Hotel sales to exceed $2b this year as tourism returns

By James Harrison

The Aussie hotel market is set to boom this year as private investors look to snag a piece of Australia’s reviving tourism and travel industry, CBRE forecast.

Australian hotel sales hit $2.14 billion in 2022 – the second highest transaction volume on record – with CBRE’s report showing that recovering occupancies and strong growth in average daily rates assisted in insulating the hotels sector from the effects of rising inflation.

Among those hotels changing hands last year included five-star hotels like the Hilton Sydney going for $530m to Hong Kong-based Baring Private Equity Asia, Spicer Retreats and six resorts went to local fund manager Salter Brothers for $130m and the Rydges Sydney Harbour at The Rocks getting snapped up by Syrian billionaire Ghassan Aboud for $100m.

While, unsurprisingly, the hotel purchasing market came to a halt in 2020, the emerging notion of ‘revenge travel’ spurring local tourism has sent the accommodation market soaring. Alongside this is the return of corporate travel, the MICE industry reconnecting businesses and higher occupancy levels pushing up daily asking rates.

The hotel market has already generated more than $1b of transaction this year, led by billionaires Andrew and Nicola Forrest purchasing Australia’s first Waldorf Astoria Hotel in Circular Quay for $575m.

Waldorf Astoria

“An expected stabilising of conditions as the year unfolds should see capital markets benefit from greater investor certainty,” CBRE’s Australian head of hotels research, Ally McDade.

“While a high inflation and interest rate environment will place upward pressure on yields and IRR expectations, improving tourism demand fundamentals and impressive performance indicators are likely to cushion any impact of higher credit-funding costs.”

Other hotels on the market include The Oaks on William in the Melbourne CBD ($90m), the Intercontinental Sydney Double Bay ($240m), Adobe Woden, Canberra ($50m), Fitzroy Island Resort ($35m), Quest Chermside and Ipswich ($30m) and Leura Gardens Resort in the Blue Mountains ($20m+), per the Australian Financial Review.

Discussing his predictions for the hotel market this year, CBRE managing director of hotels, Michael Simpson:

“With additional properties which will come to market over the course of the rest of the year, we anticipate transaction volumes will exceed $2bn for the 2023 calendar year.”

CBRE also released its ‘Hotel Overview and Outlook Report’ that highlight hotel recovery in occupancy and adily rates. The national daily rates rose 24 per cent over the year to $228, out doing 2019 levels by 23 per cent. The national occupancy rate averaged 65 per cent, which is within 10 per cent of pre-pandemic levels.

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cbre Waldorf Astoria Hotel