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30-09-2014, 09:59 PM
Melbourne hotel risk
Larry Schlesinger
428 words
30 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Melbourne is at risk of building too many hotels in the next few years, according to a new hotel report by Colliers International.
The commercial property agents said if all or a "significant amount" of the 26 proposed hotel developments went ahead, room rates and occupancy would be affected.
The 26 proposed hotels in Melbourne's development pipeline have the potential to add 4783 hotel rooms or serviced apartments between now and 2017, increasing the size of the existing market by 25 per cent.
Occupancy rates in Melbourne city hotels are currently high – above 85 per cent – with room rates touching $200 a night, according to June figures from STR Global.
Colliers International research director Nora Farren said the Melbourne market had been broadly undersupplied in terms of investment in new hotels.
"While there is a large number of rooms proposed, only around two-thirds of these projects are expected to proceed. A number have and will encounter feasibility and planning challenges – a number also have heritage concerns," Ms Farren said.
"Clearly if all or a significant amount of this new supply is constructed there will be downward pressure on room rates and occupancy – the timing of these projects will be critical. However, historically Melbourne has done well in absorbing new supply. The Melbourne market has a high proportion of domestic visitors and declines in the Australian dollar should continue to underpin this sector of tourism," she added.
Hotel projects in the pipeline include a Four Points by Sheraton hotel in Docklands, to be operated by Starwood Hotels; a Ritz-Carlton at the top of an 85-level residential tower on Spencer Street; and a Parkroyal hotel, also in Docklands.
The Colliers International report said development of new hotel stock nationally was at its highest since the early 1990s.
A range of new five-star, boutique, lifestyle and luxury budget hotels are coming to major markets, but with a local flavour.
These include Accor's Sofitel So brand, Marriott's Autograph Collection, IHG's Hotel Indigo and Starwood's Aloft Hotels.
"Local players are also making their mark with the development of new clearly defined brands," said Stephen Burt, managing director of hotels at Colliers International.
These included Amalgamated Holdings with QT and Atura, Doma Group with Little National, and APG's Art Series.
Strong market conditions – an undersupply of hotel rooms, dated existing stock and a weaker Australian dollar – combined with average hotel sector returns close to 12 per cent are encouraging investors to partner with hotel operators on new hotels.
Fairfax Media Management Pty Limited
Document AFNR000020140929ea9u0002s
Larry Schlesinger
428 words
30 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Melbourne is at risk of building too many hotels in the next few years, according to a new hotel report by Colliers International.
The commercial property agents said if all or a "significant amount" of the 26 proposed hotel developments went ahead, room rates and occupancy would be affected.
The 26 proposed hotels in Melbourne's development pipeline have the potential to add 4783 hotel rooms or serviced apartments between now and 2017, increasing the size of the existing market by 25 per cent.
Occupancy rates in Melbourne city hotels are currently high – above 85 per cent – with room rates touching $200 a night, according to June figures from STR Global.
Colliers International research director Nora Farren said the Melbourne market had been broadly undersupplied in terms of investment in new hotels.
"While there is a large number of rooms proposed, only around two-thirds of these projects are expected to proceed. A number have and will encounter feasibility and planning challenges – a number also have heritage concerns," Ms Farren said.
"Clearly if all or a significant amount of this new supply is constructed there will be downward pressure on room rates and occupancy – the timing of these projects will be critical. However, historically Melbourne has done well in absorbing new supply. The Melbourne market has a high proportion of domestic visitors and declines in the Australian dollar should continue to underpin this sector of tourism," she added.
Hotel projects in the pipeline include a Four Points by Sheraton hotel in Docklands, to be operated by Starwood Hotels; a Ritz-Carlton at the top of an 85-level residential tower on Spencer Street; and a Parkroyal hotel, also in Docklands.
The Colliers International report said development of new hotel stock nationally was at its highest since the early 1990s.
A range of new five-star, boutique, lifestyle and luxury budget hotels are coming to major markets, but with a local flavour.
These include Accor's Sofitel So brand, Marriott's Autograph Collection, IHG's Hotel Indigo and Starwood's Aloft Hotels.
"Local players are also making their mark with the development of new clearly defined brands," said Stephen Burt, managing director of hotels at Colliers International.
These included Amalgamated Holdings with QT and Atura, Doma Group with Little National, and APG's Art Series.
Strong market conditions – an undersupply of hotel rooms, dated existing stock and a weaker Australian dollar – combined with average hotel sector returns close to 12 per cent are encouraging investors to partner with hotel operators on new hotels.
Fairfax Media Management Pty Limited
Document AFNR000020140929ea9u0002s