Sydney hotel supply sees room rates fall
The long overdue increase in supply of new hotels in Sydney is contributing to a drop in occupancy and average daily room rates, but investors and developers are continuing to spruik hotels for sale.
Latest STR figures reveal occupancies in Sydney hotels during March dropped 1.3% to 87.2%, while average daily room rates dropped nearly 7% to $230.94 compared with the previous March.
Revenue per available room was hit the most, plummeting 8% to $201.36 in March compared with the previous corresponding period.
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STR says the occupancy levels are the lowest for March in Sydney in five years.
“The decrease in average daily room rate marks the first year-over-year decline in the metric for any March since 2009,” STR says.
STR attributed the lower performance levels to a steady rise in supply and shifts in demand to lower average rate properties in sub-markets of Sydney. It said supply had increased nearly 3% in March compared with March, 2018.
Meanwhile, JLL Hotels & Hospitality have listed a yet-to-be-built 124-room hotel at 9-25 Commonwealth Street, Sydney, with price expectations of more than $90 million.
Approvals are in place and construction is due to commence in the next few months for completion in 2021.
The hotel, located in the Hyde Park district and yet to be branded, is positioned to take advantage of Sydney’s increasing domestic and international tourism arrivals.
The vendor is WR Sydney, a joint venture between China Wuyi and Rudder Group Australia, which is an independent developer.
“Finding a new development which doesn’t have a brand attached to it is very rare,” says JLL Hotels & Hospitality selling agent Andrew Langsford.
Knight Frank is co-selling the hotel with JLL.
This article originally appeared on www.theaustralian.com.au/property.