Sydney, 11 February 2013 - Strong sales activity has been recorded in Australia’s mid-tier and regional hotel market in the past 12 months, with close to $210 million in properties having changed hands according to a new market analysis from CBRE Hotels.
CBRE Hotels Regional Director Rob Cross said there had been widespread coverage in relation to the record breaking volume of overall hotel transactions in 2012. However, much of this had made up of three significanttransactions, those being the Marriott Portfolio sale to YTL, the Shangri La, Sydney acquisition and the Mirvac sale to Ascendas/ Accor.
“What has not received the same exposure has been the plethora of activity in the mid-tier and regional hotel sector,” Mr Cross said.
“In 2012, CBRE Hotels had one of busiest transaction years for some time. In the $10 million to $50 million price range both suburban and regional hospitality assets attracted substantial buyer attention, with properties such as the Leisure Inn Hotel Macquarie in Hobart attracting over 100 enquiries.”
Unlike the 5 star corporate transactions market, which was primarily the domain of offshore purchasers, Mr Cross said the mid-market had been dominated by locally based corporate and private money.
This had been highlighted by the most recent mid-market sale of the Leisure Inn, which was transacted by CBRE Hotels.
“We conducted 19 inspections and received 14 bids for this asset which is a phenomenal level of interest for a hotel in Tasmania,” Mr Cross said.
“In the current climate we have fielded similar interest for a range of recent campaigns, including those for the Peppers Anchorage at Port Stephens, Novotel St Kilda, Diplomat Hotel Canberra and the Sebel Hotel in Mandurah, south of Perth.”
Mr Cross said private buyers were actively seeking premier assets in regional locations.
“The corporate, major city hotels tend to be in a much higher price range, offer lower returns and are rarely available to the market,” Mr Cross said.
“It’s all about “bang for the buck”. Private buyers are actively seeking higher returns or opportunities to add value through management restructuring or capital upgrades. This is not the case with major city, CBD assets where most are encumbered with long term management agreements.”
CBRE Hotels is forecasting a similar trend in 2013, with a number of high profile regional opportunities about to hit the market.
These include an upcoming opportunity from Linear Group, based out of Sydney, which is about to offer a number of hospitality assets to the market via CBRE Hotels executives Rob Cross and Andrew Jackson. These include:
• The Quality Hotel Apollo International, Newcastle
• The Quality Inn HW Boutique Hotel, Port Macquarie
• Best Western Tall Trees in Canberra
“The Newcastle and Port Macquarie assets would be amongst the best presented regional hotels to be offered to the market in recent years whist the Canberra asset is a rare offering in our nation’s capital” Mr Jackson said.
“Tall Trees and the HW Boutique, which enjoys a premier waterfront position in Port Macquarie, have been fully refurbished while the Apollo has not only been fully renovated but has had another 44 rooms added in 2012, so there are no CapEx requirements for the incoming buyer.”
Mr Jackson added; “Canberra and Newcastle hotel opportunities are highly sought after, as evidenced by the recent sale of the Diplomat in Canberra and the Novotel Newcastle. Both were keenly contested, culminating in sales prices which approached $200,000 per room.”
The Linear properties are being publicly marketed by CBRE Hotels with Expressions of Interest closing March 27, 2013.
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