Strong demand for hotel assets
HOTEL giant Starwood is not content with opening a 280-room W Hotel in Brisbane. The US-backed company is also working on re-entering the Sydney market with a luxury W Hotel and is searching for a suitable property to strike a management agreement, company executives said yesterday.
“The W brand is well suited for the Sydney and Melbourne markets and they are actively seeking development opportunities,’’ added Michael Simpson, managing director, Savills Hotels.
“They would not build but they are looking to partner up with a developer or owner.”
Starwood is also close to selling its Sheraton on the Park Hotel in Sydney’s Elizabeth Street for a record $465 million as the company continues to sell its bricks and mortar hotel assets to concentrate on management agreements.
A report into Australian hotels from Savills released yesterday foreshadows a number of high profile hotel assets will change hands over the next couple of months with 2014 expected to be another strong year for sales transactions.
Indeed, hotelier Jerry Schwartz is about to buy a yet to be built 600-room Sofitel Hotel at Darling Harbour for $360m from Lend Lease in a deal foreshadowed by The Australian earlier this year.
The Savills research reveals interest from both local and international investors has again set a benchmark for hotel transactions over the past 12 months.
“The lack of good quality international branded hotels available for sale across Australia, and weight of capital entering into the Australian hotel investment market, is resulting in strong demand for hotels assets,” Savills said.
“Values are increasing as demand outstrips supply, although we are yet to see this filter through to the sub $20m regional markets.”
About $2.2 billion worth of hotels sold in the 12 months to June, up 8 per cent on last year with a number of portfolios changing hands and several single asset transactions such as the $340m sale of the Four Seasons Hotel Sydney and the $216m sale of The Reef Hotel Casino in Queensland.
Average national room rates grew 4.2 per cent in the 12 months to July, according to data from STR Global with the strong results driven by a 10.1 per cent increase in revenue per available room on the Gold Coast, a 9.5 per cent jump in Adelaide and an 8.3 per cent increase in Hobart. However, Brisbane’s revenue per available room — the standard industry measure of financial return from each hotel room — slumped 3.5 per cent and Perth hotel rooms fell nearly 4 per cent in the 12 months.
Source: The Australian - September 18th 2014
