HOTELS 2016 - Research and Forecast Report - sky news coomera garden hotel gold coast
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Research and
Forecast Report
Accelerating success.
HOTELS
2016
EXPERTS
IN PROPERTY DATA & INSIGHTS
Colliers Edge is a subscription service developed by our in-house
property research specialists, drawing on the expertise of our
national network of operators.
DEEPER INSIGHTS LIMITLESS SUPPORT FAIRER PRICING
Largest data set Analyst not operators Tailored to your needs
on market today
Want better insights, faster? Talk to a Colliers Edge expert today
Luke Dixon
Director | Research
+61 417 118 071
luke.dixon@colliers.com
colliers.com.au/colliersedge
Accelerating success.
CONTENTS
Hotels snapshot 4
Introduction 5
Hotel market snapshots
New South Wales 6
Victoria 10
Queensland 14
Western Australia 16
South Australia 18
Australian Capital Territory 20
Tasmania 21
Our experience – Hotels 22
Hotels | Research & Forecast Report | 2016 3
HOTELS
3.8
SNAPSHOT 2.6
TOTAL VALUE OF HOTEL TRANSACTIONS IN AUSTRALIA 2.2
($ BILLION) 2.0
1.6 1.6
1.4
1.2 1.3
1.0
0.9 0.9
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD
OCTOBER
Source: Colliers Edge
VISITOR ARRIVALS TO AUSTRALIA YTD AUGUST 2016 COMPARED WITH YTD AUGUST 2015
SYDNEY CITY MELBOURNE CITY BRISBANE
OCC OCC OCC
87.7% | 0.8% 86.1% | 0.8% 70.8% | 1.9%
17%
NEW ZEALAND
16% ADR ADR ADR
OTHER ASIA $234.95 | 5.8% $202.21 | 0.9% $161.35 | 6.6%
RevPAR RevPAR RevPAR
$206.07 | 6.7% $174.14 | 0.2% $114.30 | 8.4%
11% 15%
OTHER EUROPE CHINA ADELAIDE CAIRNS GOLD COAST
OCC OCC OCC
76% | 2.8% 83.3% | 5.4% 72.2% | 3.7%
8%
OTHER COUNTRIES ADR ADR ADR
$148.24 | 0.9% $136.96 | 7.2% $176.94 | 5.2%
9%
UNITED KINGDOM
RevPAR RevPAR RevPAR
3% $112.71 | 3.7% $114.02 | 13.0% $127.81 | 9.1%
3% 9%
HONG KONG 5% USA
JAPAN
INDIA
5% PERTH DARWIN CANBERRA
SINGAPORE
OCC OCC OCC
77.9% | 3.0% 66.5% | 4.2% 72.7% | 0.9%
lageVilage
Source: IVS, Tourism Research Australia, YE June 2016 ADR ADR ADR
$183.01 | 6.6% $160.83 | 10.2% $161.97 | 0.1%
RevPAR RevPAR RevPAR
$142.65 | 9.5% $106.95 | 13.9% $117.71 | 0.8%
Source: STR
TOP 5 MARKETS CONTRIBUTING TO AUSTRALIAN TOURISM ($BILLION)
1.5
3.6 2.7
3.9
8.9
CHINA UNITED KINGDOM USA NEW ZEALAND JAPAN
Source: IVS, Tourism Research Australia, YE June 2016
INTRODUCTION
By Gus Moors
top 20 markets had record visitor numbers during the year. The
Head of Hotels
holiday and education segments underpinned this strong growth.
gus.moors@colliers.com
Interestingly, nights spent in hotels, motels and resorts increased
Welcome to the latest research publication from Colliers Interna- by nine per cent to 27.5 million on the back of strong growth in the
tional Hotels. Our national executive team has brought together holiday segment.
key market information that provides wide ranging insight into
China’s growth in visitation continues and exceeded 1 million
the factors affecting each market, as well as identifying potential
visitors for year ending June 2016. Visitor nights (41.6 million)
future impacts.
and expenditure ($8.9 billion) is the highest of all countries.
Sydney remains the best hotel market, not only nationally but Expenditure from other nations was solid, with United Kingdom
across the Asia Pacific region. Strong trading fundamentals at $3.8 billion, USA at $3.6 billion ($1.7 billion for the purposes of
and the addition of future tourism generating infrastructure and holiday) Singapore, Korea and Japan all recording $1.5 billion in
significant investor appetite augurs well for the medium to long expenditure.
term. Melbourne is experiencing increased levels of transaction The lower Australian dollar is one factor that is encouraging
activity, as owners capitalise on the weight of capital chasing international visitation to Australia, making us more affordable
limited stock. The leisure markets of Cairns and Gold Coast are relative to other international destinations. This is particularly in
showing strong growth, bolstered by the lower Australian dollar comparison to 2013/14 when the Australian dollar traded above
and increased international visitation. The cooling of the resources parity with the US dollar for most of that year and overall visitation
sector, combined with increased supply is creating challenging only increased by 1.3 per cent, and in fact most States and
headwinds for Perth, Brisbane and Darwin, but we anticipate this Territories recorded declines in international visitation including
to create counter-cyclical opportunities for investors. Queensland recording declines of 1.9 per cent, South Australia
Transaction activity for 2016 has exceeded $2.2 billion at the (-9.4 per cent), Western Australia (-2 per cent), Tasmania (-14.7
end of October, with a number of deals in the pipeline likely to per cent) and ACT (-11.3 per cent).
push this figure to match 2014 levels (though well down on the Forecasts prepared by Tourism Research Australia project that
super-charged $3.8 billion in 2015). The $700 million sale of “The inbound visitor nights will continue the upward trend reaching
Ribbon” hotel in Sydney’s Darling Harbour has clearly bolstered almost 400 million nights by 2024-25 (representing 5.4 per cent
these year to date sales. Capital cities continue to draw the main compound average annual growth between 2014/15 through
investor focus, though recent regional transactions suggest buyers to 2024/25) which indeed will be positive for Australia’s hotel
are broadening their horizons.
inventory.
We have also utilised the research provided by Colliers Edge to
review the commercial office markets in the capital cities. The Hotel markets across Australia
factors affecting the office markets have a direct correlation with Sydney continues to be the leader in hotel performance across
corporate demand in hotels, so it is interesting to understand the the country, with RevPAR increases every year for the past
future outlook in these markets as potential lead indicators for seven years. Melbourne has remained flat in 2016, coming off a
hotel demand. particularly strong, event-driven 2015 result. Brisbane, Darwin
and Perth continue to be impacted by the softening demand post
We trust you’ll find this information useful in shaping your
the mining boom peak and have also had to withstand recent
decisions and welcome any feedback.
supply additions. The two leading leisure destinations of Cairns
and Gold Coast are performing well benefitting from the desire of
National overview Australians to holiday at home, together with the falling Australian
dollar making it more appealing for international visitors to come
International arrivals to Australia to Australia.
Australia received 7.2 million international visitors (up 10 percent, Looking forward to the next few years we anticipate that Sydney
or 680,000) and 248 million international visitor nights (up five and Melbourne will continue to perform at strong levels, while
percent) for the year ending June 2016. Thirteen of Australia’s the markets of Darwin, Brisbane and Perth will need to absorb
incoming supply over the medium term.
Hotels | Research & Forecast Report | 2016 5
Research &
Forecast Report
NEW SOUTH WALES
Hotels | 2016
By Michael Thomson In the middle of 2016, Grocon gained planning approval for a hotel
National Director | Valuation | Hotels development at the site of the IMAX cinema at Darling Harbour
michael.thomson@colliers.com and soon after transacted to Chinese investor Zhengtang for a
reported $700 million.
MARKET HIGHLIGHTS In Regional NSW, a notable transaction was the approximate $5
million sale of the Peppers Convent to the Escarpment Group who
The Sydney City hotel market continues to perform strongly also operate the Hydro Majestic Hotel, Parklands Country Gardens
with occupancy levels above 87 per cent according to the & Lodges, Lilianfels and Echoes in the Blue Mountains.
latest STR data, and average room rates growing.
Sydney trading environment
Reduced Sydney hotel transactions for the first half of 2016.
Sydney continues to be a strong market underpinned by growing
inbound visitation of over 3.4 million for the year ending June
The outlook for the Sydney hotel market is positive with market 2016. The composition of these visitors (with the largest
dynamics remaining favourable. percentage from China) is shown on the sidebar graph. Continued
growth in passenger arrivals to Sydney Airport demonstrates the
Major transactions strength of the market.
The five hotels sold by Eureka to SB &G Hotel Group in late 2015 According to the latest STR data, the Sydney City hotel market
included two properties in NSW; namely the Crowne Plaza Coogee recorded occupancy levels over 87 percent for YTD August 2016
Beach and the Holiday Inn Potts Point. (up almost one per cent on the same period in 2015), average
room rates of almost $235 (up six per cent) and RevPAR over
$206 (up almost seven per cent and clearly rate driven).
Major transactions – New South Wales
Hotel Rooms Rating Date Price $ per room
Rendezvous Sydney Central Hotel 116 4 Aug-15 36,150,000 311,638
Pullman Sydney Airport 229 5 Late 2015 84,000,000 366,812
Crowne Plaza Coogee Beach* 209 4 Dec-15 80,400,000 384,689
Vibe Hotel Sydney 191 4 Jan-16 97,000,000 507,853
Peppers Convent Hotel Pokolbin 17 5 Jun-16 5,000,000 294,118
Mercure Parramatta 165 4 Jul-16 40,000,000 242,424
The Ribbon development site -
400 (proposed) 5 Jul-16 700,000,000 N/A
Darling Harbour
Park Regis City Centre 122 3 Aug-16 46,000,000 377,049
*Part of 5 property sale – total transaction $466 million
Source: Colliers Edge
6
Sydney continues to benefit from a range of demand generators, International visitors to Sydney
including a strong state economy. The Sydney office market
continues to have low vacancy levels which is a positive indicator 8%
Other
Countries
of a healthy corporate sector and an important market segment for 18%
Mainland China
Sydney CBD hotels. 13%
Other Europe
Sydney also remains the main cruise ship port for embarking and
10%
disembarking passengers, which positively impacts those hotels New Zealand
13%
located particularly near the Circular Quay area. Other Asia
11%
USA
Sydney major infrastructure projects India
3%
4% 10%
UK
The opening of the International Convention Centre at the end of Singapore
4%
5%
2016 will undoubtedly be a positive impact on hotels in Sydney with Japan
South Korea
major conventions already confirmed for the centre including the Source: International Visitors Survey, YE June 2016, Tourism Research
Australia & Destination NSW
Amway China Leadership seminar in 2017 with 10,000 delegates
and the SIBOS conference in 2018 with 6,000 delegates.
Sydney airport arrivals
The extension of a constrained CBD into Barangaroo will also 45,000,000
40,000,000
stimulate room demand and the Sydney Light Rail currently being 35,000,000
constructed will connect the Southern and Northern ends of 30,000,000
Passengers
the CBD. 25,000,000
20,000,000
15,000,000
Sydney future supply 10,000,000
5,000,000
As at June 2015 (latest ABS data available), Sydney City rooms 0
supply was approximately 21,787 rooms. Over the period to
2022, there are approximately 7,100 new rooms proposed and
Domestic & Regional International Total
Source: BITRE/Colliers Edge
approximately 750 rooms proposed to be withdrawn from the
market. Hence a 30 per cent net increase in supply by 2022 if all Sydney CBD office vacancy by grade
developments do indeed proceed. 14%
12%
The most significant recent supply additions include the 282 room
Tankstream hotel and the Primus hotel with 172 rooms which
10%
opened in late 2015.
8%
6%
Some of the new future supply additions include the extension 4%
of the Four Points by Sheraton Hotel (to be rebranded a Hyatt
2%
Regency), the Sofitel at the new International Convention Centre,
0%
the Ibis Styles at Town Hall, the Ritz Carlton at The Star, and the
Jan-18
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-06
Jan-07
Jan-08
Jan-09
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-06
Jul-07
Jul-08
Jul-09
proposed W Ribbon Hotel to name a few. Premium A Grade B Grade Total
Source: Colliers Edge/MSCI
Some hotel supply is also likely to be withdrawn over the next
five years including the 446- room Menzies hotel and compulsory Sydney city accommodation rooms supply
acquisitions due the Metro construction line (including the Metro on – proposed additions and withdrawals
Pitt and the proposed Aloft that will now not proceed). 2000
Capital market participants
1500
Number of rooms
1000
As anticipated we have seen a slowdown in transactions in the
CBD due to a lack of stock coming on to the market, particularly 500
after several of the top five star hotels changed hands in 2014 0
and 2015.
-500
2015 2016 2017 2018 2019 2020 2021 2022
The ongoing strong appetite of Chinese investors is evident in the
Supply Additions Supply Withdrawals
Zhengtang Group $700 million purchase of the Ribbon development Source: Colliers Edge
in Darling Harbour, Nanshan’s purchase of the Pullman Sydney
Hotels | Research & Forecast Report | 2016 7
Airport and the $46 million purchase of the Park Regis hotel by a Link to the Sydney CBD office market
Chinese backed private capital group in August 2016.
As the Sydney hotel market is impacted by the strength of the
corporate segment, the correlation between office vacancy levels
Value benchmark implications
and hotel occupancy levels is strong. We therefore provide an
The general trend has been continuing growth in revenue and overview of trends in office vacancies below from Colliers Edge.
further tightening in capitalisation rates. The trend of falling
Colliers Edge forecasts office vacancy levels to remain stable at
capitalisation rates was first experienced at the luxury end of the
5.7 per cent by January 2017. With more buildings earmarked for
market but has now percolated down to mid-market hotels.
residential or hotel conversion in the next couple of years, it is
The main overseas investor interest continues to be in prime CBD anticipated that total market vacancy will fall to 4.2 per cent by
locations. In contrast, the regional markets have been dominated January 2019. Should this occur, it will be the lowest recorded
by domestic purchasers such as the Karedis Group purchase of vacancy since January 2008 where levels fell from 5.6 per cent
the Crowne Plaza in Terrigal and Escarpment Group purchasing to 3.7 per cent.
The Convent in Pokolbin.
The total market vacancy isn’t expected to increase again until
the end of 2019 as strong tenant demand, permanent withdrawal
Stock availability of stock and a limited supply pipeline generate ongoing rental
Colliers International is aware of 14 New South Wales hotel and growth.
motel transactions to date in 2016, compared to 20 for the same
period in 2015 with some slowing in activity especially taking into
account these are smaller hotels.
333 Kent Street, Sydney
Sold on behalf of Maville Bay Pty Ltd
8
Research &
Forecast Report
VICTORIA
Hotels | 2016
By Michael Thomson The Singapore-listed Frasers Hospitality Trust has recently
National Director | Valuation | Hotels increased its presence in the Melbourne hotel market with the
michael.thomson@colliers.com purchase of the Novotel Melbourne on Collins from US based
LaSalle Investment Management for $237 million, setting a new
record for the Melbourne 4.5 - star market while Sing Holdings
MARKET HIGHLIGHTS
acquired the 291 room Travelodge Docklands for $107 million.
The Melbourne hotel market demonstrates a degree of Two regional Victorian properties, namely the Grange Cleveland
stability in both occupancy and average room rates. Winery in Lancefield and the Grange Bellinzona in Hepburn
Springs were purchased by the Chinese based Interactive
There have been three major city centre hotel transactions Entertainment China Cultural Investment Limited, demonstrating
so far for 2016 including Singapore Holdings acquiring the appetite from the Chinese for regional as well as capital
291 room Travelodge Docklands for $107 million. city assets.
The five property sale of Eureka assets to SB & G Hotel Group
The outlook for the Melbourne hotel market is positive
in late 2015 included two properties in Melbourne, namely the
though potential supply increases may create headwinds if
Intercontinental Rialto and the Crowne Plaza Melbourne.
it is all developed.
Major transactions – Victoria
Hotel Rooms Rating Date Price $ per room
Aurora Melbourne Central 252 5 Mid 2015 120,000,000 476,190
Pensione Hotel Melbourne 114 3.5 Sep-15 26,000,000 228,070
Grange Cleveland Winery, Lancefield 52 4 Oct-15 10,500,000 201,923
Grange Bellinzona, Hepburn Springs 43 4 Oct-15 6,500,000 151,163
The Olsen, South Yarra 229 5 Dec-15 97,800,000 427,074
The Cullen, Prahran 113 5 Dec-15 48,200,000 426,549
InterContinental Rialto* 253 5 Dec-15 133,000,000 525,692
Crowne Plaza Melbourne* 385 4 Dec-15 141,000,000 366,234
Tune Hotel Melbourne, Carlton 235 4 Feb-16 53,000,000 225,532
Quest New Quay Docklands 221 4 Jul-16 71,000,000 321,267
Novotel on Collins 380 4.5 Sep-16 237,000,000 623,684
Travelodge Docklands 291 3.5 Oct-16 107,000,000 367,697
*Part of 5 property sale – total transaction $466 million
Source: Colliers Edge
Hotels | Research & Forecast Report | 2016 9
Melbourne trading environment Profile of international overnight visitors to Melbourne
Other countries
According to the latest STR data, Melbourne has maintained
occupancy in the mid 80’s and is the second highest performing 5%
Germany 11%
market in both rate and occupancy behind only Sydney. 3%
Other Europe
13%
New Zealand
Melbourne continues to benefit from a range of demand
generators, with its strong events calendar being a major driver. 9%
UK
The Melbourne office market continues to have low vacancy levels
which is a good indicator of strong corporate demand for hotels, 19%
10% China
particularly for CBD properties. North America
Melbourne Airport has seen consistent growth, particularly in
3%
relation to growth in international passengers, up 10.3 per cent 9%
14%
Other Asia Other North Asia
between 2014-15 and 2015-16. Other South Asia
4%
India
Melbourne future supply Source: Tourism Victoria, Melbourne Market Profile, YE December 2014
There is the potential for some significant growth in supply with Melbourne airport arrivals
Colliers identifying approximately 30 proposed hotel and serviced 40,000,000
apartment developments to 2021. Clearly not all of these will be 35,000,000
30,000,000
constructed, however in terms of room numbers this represents
Passengers
25,000,000
a 32 per cent increase in the number of rooms operating in the 20,000,000
market if all proceed. 15,000,000
10,000,000
The Windsor hotel is slated to be withdrawn from the market in
5,000,000
early 2017 and re-enter with approximately 290 rooms by 2020 0
targeting the luxury end of the market.
Domestic & Regional International Total
Source: BITRE/Colliers Edge
Capital market participants
Melbourne CBD office market vacancy and absorption
There have been a range of major hotel transactions in Melbourne 12% 200,000
over the last twelve months confirming continued investor interest 10% 160,000
in this market. Most recently, La Salle Investment Management
Net Absoprtion (sqm)
8% 120,000
have capitalised on current investor appetite and sold the Novotel
Vacancy Rate
on Collins to the Frasers Hospitality Trust while Sing Holdings 6% 80,000
purchased the Travelodge Docklands from M&L. In late 2015 4% 40,000
Melbourne based Asian Pacific Group sold the Olsen and Cullen 2% 0
hotels to the UK based M & G Investments, subject to a sale and
0% -40,000
leaseback arrangement.
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-06
Jan-07
Jan-08
Jan-09
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-06
Jul-07
Jul-08
Jul-09
Net Absorption Total Vacancy 10 year vacancy average
Value benchmark implications Source: Colliers Edge
While revenue growth has been relatively flat compared to 2015, Melbourne City accommodation rooms
the general trend has seen a further tightening in capitalisation supply – proposed additions and withdrawals
rates and increased price per key metrics, with the consequence 3500
being a continued growth in values. 3000
2500
Stock availability 2000
Number of rooms
1500
Colliers International is aware of approximately ten major hotel 1000
and motel transactions since October last year, compared to six 500
0
over the same period in 2015, noting that a number of owners 2016 2017 2018 2019 2020 2021
-500
have seen the recent sales trends in Sydney, and sought to Supply Additions Supply withdrawals
capitalise on the weight of capital seeking CBD hotel assets. Source: Colliers Edge
10Link to the Melbourne CBD office market This trend bodes well for corporate demand for hotel rooms,
helping to absorb the growth in supply.
Like Sydney, Melbourne CBD hotels market are impacted by the
corporate segment of the market and the link between office
Melbourne summary of future outlook
vacancy levels and hotel occupancy levels is strong.
The size of the Melbourne hotel market has exceeded Sydney
Data from Colliers Edge reveals that unusually for Melbourne,
(21,878 available rooms versus 21,187 rooms), and we anticipate
there were no new developments completed in the first half of
this trend to continue with a further 6,955 rooms potentially to
2016, which resulted in the vacancy rate tightening by 80 basis
be added or a 32 per cent increase in supply over the next four
points to seven per cent during this period.
years if all the mooted supply proceeds. Its strong event calendar
There is no known new supply in 2017 for the Melbourne CBD, and popularity as an international tourist destination are key to the
which should see the average vacancy rate contracting further city absorbing this supply. Historically Melbourne has done well in
over the next twelve months to 5.6 per cent. this regard, however it remains to be seen how the market will be
able to absorb the next wave of new development. This will be a
Completions for the first half of 2018 include 664 Collins Street
function of how much of the projected new supply eventuates and
(currently under construction) and One Melbourne Quarter. The
the exact timing of the proposed openings.
current tightening vacancy trend is expected to continue through
to mid-2019, with vacancy rates forecast to be as low as 4.3
percent by July 2019 – the lowest on record since 2008.
Bridie O’Reilly’s, 29 Sydney Road, Brunswick
Sold on behalf of Elmara One Pty Ltd
Hotels | Research & Forecast Report | 2016 11Research &
Forecast Report
QUEENSLAND
Hotels | 2016
By Baden Mulcahy conditions experienced following the Global Financial Crisis and
National Director | Valuation | Hotels high dollar during the mining boom periods. These destinations
baden.mulcahy@colliers.com are experiencing renewed growth in both domestic and
international travellers. Cairns in particular continues to record
high occupancies at 83.3 per cent year to date to August 2016, up
MARKET HIGHLIGHTS
5.4 per cent compared with the same period of 2015. Occupancy
on the Gold Coast is similarly up year to date, by 3.7 per cent to
The Brisbane tourism region continues to be challenged
72.2 per cent. Stronger occupancy levels have allowed hotels to
by supply additions outstripping demand growth with
lift room rates, with Cairns demonstrating growth of 7.2 per cent
occupancy levels falling.
and the Gold Coast 5.2 per cent over the year to date period.
These conditions have allowed both markets to achieve the
The Brisbane accommodation market is anticipated to face
highest RevPAR growth rates over the period in major markets
ongoing headwinds until 2018 as the new supply under
throughout the country at 13.0 per cent for Cairns and 9.1 per cent
construction comes on-line over this period.
for the Gold Coast.
Brisbane, in contrast, continues to be challenged by supply growth
Further demand growth in the major leisure markets of the
outstripping demand, with occupancy levels down 1.9 per cent to
Gold Coast and Cairns, combined with static supply has
70.8 per cent year to date. Room rates continue to come under
resulted in these two markets being the best performing
pressure falling by 6.6 per cent over the period as the new hotels
in the country.
compete aggressively for customers. As a result RevPAR levels
are down 8.4 per cent for the first eight months of the year
There has only been one major Brisbane transaction this compared to the same time last year. Source: STR
year, however, in contrast there has been a continuation
Many regional markets which had exposure to the mining, gas and
of the significant amount of activity in leisure destinations
the associated infrastructure boom continue to feel the contraction
as purchasers look to capitalise on the revival of tourism
in demand with occupancy and room rates declining.
growth in these markets.
Major infrastructure projects
Major transactions
The Destination Brisbane Consortium (Echo Entertainment Group,
The vast majority of transactions have taken place in the leisure Far East Consortium and Chow Tai Fook Enterprises) continue
destinations of the Gold Coast, Cairns and the Whitsundays. to progress the Queens Wharf Integrated Resort Development.
The largest transactions have been the $80 million sale of the This project is proposed to include a new casino, retail, residential
Hotel Grand Chancellor in Surfers Paradise to Challenger on apartments and approximately 1,100 hotel rooms. Demolition
behalf of an offshore investor and the Surfers Paradise Marriott works on the State Government site are anticipated to commence
Resort and Spa for $70 million, also to an offshore investor. early next year following the relocation of government office
on the site to the new 1 William Street tower which is nearing
Queensland trading environment completion.
According to STR, the resort markets of the Gold Coast and On the Gold Coast, preparations for the Commonwealth Games
Cairns/Tropical North Queensland continue to benefit from in 2018 are progressing, including the construction of sporting
the lower Australian dollar, rebounding after the tough trading facilities and the athlete’s village. Gold Coast Airport has
12commenced stage one redevelopment works which includes site Meriton recently opened a 208 suite serviced apartment operation
works, new aircraft parking stands and terminal redevelopment, within a larger mixed use complex at Southport on the Gold Coast.
which is due to be completed in 2017. The second stage of the A further two new hotel projects are also under construction
Gold Coast Light Rail will connect the existing light rail system (Jewel 300 rooms and the Jupiter’s Casino 80 suite expansion)
at Southport to the heavy rail at Helensvale, construction which are expected to open by 2018. Jupiter’s has also released a
commenced in July 2016 and is due for completion in early 2018. Master Plan for its casino precinct to potentially include a further
five hotel and/or apartment buildings, including a 700 room hotel
Future supply and apartment tower. A number of other hotels are also being
proposed for the Gold Coast as either part of larger mixed use
We are aware of 15 further new hotel developments proposed
developments or as additions to existing complementary facilities,
for Brisbane between late 2016 and 2018 (2,760 rooms), and
which could lead to additional room stock in the medium term.
approximately 1,100 additional rooms in 2021 within the Queens
The renewed construction of high rise residential apartments on
Wharf Development. Over the period from 2013 to 2018 the
the Gold Coast is also likely to lead to new strata title serviced
Brisbane market is forecast to have an addition to supply of
apartment stock.
over 6,700 rooms, or an increase of over 50 per cent. With new
supply continuing to outstrip demand growth, we expect market There is limited new supply entering the Cairns market apart from
occupancy levels to continue to come under pressure before the expansion of existing properties given the disparity between
bottoming out in 2018-2019. The vast majority of the new room current values and replacement cost. The proposed Aquis Great
stock is located in the Brisbane CBD and fringe, which is having a Barrier Reef Integrated Resort Development has been significantly
greater impact on specific localities. scaled back and no longer includes a casino component. Timing
for the revised proposed hotel, villa and apartment development
remains unclear.
Major transactions – Queensland
Hotel Rooms Rating Date Price $ per room
TRYP Fortitude Valley Hotel 65 4 Jan-16 20,300,000 312,308
Vibe Hotel Surfers Paradise 199 4 Jan-16 45,000,000 226,131
Greenmount Resort, Coolangatta
151 4 Mar-16 26,000,000 172,185
(redevelopment site)
Rydges Tradewinds Cairns 246 4 Mar-16 34,000,000 138,211
Surfers Paradise Marriott Resort & Spa 216 5 Feb-16 70,000,000 324,074
Quest Chermside 54 4 May-16 12,900,000 238,889
Quest Ipswich 64 4 May-16 10,500,000 164,063
International Beach Resort, Surfers
120 4 Jun-16 65,000,000 541,667
Paradise (redevelopment site)
Holiday Inn Townsville 199 3.5 Jun-16 14,000,000 70,352
Hotel Grand Chancellor 404 4 Jun-16 80,000,000 198,020
Novotel Cairns Oasis Resort 314 4 Jun-16 50,000,000 159,236
Townsville Central Hotel 118 3.5 Jun-16 9,400,000 79,661
Club Crocodile Resort, Airlie Resort 161 3 Jul-16 9,000,000 55,901
South Molle Island Resort 180 n.a Aug-16 25,000,000 138,889
Rydges Esplanade Cairns 242 4 Sep-16 40,000,000 165,289
*Part of 5 property sale – total transaction $466 million
Source: Colliers Edge
Hotels | Research & Forecast Report | 2016 13Capital market participants Brisbane airport arrivals
25,000,000
Demand for major assets has primarily come from Asian based
investors and operators, including Singapore, Hong Kong, China 20,000,000
and Malaysia. Domestic demand also exists for select and smaller
Passengers
15,000,000
properties that are appropriately priced.
10,000,000
Value benchmark implications 5,000,000
As previously stated, trading conditions have softened in the 0
Brisbane market and future supply increases are expected to
reduce market occupancy levels and moderate average room rate Domestic and Regional International Total
Source: Colliers Edge/BITRE
prospects for the next two to three years. We anticipate that the
new hotels will gain their fair market share, which will in turn put Cairns airport arrivals
pressure on value levels, particularly for older and lower grade 5,000,000
stock, and will be more pronounced in certain localities. Capital 4,500,000
4,000,000
markets, however, appear to be taking a medium to longer term 3,500,000
Passengers
3,000,000
view to asset performance for better quality stock. 2,500,000
2,000,000
Leisure destinations have typically seen an improvement in 1,500,000
1,000,000
demand, trading conditions and value levels. Hotel pricing on the 500,000
Gold Coast, particularly at the four star level has seen significant 0
growth over the past two years, with purchasers picking up assets
at below replacement cost with a view to future revenue and Domestic and Regional International Total
Source: Colliers Edge/BITRE
profitability growth. Supported by a lower Australian dollar and
with minimal supply forecast in the short to medium term, value CBD White collar employment growth
levels in Cairns are expected to continue to show growth, with 60,000
some evidence of yield tightening emerging.
40,000
Many of the challenged regional markets have experienced a
20,000
decline in profitability and value levels, with an increasing number
of properties being placed on the market under instructions from
0
mortgagees. This is likely to limit the pricing of property in these -20,000
markets until the number of distressed assets diminishes or visitor -40,000
demand improves.
-60,000
Jun-06
Jun-07
Jun-08
Dec-08
Jun-09
Dec-09
Dec-06
Dec-07
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Stock availability
Source: Deloitte Access Economics
The Brisbane market continues to be reasonably tightly held, with
owners taking a wait and see approach to the impact of future
Brisbane City accommodation
supply. Some owners of lower quality stock, however, may take
rooms supply – proposed additions
the opportunity to divest for redevelopment rather than re-invest. 1,400
As revenue and profitability continues to be impacted at an 1,200
individual asset level, some owners may be more motivated to 1,000
transact if debt servicing becomes an issue. 800
600
Similar to last year, the majority of transactional activity has 400
been within leisure markets. We expect longer term owners will 200
continue to consider potential exit strategies in these markets -
2015 2016 2017 2018 2019 2020 2021
as conditions provide potential trading upside and new buyers Supply Additions Supply withdrawals
emerge. However, given the significant number of transactions Source: Colliers Edge
over the past two years the number of owners in this position is
significantly reduced.
14Activity within regional markets is expected to continue to where The increasing vacancy levels in the office market over recent
trading conditions are favourable and demand proves sustainable. years provide insight into the softening corporate hotel demand
over this period.
Link to the Brisbane office market
The Property Council Office Market Report recorded a substantial
Summary of future outlook
increase in the total vacancy rate in the Brisbane CBD from 14.6 The lower Australian dollar and forecast continued increase in
percent to 16.9 per cent in the first half of 2016, however, this was inbound business is expected to support leisure market trading
primarily due to the significant net increase in supply of 104,000 conditions, and as a result capital values and transaction activity.
square metres or 4.8 per cent outstripping increased total
The Brisbane trading market is expected to continue to be
occupied floor space of 2.3 per cent. Significantly, this is the first
challenged over the next two to three years by the amount of new
increase in occupied floor space in the CBD since the first half of
supply and the perceived impact by purchasers on trading levels.
2013. The market will continue to be impacted by the completion
Transactional activity is expected to continue to be light, however,
of the 1 William Street development, to be occupied by various
some owner’s may test market appetite over this period as the
State Government departments, and the subsequent demolition
supply cycle draws to a close, or are forced to, due to cash
of a number of government office buildings on the Queens Wharf
flow issues.
site. It is expected that the vacancy rate will remain stable in the
short term until absorption and withdrawals lead to a decline in
the medium term. Colliers Edge is expecting the vacancy rate to
peak around 17.5 per cent in January of 2017.
Rydges Esplanade Resort, Cairns
Valued on behalf of Mulpha Australia Limited
Hotels | Research & Forecast Report | 2016 15Research &
Forecast Report
WESTERN AUSTRALIA
Hotels | 2016
By Gus Moors The Indian Ocean Hotel is located in Scarborough on Hastings
Head of Hotels | Australia Street, in the city’s north-western suburbs. The property was
gus.moors@colliers.com bought by Perth hoteliers, the Grove family, from receivers.
Trading environment
MARKET HIGHLIGHTS
Trends in passenger numbers through Perth Airport highlight the
overall softening of the market, with financial year 2015-16 being
Occupancy levels are softening in the Perth City hotel
the third year in a row where domestic and regional passenger
market and average room rates are in decline.
numbers have decreased (due to the lower number of flights
Source: STR
required following the end of the mining boom). On a positive
note, International passenger movements continue to grow at
Further downward pressure is anticipated in the next few approximately 2 per cent per year for the past two years.
years as new supply enters the market.
According to STR, Perth has continued to experience a decline
in occupancy in 2016 falling to below 80 per cent. Average room
Major transactions rates, which in 2014 were the second highest in the country after
Sydney, have now dropped to an average of $183, a fall of 6 per
There has been minimal activity in Perth CBD since the sale of the
cent on the previous year and now ranks third in the country after
Four Points by Sheraton Hotel in August 2015. Transaction activity
Sydney and Melbourne.
is likely to be subdued until we see a positive trend once more in
RevPAR growth. The decline in average room rates coincides with the shift
in the mining sector from development to production, which
In regards to the below sales, the Quest Adelaide Terrace was sold
requires lower levels of staff, while new mining development
by the Diploma Group to a private investor prior to the opening of
projects have been shelved. While occupancy has held up well
the serviced apartment complex in May 2016.
to date, the market has seen a shift away from Corporate and an
Major transactions – Western Australia
Hotel Rooms Rating Date Price $ per room
Four Points by Sheraton, Perth 278 4 Aug-15 91,500,000 329,137
Quest Rockingham 96 4 Aug-15 22,000,000 229,167
Monkey Mia Dolphin Resort 46 4 Aug-15 7,662,532 166,577
Ningaloo Reef Resort 34 3 Aug-15 10,334,830 303,966
COMO The Treasury 48 5 Sep-15 10,100,000 210,417
Quest Adelaide Terrace, East Perth 130 4 Early 2016 42,000,000 323,077
Indian Ocean Hotel, Scarborough 59 3 Jun-16 not disclosed N/A
Source: Colliers Edge
16increase in Leisure, which is coming at lower rates. At the same Perth Airport Passenger Movements
time Corporate and Aircrew accounts have re-negotiated their 14,000,000
contracted rates down from their peak. This combined shift in mix 12,000,000
and lower contracted rates has resulted in the decline of overall 10,000,000
average rates across the city.
Passengers
8,000,000
6,000,000
Perth major infrastructure projects 4,000,000
The State Government is investing more than $1 billion in its 2,000,000
construction of the new Perth Stadium and Sports Precinct 0
with an estimated opening of March 2018. An assessment of
the impact of the venue is that it will attract at least 66,000 new Domestic and Regional International Total
visitors per year to Western Australia according to the Tourism Source: Colliers Edge/BITRE
Council of Western Australia.
Perth City rooms accommodation supply –
Future supply proposed additions & withdrawals
2,000
There is the potential for some significant growth in supply with
Colliers identifying approximately 34 proposed hotels and serviced 1,500
apartment developments totalling nearly 6,300 rooms (i.e. a
Number of rooms
1,000
doubling of the current inventory). With the accommodation sector
500
cooling, clearly not all of these will be constructed however.
-
We highlight that a redeeming feature of much of the new supply
2015 2016 2017 2018 2019 2020
is that it is occupies the upscale segment that Perth has previously (500)
Supply Additions Supply withdrawals
lacked. This increased quality may attract increased demand and Source: Colliers Edge
should lead to higher rates being charged.
There is potential for strong increases in supply, particularly in Perth CBD office supply, net absorption & vacancy
2017, 2018, and 2019. While we expect it is unlikely that all these 180,000 28%
developments will progress, clearly the market will have to absorb 160,000 24%
140,000
a substantial number of new hotels over this period. 120,000
20%
16%
100,000
Vacancy rate
80,000 12%
Link to the Perth office market
sqm
60,000 8%
40,000
4%
20,000
Colliers Edge highlights that during the financial year 2015-16, 0
0%
-4%
a total of 142,545 square metres of office space was completed -20,000
-40,000 -8%
and added to Perth CBD stock. This is the second highest level
Jan-18
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-06
Jan-07
Jan-08
Jan-09
Jul-15
Jul-16
Jul-17
Jul-18
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-06
Jul-07
Jul-08
Jul-09
of increased annual supply on record and effectively brings to an Total Supply 6 mth Net Absorption (sqm) Total Vacancy Rate (%)
end the latest development cycle, with only one major project left Source: Colliers Edge/Property Council
under construction (Woodside’s new HQ). Moving forward Perth’s
CBD vacancy is now expected to start trending downwards over As noted elsewhere, the hotel industry in CBD locations is closely
the next 5-10 years. correlated to the corporate sector, therefore highlighting some of
the challenges ahead.
This recent increased supply has however resulted in vacancy
increasing from 16.6 per cent in June 2015 to 21.8 per cent at the
Capital market participants
end of June 2016, according to the Property Council of Australia.
This rise in vacancy has continued to put pressure on landlords to The vendor in respect to the Quest Adelaide Terrace, East Perth
reduce face rents and offer higher levels of incentives to attract was Western Australian construction property development
tenants. The softening of corporate activity, particularly from the company Diploma Group Limited.
mining sector and ancillary services does not aid the current Anecdotally, a number of investors are re-focusing on Perth, due
outlook. to potential counter cyclical opportunities. Investors are attracted
Hotels | Research & Forecast Report | 2016 17by the higher levels of return relative to the Eastern seaboard, Summary of future outlook
though showing caution about the future supply pipeline.
Anecdotal evidence suggests Perth hotels have pursued new
Stock availability markets to replace lost business post the resources boom and
while these new markets have replaced lost occupancy this has
Perth is a relatively illiquid market, with only one hotel sale this generally been at the cost of lower average rates.
year and just two in 2015. The new supply may create buying
opportunities, with existing owners potentially trading out and It remains to be seen what the impact of the next wave of supply
some of the new developers bringing their property to market will be on the Perth market. There is potential for some of the
either before or on completion (e.g. Far East’s proposed Ritz new five star stock being constructed such as the Westin and the
Carlton hotel). This lack of transactional evidence creates some Ritz Carlton to set new benchmarks in room rates in respect to
challenges in determining where the market currently perceives the top end of the market and it is likely to force some of the older
Perth to be from a yield perspective. premium stock in the market to refurbish or struggle to compete.
Four Points by Sheraton, Perth
Valued on behalf of Henrick (Singapore) Pty Ltd
18Research &
Forecast Report
SOUTH AUSTRALIA
Hotels | 2016
By Christopher Milou Trading environment
Director | Valuation | Hotels
christopher.milou@colliers.com The Adelaide Airport has experienced consistent growth in
passenger numbers since 2012-13 with data illustrating the
dominance of domestic traffic which accounted for 89 per cent of
MARKET HIGHLIGHTS all passengers in the 2015/2016 financial year.
The Adelaide hotel market has proven to be stable with Adelaide experienced good growth in occupancy and room rates
occupancy levels up two points and rate growing marginally. according to the STR data in 2014 on the back of the reopening
Source: STR of the Adelaide Oval and strong conference activity. However,
in 2015 the market has experienced some decline in occupancy
falling to the mid 70’s. Over the same period average room rates
There has only been one Adelaide hotel/serviced apartment
have remained relatively stable at just under $150. This was a
transaction for the first half of 2016.
consequence of supply increasing at a faster rate than demand,
with three new hotels having entered a relatively small market.
The Adelaide accommodation market is anticipated to soften These properties were the 311 room Ibis hotel, the 67 apartment
over the next few years as new supply is absorbed. Quest on King opening in the second half of 2014 and the 170
room Mayfair Hotel opening in January 2015.
Major transactions In 2016 for YTD August, we have seen a solid bounce-back, with
occupancy levels improving to 76 per cent (up almost three per
The South Australian hotel market continues to be tightly held and
cent) average room rates of $148 (up almost one per cent) and
we are only aware of one transaction that has taken place since
RevPAR over $112 (up almost four per cent). Source: STR Global
late last year.
Ltd This highlights that the new supply in 2014 and 2015 has been
Quest Apartments Mawson Lakes is a purpose-built 4 storey absorbed and demand is continuing to improve.
serviced apartment complex which was constructed in 2008/09,
comprising commercial and retail tenancies to the ground Adelaide tourism infrastructure
floor and serviced apartments on the three upper levels. The developments
apartments are managed by Quest on an extended lease to 2024.
A number of upgrades and refurbishment programs are being
The property sold in February 2016 to a Singaporean investor
undertaken in Adelaide which we believe will increase the appeal
with a passing yield of approximately eight per cent.
of the city as follows:
Major transactions – South Australia
Hotel Rooms Rating Date Price $ per room
Quest Apartments Mawson Lakes,
66 4 Feb-16 18,000,000 272,727
Adelaide North
Source: Colliers Edge
Hotels | Research & Forecast Report | 2016 19• Current activities forming part of the upgrade of the Adelaide airport arrivals
Riverbank Precinct include the $350 million extension of the 9,000,000
Convention Centre (under construction), the new pedestrian 8,000,000
bridge over the Torrens and the completed Adelaide Oval 7,000,000
6,000,000
Passengers
redevelopment. 5,000,000
• The Victoria Square upgrade will create a large events space 4,000,000
3,000,000
and promenade along with other infrastructure upgrades. 2,000,000
• Rundle Mall has been refurbished as part of the Rundle Mall 1,000,000
0
Masterplan. The Adelaide City Council allocated approximately
$30 million dollars to the redevelopment which has enhanced Domestic & Regional International Total
the mall.
Source: Colliers Edge/BITRE
• As part of Adelaide City Council and State Government
Adelaide rooms accommodation supply
initiative to increase the vibrancy of the CBD, several small
– overall developments in Adelaide
laneways such as Leigh Street, Peel Street, Bank Street
1,200
and James Place have been activated with the addition of
1,000
numerous bars, restaurants and cafes.
Number of rooms
800
• The Casino has also announced a $300 million
600
redevelopment which has received government approval
400
to proceed.
200
Adelaide future supply -
2015 2016 2017 2018 2019 2020
We are aware of fourteen hotels proposed between 2017 and Supply Additions Supply withdrawals
2020 which could add a further 31 per cent supply in rooms to Source: Colliers Edge
the market on top of the recent supply increases in 2015.
Stamford Grand, Adelaide
Valued on behalf of Stamford Property Services
20Hotel Grand Chancellor on Hindley, Adelaide
Valued on behalf of Hotel Grand Central Ltd
Although not all of the proposed fourteen developments are likely an overall trend of contracting capitalisation rates due to cheaper
to proceed, we highlight that construction has commenced on a finance and limited buying opportunities is likely to be positive
245-room Holiday Inn Express. for hotel values (however is dependent on actual future supply
increases).
Link to the Adelaide office market
We refer here to office market trends that highlight the increase in
Stock availability
office vacancy levels for Adelaide City. The construction cycle in Current open market campaigns of hotels in the Adelaide hotel
the Adelaide office market is slowing, with only two new buildings are limited to the Rydges South Park Adelaide. However, with the
to be completed this year, and limited new supply in the short to new supply being constructed it is likely we will see more buying
medium term. There are several mooted projects in the pipeline, opportunities in the next three years as not all of the developers
but construction is unlikely to commence without significant tenant will want to hold on to their stock.
pre-commitment.
Adelaide summary of future outlook
Total vacancy has increased to 15.8 per cent in July 2016
compared to 14.1 per cent in January 2015. Despite forecast The Adelaide hotel market has showed some growth in occupancy
improvements in white collar employment during 2016, vacancy in 2016 up to approximately 76 per cent, and marginal growth in
is expected to remain high over the medium term, according to average room rates. Although the recent new supply seems to
Colliers Edge. have been absorbed, new supply over the next three years will put
further pressure on existing hotels unless we see new demand
We highlight that although office vacancy levels in Adelaide are growth which is possible once the Convention Centre and Royal
relatively high, at 15.8 per cent, the hotel sector in Adelaide has Adelaide Hospital developments are completed. There is the
not seemed to follow the same trends, as is noticeable in other potential for some of the new stock to be constructed such as
Capital cities. Hence the reliance on the corporate sector may not the Sofitel or Sheraton hotel to set new benchmarks in respect of
be as strong in Adelaide as in Perth or Brisbane for example. the top end of the market and it is likely we will see existing stock
refurbishing in order to remain competitive.
Value benchmark implications
The market is experiencing a stabilisation in revenues which is
providing greater confidence in the market. This coupled with
Hotels | Research & Forecast Report | 2016 21Research &
Forecast Report
AUSTRALIAN CAPITAL TERRITORY
Hotels | 2016
By Christopher Milou For August 2016 YTD, we note that the Canberra hotel market has
Director | Valuation | Hotels recorded occupancy levels of 72 per cent for YTD August 2016
christopher.milou@colliers.com (down marginally at 0.6 percentage points), average room rates of
$162 (up marginally at 0.1 per cent) and RevPAR over $117 (down
marginally at -0.8 per cent). Source: STR
MARKET HIGHLIGHTS
Average room rates and occupancy levels largely in line
Link to Canberra office market
with those reported last year for the Canberra hotel market. Data from Colliers Edge highlights increased tenant activity which
Source: STR has seen a steady decline in the headline vacancy rate from 15.4
per cent in January 2015 to 13 per cent in July 2016 as recorded
Outlook for the Canberra hotel market is positive with only in the latest Property Council figures. Vacancy in A and B grade
limited new supply proposed. stock is tightening significantly in Canberra with a number of
town centres recording 0 per cent vacancy and the CBD with very
limited options for potential tenants. C and D grade conversely
Major transactions have increasing levels of vacancy, however a number of adaptive
re-use projects will see this trend begin to reverse in the near
The ACT hotel market continues to be tightly held with just three
future.
significant hotel transactions since late 2015, being the Best
Western Tall Trees, Crowne Plaza Canberra and the Clifton Suites. We note that in particular the office vacancy level of A grade office
space has been declining over the past three years, and hence
The sale of the Crowne Plaza Canberra was part of the five
it could be expected that corporate demand remains stable for
property sale of Eureka assets to SB &G Hotel Group in late 2015.
Canberra hotels.
There has only been one major transaction for year to date 2016
We highlight however that the Canberra hotel market is also
being the Clifton Suites on Northbourne Canberra. Facilimate
heavily dependent on demand from government activity and
together with Perth-based investment group Ascot Capital
demand is influenced by parliament sitting weeks and election
acquired the 153-room Clifton Suites hotel for a reported $65
cycles.
million. This transaction represented one of the largest hotel
transactions in Canberra since the global financial crisis.
Canberra future supply
There have been two new hotel openings in the past year
Trading environment including the 120 room Little National developed and operated by
The Canberra Airport has experienced some declines in Doma Group which opened in early September 2015 and the new
passenger numbers since 2009-2010, with 2015-16 being the 191 room Vibe Hotel at Canberra Airport.
first year that the airport has recorded positive growth (of 0.4 per
We highlight that there is limited additional new supply anticipated
cent). We highlight that historically the Airport has only catered
for the Canberra hotel market, especially in comparison to other
for domestic traffic but Singapore Airlines has commenced direct
key hotel markets around Australia.
services operating from Canberra to Singapore and Canberra to
Wellington as at late September 2016. These direct flights will
undoubtedly assist demand for Canberra hotels.
22Canberra tourism infrastructure Canberra Airport Arrivals
developments 3,500,000
In mid-June 2015 an announcement was made that the ACT
3,000,000
government had allocated $5.4 million over two years to
2,500,000
Passengers
the refurbishment of the National Convention Centre. This
2,000,000
refurbishment is currently taking place and the final component of
1,500,000
1,000,000
the refurbishment program will be completed in January 2017.
500,000
Early planning is also being completed for the construction of a 0
new multi-purpose sporting stadium and entertainment centre
to cater for between 20,000 to 30,500 seats. The project is not Source: Colliers Edge/BITRE
anticipated to commence until mid-2020 with construction not
anticipated to be completed until mid-2024. Canberra rooms accommodation supply –
proposed additions & withdrawals
Capital market participants 450
400
The Canberra market has traditionally been dominated by local
350
players, however the purchase of the Abode in October 2014 by
Number of Rooms
300
a Melbourne based fund manager, together the with the recent 250
200
transaction of the Clifton Suites on Northbourne (to Facilimate
150
together with Perth-based investment group Ascot Capital) 100
suggests that there may be greater ownership diversity in 50
the future. -
2015 2016 2017 2018 2019 2020
Supply Additions Supply withdrawals
Stock availability Source: Colliers Edge
Colliers International is not aware of any open market campaigns
for any Canberra hotels at present apart from part interest in a Canberra office vacancy by grade
40%
hotel in Braddon. 35%
30%
Summary of future outlook 25%
20%
STR data supports that the Canberra hotel market performed 15%
well in 2015, up significantly from the lows of 2014, and has 10%
continued to be stable in YTD August 2016, performing well
5%
0%
despite the recent supply additions. With only minor new supply
Jan-13
Jan-14
Jan-15
Jan-16
May-06
May-07
May-08
May-09
Jan-10
Jan-11
Jan-12
Jan-06
Jan-07
Jan-08
Jan-09
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
May-11
May-12
May-13
May-14
May-15
May-16
Sep-06
Sep-07
Sep-08
Sep-09
May-10
anticipated for the future, we would anticipate that the Canberra A Grade B Grade C Grade D Grade Total
market should be stable, supported by demand from corporate, Source: Colliers Edge
government and domestic tourism sources.
Canberra Rex Hotel, Canberra
Valued on behalf of St George Bank Limited
Hotels | Research & Forecast Report | 2016 23Research &
Forecast Report
NORTHERN TERRITORY
Hotels | 2016
By Tony West 2014-15 and 2015-16. We highlight however that there was a
Director | Valuation significant reduction in international passenger numbers over
tony.west@colliers.com the past two years (-11.5 per cent in 2015/16 and -13.8 per cent
in 2014-15). We highlight that this in part could be due to Jetstar
reducing flights to the Northern Territory in 2014 and also closed
MARKET HIGHLIGHTS
its aircraft base in Darwin in 2014, blaming intense competition
The Darwin hotel market has seen year on year declines in from foreign airlines. The reduction in flights included flights from
RevPAR, with the most significant drop coming from average Darwin to destinations including Bali, Tokyo and Singapore.
room rates. Source: STR The Darwin Hotel market experienced significant occupancy and
rate growth from 2011 through to 2013 backed by major project
The Alice Springs hotel market has performed well over the activity in the oil and gas sectors. In 2014 and 2015 however,
past year with 5.3 per cent growth in RevPAR, supported by occupancy and average rate levels softened, resulting in softer
increases in leisure tourism. RevPAR results. Darwin has undoubtedly experienced softening
market conditions post 2012 when occupancy levels were at 80
per cent and now occupancy levels have reduced to 66.5 per cent
The Darwin accommodation market is anticipated to continue
YTD August 2016. Average room rates are down 10.2 per cent for
to be challenged over the next few years as the recent supply
YTD August 2016 at $160.83, resulting in RevPAR declining by 14
additions are absorbed and potentially further new supply
per cent to $106.95 for YTD August 2016. Source: STR
enters the market.
Darwin tourism infrastructure projects
Major transactions
On 9th May 2015, the Darwin International Airport’s expanded
There have not been any hotel transactions in Darwin for 2016. terminal was officially opened. Darwin International Airport
The most recent major transaction was the sale of the Elan Soho terminal increased from 16,000 to 27,000 square meters, allowing
Hotel in August 2015 for $57,100,000. This equated to $189,701 for an expanded arrivals and departures area and four new
per key. domestic and two new international boarding gates. Overall,
the additional capacity means the terminal can handle double
Trading environment the passengers during peak periods. Additionally, through this
expansion project the airport secured long-term commitments
The Northern Territory overall has experienced an increase in
from Qantas and Virgin Australia, which have both built new
holiday visitors specifically with the combined international and
airline lounges.
domestic visitor results for the year ending June 2016 recording
increases across the Top End (up 24 per cent to 513,000 holiday Other infrastructure that may impact accommodation providers
visitors) and Central Australia (up 9.2 per cent to 432,000 holiday is the Palmerston Regional Hospital, a $150 million public facility
visitors). In line with this positive trend, Alice Springs hotels that will open in 2018. The facility will be the Northern Territory’s
recorded growth of 5.6 percentage points in occupancy for year first new public hospital in almost 40 years and will be the most
ending June 2016 to reach 69 per cent and resulting in a 5.3 per technologically advanced hospital building in the NT, treating
cent increase in RevPAR to $81. thousands of residents each year and employing 340 staff. This
facility is likely to generate demand for local accommodation
In relation to Darwin Airport however, we note that overall
providers from visiting friends and relatives, visiting specialists
passenger numbers declined slightly by -0.8 per cent between
and doctors and patients before and after treatments.
24You can also read
