Australian Hotel Sector

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Chinese in box seat for Sheraton
BEN WILMOT AND LISA ALLEN THE AUSTRALIAN AUGUST 01, 2014 12:00AM

Lisa Allen

Property & Tourism Reporter
Sydney
Chinese in box seat for Sheraton
Sunshine Insurance Group of China is favourite to pick up the Sheraton on the Park hotel in Sydney for $465m Source: Supplied
CITY hotels are drawing the ­attention of global investors with Chinese behemoth Sunshine Insurance Group eyeing Sydney’s Sheraton on the Park for a record $465 million.

While Sunshine Insurance — one of China’s top 500 companies — is in the box seat, it must still beat off other international bidders to buy the hotel overlooking Hyde Park from the US hospitality group Starwood Hotels and Resorts which is exiting hotel ownership.

The cashed-up Abu Dhabi Investment Authority and US group Host Hotels & Resorts have also looked at buying the 557-room ­Elizabeth Street hotel, which has benefited from an upsurge in international leisure and business tourists and has been reporting above average room occupancies of more than 90 per cent over the past few months.

Further out, Singapore-based tycoon Bobby Hiranandani is developing an InterContinental in the ritzy Sydney suburb of Double Bay, while Michael Kum, the famed Singaporean investor, is so pleased with his 683-room Four Points by Sheraton Hotel investment in Sydney’s Sussex Street that his company, M&L Hospit­ality, plans to increase its size to 913 rooms by next year.

In further signs of Asian domination of city hotels, Korean group Mirae Asset Global Investments paid $340m for the Four Seasons in Sydney’s The Rocks last year.

In Melbourne, Singaporean developer Hiap Hoe is building a Four Points by Sheraton in the Docklands, opening in 2017. Hiap Hoe will manage a second property in the Melbourne CBD under Starwood’s Aloft brand.

There is little doubt the real ­interest from Asia in capital city hotels is because they are performing so well, delivering some of the highest yields in the OECD, said Tourism Australia chairman Geoff Dixon yesterday.

“Tourism in Australia is very much on the move, there is no doubt much of the tourism we are getting is high-yield tourism and they are looking for good accommodation and that makes hotels in our cities attractive to overseas investors, particularly from Asia.”

Starwood has said that it will only sell the Sheraton on the Park to a buyer who will allow it to continue to manage it on a long-term agreement of up to 50 years.

The hotel generated earnings of about $27m last year and that is expected to climb to $29m this year. Property executives said the forthcoming sale would be a high-water mark for the sector.

The buyer also has to commit to a substantial upgrade of the hotel within the next three years, which the Chinese group could fund. It is thought to be confident about purchasing the hotel after missing out on the Sofitel Sydney Wentworth, which was bought in May by Frasers Centrepoint for $202m. While both ADIA and Host Hotels have deep ties with Starwood, their executives were less confident about winning the hotel, sources said.

Although Starwood announced this year it would exit hotel ownership in Australia, it wants to increase its management of hotels in the country.

Starwood executives declined to comment yesterday while Jones Lang LaSalle Hotels chief executive Craig Collins was in Singapore and uncontactable.

Sunshine Insurance Group would also not be drawn on its ­expected acquisition of the Sheraton on the Park, which would be its first Australian property purchase.

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Thank you for the article, it is very informative. Whilst the title of this thread is on the Australian hotel sector, I think the city which is in the spotlight should be Sydney.

Owners of hotels and those that are developing will stand to gain.

[1] RevPAR is at the highest levels for Sydney

[2] New hotels in the pipeline are few and far in between

[3] Demand factors remain to be strong especially with reported increase in Chinese tourists who are not afraid to spend; not to mention also the city also has a very healthy MICE sector

Best to keep an eye on companies who are increasing their RE exposure in Sydney although cost of borrowing in AUD still remains high.

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Hotel wave heating up

Samantha Hutchinson and Mercedes Ruehl
374 words
4 Aug 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
More than $650 million of big-ticket hotel assets are set to change hands around the country in the coming months, as the sector heats up in the ­second half of the year.

Sunshine Insurance Group is thought to be the front runner for Starwood's flagship hotel Sheraton on the Park in Sydney. Stiff competition from the likes of Host Hotels & Resorts for the 557-room hotel has insiders saying the price could move some way above original expectations of $465 million.

Elsewhere billionaire Gerry Schwartz is tipped to put his Sydney Airport Holiday Inn on the market to finance the recently finalised purchase of the Convention Centre at Darling ­Harbour with Accor.

At the same time, offshore and local groups are circling the coveted Rydges Darwin Airport Hotel and Resort, with industry sources suggesting the properties could sell for as much as $90 million.

CBRE Hotels is marketing the ­property on behalf of the vendor, a syndicate that includes property figures Stewart Baron and Phillip Wolanski are selling the Darwin assets.

The "Sandstones" Department of Lands and Department of Education buildings, also in Sydney, are also set to be re-released to market in the final months of the year. Hotel owners and investment groups told The Australian Financial Review the sales progress stalled due to uncertainty over how the assets could be utilised, and a lack of guidance from the NSW Treasury.

The spate of coming deals come hot on the heels of other major hotel transactions in the past 12 months, as Asian groups such as Hiap Hoe and IPO ­candidate M&L Hospitality up their exposure in Australian hotels.

The Sofitel Sydney Wentworth Hotel sold to Singaporean group Frasers in May for $202 million. The Four Seasons also sold to Korea's Mirae Asset Global Investments for $340 million. Groups such as Sunshine Insurance and Host Hotels were runners up for assets such as the Sofitel, hence the competitive bidding and strong pricing predictions for the Sheraton asset. The Abu Dhabi Investment Authority is understood to now be out of the running but Sunshine is not yet a shoo-in to win the prized hotel, sources said.


Fairfax Media Management Pty Limited

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Better infrastructure is attracting overseas investment in tourism

THE AUSTRALIAN AUGUST 08, 2014 12:00AM

Lisa Allen

Property & Tourism Reporter
Sydney

‘The planets are aligning for a prosperous tourism sector for the next decade,’ says Accor boss Simon McGrath. Source: News Limited
RECORD foreign tourist arrivals coupled with backing of state and federal governments is attracting more offshore investors to the $100 billion-plus tourism industry, according to Australia’s largest hotelier.

Accor’s chief operating ­officer for the Pacific, Simon ­McGrath, said the Victorian, Queensland, NSW and South Australian governments were shoring up the nation’s tourism sector with new infrastructure, which was attracting European funds and investors.

“These governments are giving offshore investors more certainty. We are seeing increased interest from Asia, the Middle East and Europe in hotel developments in Australia,” said Mr McGrath, who runs more than 200 Accor hotels in Australia.

“The pleasing shift in government is they are understanding that to drive new-hotel supply they need to build tourism infrastructure such as convention centres (and) stadiums, and ­improve access to city airports. We are seeing evidence of that …

“This is why we are getting ­interest from the Middle East and Europe.”

While revenue per available room grew in Accor’s Sydney and Melbourne hotels by an average of 8 per cent this year, Mr McGrath said revenues in Perth and Brisbane remained flat “due to a recalibration ­because of the high occupancy levels experienced during the mining boom”.

He added: “We are starting to see growth now. European funds and investors are looking at ­assets currently up for sale that is based on the strength of the industry here. The planets are aligning for a prosperous tourism sector for the next decade.”

International visitor arrivals grew almost 500,000 in the 2013-14 financial year, according to the Australian Bureau of ­Statistics.

Tourism lobby group Tourism & Transport Forum said the annual growth rate of 7.9 per cent was the highest in a decade.

For the year to June, 6.65 million international visitors came to Australia.

Meanwhile, Mr McGrath said Accor’s Pullman brand was now the fastest growing luxury hotel chain in Australia, with the group announcing a new Pullman to be developed at Brisbane Airport by the Flynn Group.

Of the 200 hotels Accor runs in Australia, its franchise portfolio controls 70. “We are targeting to have 100 hotels in our franchise portfolio by 2016.”

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Pearls Australasia eyes $170m windfall for Mirage sale
ROSANNE BARRETT THE AUSTRALIAN AUGUST 14, 2014 12:00AM

Supplied Editorial Gold Coast Sheraton Mirage Resort and Spa
Pearls Australasia has put the 296-room Gold Coast Sheraton Mirage on the market after weeks of off-market inquiries. Picture: Remco Jansen Source: Supplied
THE Gold Coast Sheraton Mirage is up for sale, amid suggestions the beachfront resort will change hands for more than $170 million.

Owners Pearls Australasia have put the 296-room property on the market after weeks of off-market inquiry for the five-star hotel and 5ha site.

Renovated at a cost of $30m over the last three years, the hotel is managed by Starwood with a contract until 2022.

The site — which is on The Spit at the northern end of Surfers Paradise — is also being touted as a future development site.

The resort has had a tumultuous history since opening to grand fanfare by infamous developer the late Christopher Skase in 1987. In 2009 Pearls Australasia bought the site for $62.5m from receivers, after the Raptis Group fell into receivership in 2008. They had paid $82m to buy the trophy development from failed funds-management group MFS and the Ray Group in 2005.

It coincides with founder of the India-based conglomerate, Pearls Group managing director Nirmal Singh Bhangoo, facing criminal proceedings over an ­alleged pyramid scheme.

A subsidiary of Pearls Group, Pearls Infrastructure Projects, is a shareholder in the Australian company.

The Times of India reported India’s Central Bureau of Investigation registered a criminal conspiracy and cheating case against Mr Bhangoo and the companies Pearls Agrotech Corporation and Pearls Golden Forest.

The CBI investigated the case on direction of the Supreme Court and had raided company offices and taken data “relating to the deposits and misutilisation and diversion of funds”.

Pearls Australasia director David Higgins said issues surrounding Pearls Group were ­irrelevant to the Australian company and the sale was “absolutely not” related.

“We bought the hotel as a passive investment, and we’ve added our value as a development company,” he said.

“Now the market is returning both globally and domestically it would seem a fantastic time to test the market, and divert the capital into our core businesses.”

Pearls Australasia has appointed McVay Real Estate and Knight Frank to jointly market the hotel.

Dan McVay said it was unknown what the end price would be, but noted the sale of Sydney’s Four Seasons for $340m last year and the $68.5m sale of the Gold Coast’s Palazzo Versace in 2012.

He said a starting price of about $170m, ranging to $200m could be achieved. “There is so much demand at the moment and there aren’t many Gold Coast Sheraton Mirages.”

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Valad puts Sheraton Noosa resort back on sales block

THE AUSTRALIAN AUGUST 16, 2014 12:00AM

Lisa Allen

Property & Tourism Reporter
Sydney
The Sheraton hotel which fronts onto Hastings street , as people talk about forecasts for the prestige property market in No...
The Sheraton Noosa Spa and Resort, fronting Hastings Street, has undergone a $10m renovation. Source: News Limited
QUEENSLAND’S iconic Sheraton Noosa Spa and Resort will again hit the market with its owners the Blackstone-controlled Valad buoyed by the turnaround in domestic and international resort traffic.

After failing to sell in 2011, Valad, which spent about $10 million renovating it, will once again put the 176-room resort on the sales block with price expectations of more than $100m.

Starwood Hotels and Resorts’ management contract over the Noosa property expires next year, sparking suggestions that the hotel will be sold vacant possession.

Earlier this week, another Starwood-managed property, the Gold Coast Sheraton Mirage, also hit the market with price expectations of $170m.

Its owner Pearls Australasia, which is backed by the Indian billionaire Nirmal Singh Bhangoo, recently spent $30m renovating the 296-room property.

“These resorts are doing so well at the moment owners are looking at options and selling is one of them,” said Sean Hunt, regional vice-president, Starwood Pacific Hotels.

Mr Hunt said the Noosa and Gold Coast properties would continue to be operated by Starwood.

Valad believes the Sheraton Noosa’s 9946sq m site on Noosa’s Hastings Street has numerous value-add and redevelopment opportunities.

McVay Real Estate Australia has been appointed to sell the Noosa property. The firm’s chairman, Dan McVay, said the sales process would begin in the next few weeks.

With Knight Frank, McVay is also handling the sale of the Gold Coast Sheraton Mirage property, which was developed by the late failed tycoon Christopher Skase. Pearls paid $62m for it in 2009. The moves come amid a shake-up of the ownership of Starwood’s local holdings.

The US group put Sydney’s Sheraton on the Park on the market through JLL this year.

The offer attracted Chinese behemoth Sunshine Insurance Group, which has been eyeing the property for a record $465m. But industry executives suggested that it had again been pipped by Singapore-group Frasers, which also beat the Chinese group to the Sofitel Sydney Wentworth, which it bought in May for $202m.

A buyer is in due diligence and the parties declined to comment.

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Shangri-La bullish on Sydney tourism

Samantha Hutchinson
546 words
21 Aug 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

Hong-Kong based Shangri-La Hotel Group is on the hunt for a second hotel site in Sydney, where it is considering opening one of its Traders hotels.

"We see the market as being very positive at the moment," Shangri-La Sydney chief executive Michael Cottan told The Australian Financial Review.

The group is also planning more than $11 million in upgrades at its flagship hotel in Sydney's Rocks precinct, including a full-scale upgrade of the ground-floor lobby and refurbishment of its Horizon Club rooms, which make up the top-third of the hotel.

Currency movements and returning confidence in the US corporate market and luxury travellers throughout Europe and the UK have injected the local market with four to five years of "very good potential", Mr Cottan said.

"That premium product is still very much in demand, and a softening of the Australian dollar has very much helped in the long-haul markets."

The Aussie softening, combined with a resurgence of corporate incentives and company loyalty programs – particularly in the US – have lifted occupancy rates in the past months, and will push RevPar on an upward curve.

Improvement in European economic conditions have also boded favourably for the hotel, as the traditionally high-paying market starts to spend on discretionary expenses again. Federal and NSW government campaigns to drive international tourism in Sydney were also supporting the sector, Mr Cottan said.

"This government is more committed to tourism than what we've seen in the past," he said. "The marketing is strong, and its more targeted." 'Ahead of the game'

The news comes as international and local groups circle major hotel assets on the market in Sydney, including the ­Sheraton on the Park and the two former government buildings on Bridge Street known as The Sandstones, while other luxury groups, including the Langham, are investing in multimillion dollar upgrades.

Mr Cottan said the group was keen to stay ahead of the game, but a number of factors also point to higher visitor numbers in Sydney.

The new Sydney Convention Centre development at Darling Harbour is expected to bring more crowds, just as a new retractable roof at ANZ Stadium will bring more world-class sporting events – and crowds – to the city.

The hotel was fully booked for two days either side of the latest Bledisloe Cup match. The Hong-Kong based group of five-star hotels and resorts now has more than 70 hotels around the world, including 16 in China.

In Australia, the group's portfolio includes Brisbane's Traders Hotel and the Shangri-La Hotel at The Marina in Cairns, in addition to its Sydney flagship hotel, for which it paid $330 million to the Government Investment Corporation of Singapore in 2012.

In an environment in which global hotel providers are switching to an asset-light model and casting off lumpy retail assets, the group is notable for owning property. In June 2012, the group bought the Holiday Inn Brisbane for about $48 million and rebranded the 191-room hotel above the Brisbane Transit Centre as the Traders Hotel. In August 2013, the group quietly took full control of The Marina Hotel in Cairns, a 255-room hotel and shopping complex.


Fairfax Media Management Pty Limited

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Chinese pay $80m for Gold Coast Sofitel
THE AUSTRALIAN AUGUST 28, 2014 12:00AM

Lisa Allen

Property & Tourism Reporter
Sydney
A MAJOR Chinese group is the surprise purchaser of the Sofitel Hotel on Queensland’s Gold Coast, pledging to pay more than $80 million for the property, as mainland players set the pace for hospitality assets.

Developed in the 1980s, the 296-suite hotel towering above the Oasis shopping centre at Broadbeach is being sold by Canadian property behemoth Brookfield.

It is unclear whether the hotel — fronting Surf Parade — will continue to be managed by the Sofitel brand, which is owned by the French hospitality giant Accor.

Brookfield is also selling the Novotel Hotel at Brighton Le Sands near Sydney Airport.

The property is also believed to have attracted interest from a Chinese buyer.

Meanwhile, one of China’s largest companies, Sunshine Insurance Group, is advancing due diligence to buy the prized Sheraton on the Park hotel in the Sydney CBD for about $465m.

It would represent the biggest single hotel deal in Australia .

Owners Starwood declined to comment, but the US-backed company requires the buyer to agree to a refurbishment ­and a 50-year management agreement.

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Mantra Group to bulk up its hotels porfolio
KYLAR LOUSSIKIAN THE AUSTRALIAN AUGUST 30, 2014 12:00AM

HOTELIER Mantra Group will target adding up to 12 new hotels a year to the group, according to chief executive Bob East, after ­announcing a net loss of $300,000 for its first year as a public ­company.

“We’ve disclosed a number of properties entering the portfolio already, but there are a number we’re working on now, including one we closed yesterday,” Mr East said. “Last year, we (added) 12 and eight came on in that year. We’re experiencing similar run rates and we’re comfortable with that.”

Mantra, which operates 114 properties across the Peppers, Mantra and BreakFree brands, booked revenues of $452.6 million, slightly ahead of prospectus forecasts, and up 5.7 per cent from the previous financial year.

The group reaffirmed forecasts of $490.9m in revenues for this ­financial year, with a $32.6m net profit.

Among the properties added were Brisbane’s 114-room Mantra on ­Edward and another 103-room hotel, also in Brisbane, to enter the portfolio next month.

There are four more hotels — one each in Brisbane, Townsville, Melbourne and Pecatu, Bali — scheduled to open in 2016.

Mr East said Mantra would be looking for further properties in Cairns, Noosa, the Gold Coast and in Queenstown, New Zealand.

“You’ll find the bulk of opportunities are in CBD hotels more than anywhere else, but if an ­acquisition fits my criteria then we’ll do it,” he said.

“We are still keen on resorts, and there are other areas we’d go, but only managing for others.”

Mantra’s biggest shareholders, CVC Asia-Pacific and UBS, floated the hotel operator in June last year.

They own a combined 43.47 per cent of the listed group, with shares held in escrow till at least the end of the year.

Analysts following Mantra suggested UBS, with a 17.5 per cent holding, would be most eager to ­divest its stake.

The earliest UBS can sell shares is January next year, although this is limited to 25 per cent of its holding, and only if shares ­remain 20 per cent above the offer price of $1.80 for more than 20 consecutive days.

Mantra’s shares closed up 12c at $2.16 yesterday.

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Global hotel operators being converted to Brisbane
ROSANNE BARRETT THE AUSTRALIAN SEPTEMBER 04, 2014 12:00AM

INTERNATIONAL hotel operators are flocking to Brisbane and entering the central business district where office vacancies are driving conversions to accommodation or apartment use.

London-listed Kuwait-backed Action Group is one of several eyeing state government office towers set to be vacated under a strategy to consolidate public ­servants in a new tower.

Action Group’s Australian ­director, Andrew Nehme, said the company preferred to develop its own buildings, but it was a chance to expand its Brisbane holdings.

“It’s all about opportunities,” Mr Nehme told The Australian.

“It all comes back down to cost. In Brisbane, (the government offices) are here, they’re empty. Why build a new one. It’s all relative with costs, we wouldn’t normally do it, but they’re here.”

It is understood Hong Kong’s biggest hotel operators are liaising with authorities to expand into Brisbane.

The Far East Consortium, which runs the Dorsett Hotel chain, is in a joint-venture bid with Hong Kong’s Chow Tai Fook Enterprises and casino operator Echo Entertainment for the multi-billion-dollar Queen’s Wharf casino resort.

But company representatives have also travelled to Brisbane to discuss a stand-alone hotel there.

Yesterday, the joint venture of Shayher Group and Pau Jar Group announced a partnership with Starwood Hotels to develop a W-branded hotel on the former site of the Supreme and District Court on George Street, and two other high rises.

Colliers analysts said there was an influx of Chinese devel­opers looking to convert or re­develop office space — at 14.7 per cent vacancy — for other uses.

Colliers director of capital markets and investment services, Tom Phipps, said “targets” for hotel conversions included TFE Hotels, which planned to convert 171 George Street, and the ­redesign of Bilbergia’s 111+222 from office to potential hotel use.

There has been strong growth in Brisbane’s hotel sector over the past two years.

The Gambaro Hotel, Four Points by Sheraton and Alpha Mosaic developments recently opened and the Next Hotel and Resorts, TRYP Hotel and Capri by Frasers are being built.

Brisbane Lord Mayor Graham Quirk said fresh stock provided more opportunities to promote the city.

“We’ve seen 550 new rooms come online this year alone and we’re going to see more rooms come online post-G20,” he said.

Action Hotels is in an expansion phase. It is in talks for sites in Melbourne and Brisbane, as well as investigating land in Mackay, Gladstone and Fremantle for new accommodation sites.