,
VIC
Colliers International
proudly completed an
operator search on
behalf of Vicinity.HOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 20
Each brand has made a targeted shift to cater to Domestic operators have also been active in this
guests’ specific lifestyles, from tech-savvy millennials space with Mantra acquiring the Art Series portfolio
to health-conscious athletes. Although the presentation of hotels (developed by Melbourne’s Deague family)
and design differs amongst the lifestyle hotel brands, and Event developing their QT and Atura brands. New
it is evident that the key elements are consistent. boutique/lifestyle chains are also being developed, for
Lifestyle Hotels Key features that discern lifestyle hotels include: example Veriu, Tribe and Little National.
– the Next Big Thing (cont.) ▶▶ Focus on the experience rather than simply the BROAD CONSUMER ACCEPTANCE
product or service;
Whilst still in its infancy, Sydney ’s boutique and
▶▶ Connect individuals and build relationships; lifestyle hotel market has expanded over the past
▶▶ Connect with their local environment to leverage six years with the opening and/or repositioning
what the precinct offers; of nine properties and the entry of new lifestyle
▶▶ Offer innovative facilities and new forms and soft hotel brands. New rooms have been
of entertainment; fully absorbed, highlighting the appeal of this
product with consumers, particularly the growing
▶▶ Enhance online presence and implement aggressive
Millennial workforce.
marketing strategies and;
▶▶ Emphasise life enrichment, creativity, RevPAR growth for lifestyle hotels in Sydney has
and rejuvenation. been stronger than for the broader city hotel market,
making it an attractive segment for investors. In 2017
Australia has a small but growing boutique/lifestyle Sydney’s lifestyle segment achieved a RevPAR index
hotel segment with an established collection of of 1.01 when compared to the city hotel market which
well‑known independent hotels primarily located includes the Sydney Harbour ‘dress circle’ hotels.
in the major state capitals. More recently we have Occupancy levels were slightly lower (index of 0.96)
seen the entrance of Asian boutique and lifestyle with many properties located in the city fringe but
operators including the Unlisted Collection (Old Clare), ADR was higher (index of 1.05). ADR is a key driver
Como Hotels from Singapore and Ovolo Hotels from of investment returns.
Hong Kong.
Sydney Lifestyle & Boutique Hotels
RevPAR (MAA) Comparison to Sydney City 2011 to 2017
$240 RevPAR
220
200
SYDNEY GROWTH 180
9properties
160
VERIU
SYDNEY CENTRAL, 140
NSW
120
OVER
6 years
Feb 12
Apr 12
Jun 12
Aug 12
Oct 12
Dec 12
Feb 13
Apr 13
Jun 13
Aug 13
Oct 13
Dec 13
Aug 13
Feb 16
Apr 16
Jun 16
Aug 16
Oct 16
Dec 16
Dec 14
Feb 15
Apr 15
Jun 15
Oct 15
Dec 15
Feb 17
Apr 17
Jun 17
Aug 17
Oct 17
Dec 17
Dec 11
Feb 14
Apr 14
Jun 14
Aug 14
Oct 14
Opened Nov 2017,
110 rooms.
Sydney City RevPAR ($) Lifestyle Hotels RevPAR ($) Source: STR Global, Colliers InternationalHOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 21
Lifestyle Hotels – the Next Big Thing (cont.)
W
BRISBANE
QLD
With the evidence pointing to a potential competitive Historically Australian hotels have steered away
advantage, we are seeing more investors willing to from food and beverage with a tendency to lease out
consider lifestyle brands with many new brands now spaces or minimise operations altogether, owing to Opened May 2018,
305 rooms.
offered by the major international groups. Lifestyle & the complexities of operating in a high labour cost
boutique hotels currently account for around 10 per environment. Hotel operators will therefore need to
cent of the national accommodation pipeline but we adjust business models if they are to compete against
expect this to grow in the coming years. an already competitive food & beverage landscape.
Outlet design to maximise efficiencies and talent
Rapidly gentrifying areas may not be ideal for legacy
strategies which attract best-in-class staff will be
hotel brands, but they’re perfect for travellers who
critical if lifestyle hotels are to thrive in Australia.
want to feel more integrated into the fabric of a city
and can offer the potential for character-packed
buildings. Lifestyle hotels are increasingly being used
as ‘place makers’, leading to the creation of vibrant
accommodation precincts for creatives and tech
workers, and a target for visitors. Major Markets
EXTENDING APPEAL BEYOND Accommodation Pipeline
JUST THE ROOMS by Product Type
Globally, luxury lifestyle and boutique hotels have been
shown to draw a greater proportion of their revenue
from food and beverage with innovative outlets driving
additional patronage into hotels, whereas midscale
lifestyle brands have relied on the local environment to
provide this amenity to guests.
LITTLE NATIONAL
The Australian food and beverage industry has 26-38 CLARENCE STREET,
SYDNEY
grown strongly in recent years, with an explosion of NSW
design-driven spaces which offer genuine customer
service and a true point of difference. With more Opening early 2020,
230 rooms.
people investing in experiences over material goods,
consumers are paying to be enticed and taken on a
journey. With a thriving dining culture, founded in
10%
fusion, Australia’s bar scene has also expanded with
speakeasy’s, gin bars and gastro-pubs.
Full Service Serviced Apartments
Lifestyle & Boutique Select Service
Lifestyle & boutique hotels currently
Source: Colliers International account for around 10 per cent of the
national accommodation pipelineHOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 22
Investment Outlook
& Forecast Indicators LINDEMAN ISLAND,
WHITSUNDAYS QLD
Strong growth in the tourism sector is More than Colliers International is
$1 bn
proudly undertaking an
attracting more investors, broadening the operator search on behalf
of White Horse Australia.
capital base and providing a strong foundation
for increased activity over the medium term.
With more than $1 billion worth of hotel worth of hotel assets currently
assets currently being marketed or in play, being marketed or in play
we expect transaction activity to increase in
FYE2019. Deals are taking longer, however, as
banks have tightened their lending and policy
changes impact the structure of global funds.
Investors from Mainland China have fallen behind
the rest of Asia as the largest group of inbound
capital. This trend is likely to continue with
South East Asian investors dominating the offshore
investment landscape, driven by renewed interest in
diversification, both in terms of location and product.
Despite recent government crackdowns on outbound
capital, Chinese investors still have the appetite
to invest however their investment criteria has
changed and we expect to see fewer acquisitions of
high‑profile trophy assets as a result.
Australia remains a favoured hotel investment
market due to its economic performance, stability,
transparency and governance. Population growth,
large infrastructure projects, increasing urbanisation
and strong state economies are also driving
valuation growth and supporting opportunities for
new hotel development.HOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 23
COMPRESSION OF YIELDS
Investment Outlook
& Forecast Indicators (cont.) 9% to 6%
FYE2013 FYE2018
a slight softening is likely in those
markets where there is significant new
accommodation supply.
Based on the yield evidence, the past four years
has seen a continued compression of yields; from Hotel Forecast Indicators
over 9 per cent in 2013 to just under 6 per cent by Product Type
in FYE2018 and approaching the level of the last
cyclical low in 2011. We expect to see little change
over the coming year, although a slight softening is SYDNEY BRISBANE HOBART
likely in those markets where there is significant new Forecast Forecast Forecast
accommodation supply. FYE18 FYE2019 FYE2018 FYE2019 FYE2018 FYE2019
As Australia transitions to a more diversified Occupancy 87.8% No change Occupancy 73.7% Decline Occupancy 79.0% Decline
service‑based economy, tourism is becoming ARR $264 Increase ARR $157 Increase ARR $170 Increase
increasingly important and has the potential to be
RevPAR $232 Increase RevPAR $116 No change RevPAR $135 Decline
Australia’s fastest growing industry. Globally, travel
continues to take a larger share of consumer spending Yield Range 5% to 6% No change Yield Range 6% to 8% No change Yield Range 7% to 9% Softening likely
and visitor expenditure in Australia is projected to
continue to grow at a strong rate.
The influence of demographics presents new CANBERRA ADELAIDE DARWIN
opportunities for the hotel sector, as developers and Forecast Forecast Forecast
brands seek to remain ahead of the curve in catering to FYE2018 FYE2019* FYE2018 FYE2019 FYE2018 FYE2019
both established and emerging generations of corporate
Occupancy 78.0% Increase Occupancy 80.8% Increase Occupancy 74.8% Increase
employees and leisure travellers. Strong growth in
inbound tourism, particularly from China, increased ARR $175 Increase ARR $157 Increase ARR $145 Increase
leisure travel by wealthy retiring baby boomers and RevPAR $136 Increase RevPAR $127 Increase RevPAR $109 Increase
catering to Millennials as the largest segment of the Yield Range 6% to 8% No change Yield Range 7% to 9% No change Yield Range 7% to 9% No change
workforce are all factors which investors should
* Subject to the timing of the next Australian federal election
consider over the coming year.
MELBOURNE PERTH
Forecast Forecast
FYE2018 FYE2019 FYE2018 FYE2019
Occupancy 85.7% Decline Occupancy 75.1% Decline
ARR $206 No change ARR $167 Decline Note:
Occ = Occupancy
RevPAR $176 No change RevPAR $125 Decline ARR = Average Room Rate
RevPAR = Revenue Per Available Room
Yield Range 5% to 6% No change Yield Range 7% to 9% SofteningHOTEL INVESTMENT REVIEW | ANZ – 2017/18 A CAPITAL MARKETS PUBLICATION
Introduction Key Findings FY2017/18 in Review Markets Overview NZ Investment Market Lifestyle Hotels – the Next Big Thing Investment Outlook & Forecast Indicators Detailed Transaction List Team /Authors Page 24
Detailed Transaction List TRANSACTIONS $10 MILLION PLUS, FYE2018
Transactions deemed confidential have been omitted
NSW
PROPERTY NAME SUBURB ROOMS PRICE SALE DATE $ PER ROOM VENDOR PURCHASER TYPE
Four Points by Sheraton Central Park Sydney 297 $145m Jul-17 $488,215 Impact Investment Private
(under construction)
Byron Bay Hotel & Apartments Byron Bay 43 $27.5m Aug-17 $639,535 Chase Property Investment Fund
Quest Nowra Nowra 81 $17.5m Sep-17 $216,049 NA Unknown
Mercure Sydney International Airport Wolli Creek 271 $76.4m Nov-17 $281,919 Rockdale Hotels Investment Fund
Quest Griffith Apartments Griffith 68 $15.3m Feb-18 $224,265 Railway Street Holdings Investment Fund
North Shore Hotel North Sydney 27 $10m Feb-18 $370,370 Frank & Wade Huang Private
Breakfree on Clarence Hotel Sydney 52 $30m Mar-18 $576,923 Elanor Investors Owner Operator
Quest Newcastle West Newcastle 78 $16m Jun-18 $205,128 Unknown Investment Fund
VIC
PROPERTY NAME SUBURB ROOMS PRICE SALE DATE $ PER ROOM VENDOR PURCHASER TYPE
All Seasons International Bendigo Bendigo 77 $24m Aug-17 $311,688 Moelis Private
Mercure Treasury Gardens Melbourne 164 $70m Sep-17 $426,829 Pearl Hotels Developer
Sheraton Melbourne Melbourne 174 $126.9m Oct-17 $729,310 Golden Age Corporate
Adina Melbourne Melbourne 65 $43m Nov-17 $661,538 Schwartz Family Private
Royce Hotel Melbourne 100 $55m Dec-17 $550,000 NA Private
Quest Ballarat Ballarat 55 $10.5m Dec-17 $190,909 NA Private
Chateau Yering Yering 32 $14m Jan-18 $437,500 NA Owner OperatorYou can also read
