Asian buyers undeterred by flagging hotel market

The four-star Novotel Hotel in central Brisbane. Picture: AAP
The four-star Novotel Hotel in central Brisbane. Picture: AAP

The chronic lack of hotel guests, and plunging room and occupancy rates, are not deterring Asian investors from pursuing city hotels, judging by recent purchases in Sydney and Brisbane.

The run of sales shows buyers are punting on a longer recovery that will at first be driven by domestic tourism.

The Australian has leant that Asian groups are at the forefront of buying activity, showing interest in two portfolios.

Brisbane’s four-star 296-room Novotel Hotel in inner city Spring Hill has been purchased for about $69m by the owners of the Amora Hotel in Sydney’s ­Jamison Street.

It is being sold by the listed Singapore hospitality trust CDL, represented by Vincent Yeo.

Raja David of Amora Hotels & Resorts said he was delighted to enter the Brisbane market, in the deal negotiated by JLL Hotels.

The hotel is popular among corporate and government bodies and is expected to pick up once the state’s borders open.

On the portfolio front, buyers are awaiting information on a portfolio of 23 AccorInvest hotels that has hit the market again after the once high-flying fund manager I-Prosperity pulled out of a $200m purchase.

At the time, I-Prosperity had the backing of Singapore-based ZACD and the Asian group remains interested in the portfolio despite I-Prosperity’s collapse.

The Travelodge portfolio has also hit the market, as foreshadowed by The Australian. Up for grabs are 2032 hotel rooms in 11 hotels.

It is being sold by NRMA and Mirvac and is also offered with vacant possession, prompting rival chains to run numbers on the sites. It also includes ownership of the Travelodge Hotels brand in Australasia.

Selling agents McVay and Credit Suisse said 81% of the rooms were in Sydney and Melbourne.

Asian hotel investors are also active on individual hotels, and The Capitol Square Hotel in Sydney’s Chinatown has just sold for $26m to MKH Properties. The three-star, 94-room hotel fronting Campbell Street is expected to benefit from proposed new infrastructure slated for the Central Station precinct. The vendor was New Landmark.

Selling agent Colliers International national director, hotels, Karen Wales said despite the challenges experienced by the hotel sector, both domestic and offshore investors continued to display optimism surrounding the market’s recovery.

Co-selling agent Gus Moors, also of Colliers, said there had been low transaction volumes but there was more activity in the final quarter of 2020 “as both sellers and buyers start to develop greater clarity about the road to recovery for the hotel sector”.

Buyers are also circling the Primus Hotel, which is being sold by China’s Greenland Group, via JLL’s Mark Durran. The hotel was offered with vacant possession and had caught the eye of operator Westin, which was looking to get back into the Sydney market, hotel players said.

There is room for some optimism, with new data from STA Travel showing rising hotel occupancy rates, particularly in the ­regions which are faring well as travellers swap trips to Bali for domestic getaways.

“Regional areas are outperforming capital cities,” said STR, adding that the increased occupancies were especially strong on weekends.

Regional Australia hotel and resort occupancies are at 46% this Saturday, while capital occupancies are just 26%.

“November and December data follows suit, with regional Australia data sitting between 14-32% and capital cities between 8-17%,” STR said.

“Post-Christmas is where the trend begins to shift slightly with more Australians set to head out of town for their summer vacations,” STR said.

STR’s regional manager Matthew Burke said while regional Australia was benefiting from intrastate travel as Australians take short breaks, airline capacity remained low as corporate travel was still restricted.

“To date, as reflected by the occupancy on the books for the capital cities, corporate travel has not recommenced,” he said.

– with Lisa Allen

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