Hotel room rates in Melbourne contract

Melbourne’s hotel market is expanding but its room rates have been shrinking because of the increase in hotel stock and the high quality of Airbnb stock located near the CBD.

On one hand, there is the recent opening of the 317-room Melbourne Convention and Exhibition Centre Novotel, which is expected to be followed by the launch of the IBIS Melbourne that will add another 270 rooms to the city’s supply.

Add to that the the Novotel Little Lonsdale which has 213 rooms and is due to open later this year.

But room rates are on the decline according to research from Citi and STR.

Their data shows Melbourne hotels’ revenue per available room rates dropped 0.3 per cent for the second consecutive month. That followed a 0.9 per cent drop in June compared to June 2017.

Still, some hotel analysts say Melbourne will keep its investment traction following the big increase in hotel stock and Airbnb activity.

“We have seen no decline in interest in acquiring hotels in Melbourne or developing them,” Ashurt partner John Stawyskyj told The Australian

“Clients continue to be interested in Melbourne as an investment destination which may belie those figures.

“The long-term prospects for Melbourne are relatively strong and the Melbourne market has shown good resilience over the past few years and can absorb new stock,” added Mr Stawyskyj,

Mr Stawyskyj is moderating a session on the global search for hotel opportunities at the international Hotel Investment World conference next week.

Jones Lang LaSalle Hotels executive vice-president Peter Harper says Melbourne’s occupancy rate is exceptionally high. He says it commands the second-highest average daily rate of all capital city markets after Sydney.

“Melbourne has witnessed six major hotel transactions in the past two years and all but one of them was undertaken by offshore capital, which shows how strongly the market is viewed among the global investment community,’’ Mr Harper told The Australian.

23rd July 2018