Hotels - PRDnationwide

Research and
Forecast report
Second Half 2013
Australia
HOTELS
Investors Dive In
Offshore capital dominates major
hotel transactions
Accelerating success.
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HOTELS
Contents
A 30 year love story - Australian hotels and offshore capital
5
Investment market overview
6
Our hotels perspective
8
Sydney city average room rates – where to from here?
10
Window of opportunity - conversion of office to hotel
12
Key market indicators
14
Hotel market indicators
16
Our Hotels experience
20
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Hotels | Research & Forecast Report | Second Half 2013
3
4
A Colliers International publication
Metro Office
HOTELS
A 30 year love story Australian hotels and
offshore capital
It can reasonably be suggested that recognition of the Australian
hotel property sector as a scalable and legitimate property
investment class coincided with the opening of the 620 room
Regent of Sydney Hotel in 1983. This was Australia’s first true
5-star hotel managed by an international luxury brand, and it
was at that time Australia’s largest hotel (by one room over the
619 room Sydney Hilton). The Regent subsequently had a change
of brand to Four Seasons and also underwent a partial room
consolidation to reduce to 531 rooms.
By Nora Farren
Director | Research
nora.farren@colliers.com
The other key feature of The Regent Sydney was the fact it was developed with foreign
capital. The importance of foreign capital to the Australian hotel market has been an enduring
theme over the subsequent thirty years. In the last few months alone we have seen Australia’s
largest ever hotel property portfolio transaction with the Abu Dhabi Investment Authority
acquiring 31 hotels from Tourism Asset Holdings Limited. Furthermore, Australia’s largest
ever single hotel property transaction was completed in September, with the sale of the Four
Seasons Hotel Sydney to a Korean purchaser. Both sales reflect the continued strong demand
from offshore investors for Australian hotel assets.
In this report we offer further analysis of the hotel investment market, the hotel operating
market, and key market metrics relating to travel and visitation. We also provide an insight into
movements in average room rates in Sydney and the window of opportunity for conversion of
office to hotel accommodation.
Over the year to June 2013, the major city hotel markets monitored by Colliers International
saw revenue per available room (RevPAR) increase by 2.5%. At a national level, the Australian
hotel market appears to be relatively stable however; there is wide divergence between
the performance of individual cities. The mining and resource dominated hotel markets
have soften as the current construction boom moves through its peak. National average
occupancy rates for the year to June 2013 fell to 73.8%, with all major city markets monitored
experiencing a decline in occupancy with the exception of Darwin. The growth in room rates
across the country averaged 4.4% for the 12 months to June 2013, with the strongest growth
occurring on the Gold Coast (11.9%) and in Darwin (11.4%). Declines in average room rates
were recorded in Adelaide and Canberra.
The outlook for new hotel supply continues to gain momentum, with new developments
recently announced in Adelaide, Brisbane and Canberra and across a number of regional
areas. The majority of new development will occur in the motel and serviced apartment
sectors, with the cost to develop a new 4 or 5-star hotel still challenging without the benefit of
a mixed-use component.
Hotels | Research & Forecast Report | Second Half 2013
5
Investment market overview
Offshore capital drives hotel investment activity
up 20%
MAJOR HOTEL SALES IN AUSTRALIA
$1,800
$1,600
the year-to-date 2013 is in excess of $1.550 billion (including
the recent sale of the Tourism Asset Holdings Limited (TAHL)
properties), showing an increase of 20% on the total value for
2012. Transaction activity during 2013 has been the strongest
since 2007, reflecting interest from sovereign wealth funds and
global institution investors. The attraction of Australia for offshore
institutions is a combination of factors including the availability of
scalable investments, reasonable initial yields, a stable economy,
Value of Transactions ($ millions)
Total hotel sales activity (above $7.5 million per transaction) for
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
YTD
Source: Colliers International
attractive REIT structures and a transparent legal system. All of
these attractions are still prevailing and we can expect to see
of $221 million. Local investors were also acquisitive during
further offshore interest in Australian hotels.
the year picking-up 13 assets for a total of $245 million, which
accounted for 16% of sale by value. Domestic purchasing activity
Offshore investment activity was led by the Abu Dhabi Investment
Authority, whose portfolio purchase accounts for 50% of sales
to-date in 2013 by value. Investors from Singapore continue to
be active in the Australian market buying five assets for a total
was focused in New South Wales (both city and regional areas),
Melbourne and in the Canberra market. The average value of
acquisitions made by Australian investors was $18.9 million, which
is substantially lower than the average for offshore investors.
TAHL Portfolio
Valued on behalf of purchaser.
6
A Colliers International publication
Metro Office
HOTELS
TAHL portfolio transaction makes up over half
of all 2013 sales
ORIGIN OF HOTEL PURCHASERS BY VALUE
$1,800
$1,600
Over half the value of hotel transactions this year encompasses
$1,400
the sale of the privately held TAHL portfolio of 31 hotels for a
$1,000
were purchased by one of the world’s largest sovereign wealth
$800
funds, the Abu Dhabi Investment Authority (ADIA), making them
$600
the largest hotel owner in Australia. ADIA already have significant
$400
commercial property investments in Australia via direct and fund
$200
Hong Kong
Other
UK
USA
2013 YTD
2011
2012
2010
2009
2007
2008
2005
Singapore
2006
2003
2004
2001
2002
1989
2000
1997
1998
1995
1996
1983
Australia
Novotels in Melbourne, and Canberra; and Pullman, Novotel and
1994
1991
1992
1989
Pre 1989
and includes the Novotel and Ibis at Darling Harbour in Sydney;
1990
$0
ownership. The TAHL portfolio comprises around 4,000 rooms
Japan
Source: Colliers International
Ibis hotels at Sydney Olympic Park. Accor has long-term leases
over 29 of the hotels and manage the other two.
AUSTRALIAN HOTEL PROPERTY INDEX RETURNS
Largest single hotel asset traded in Australia
for $340 million
25
20
The largest single hotel asset transaction of 2013 and the biggest
Annualised Rolling Return %
15
in Australia’s history was the sale of the Four Season Hotel
Sydney for $340 million. The 531-room property was acquired
by one of the largest financial institutions in Korea, Mirae Asset
Global Investment. The vendor was Eureka Funds Management,
who undertook a $45 million refurbishment of the hotel in recent
10
5
0
-5
-10
-15
Income Return
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Sep-11
Dec-11
Jun-11
Mar-11
Dec-10
Jun-10
Sep-10
Mar-10
Dec-09
Jun-09
Sep-09
Mar-09
Sep-08
Capital Return
agreement to Four Seasons. The sale is the largest since the
Dec-08
Jun-08
Mar-08
Sep-07
Dec-07
Jun-07
Mar-07
Dec-06
The property was sold subject to a long-term management
Sep-06
Mar-06
years, meaning minimal capital expenditure for the new owners.
Jun-06
-20
Total Return
Source: IPD/Colliers International
Shangri-La Hotel Sydney was sold last year for $330 million.
Investors continue to be attracted to the Sydney market by healthy
occupancy rates and a positive outlook for room rates.
Hotel sector returns soften
Whilst over the medium term the hotel sector has outperformed
other commercial property asset classes, recently returns from
the hotel sector have softened as a result of a slowdown in the
mining sector and reduced government spending. IPD report
that over the year to June 2013 returns generated from the hotel
sector halved to 6.3%, down from 12.8% the previous year. The
decline was driven by a sharp slowdown in capital growth, while
income returns have been broadly steady. Total returns from the
hotel sector averaged 11.8% over the past three years, compared
with 9.5% for retail, 10.0% for office and 9.7% for the industrial
sector. While income returns generated by the hotel sector remain
solid at 8.2%, the capital returns for the year to June 2013 fell
to -1.8%, the first decline since March 2010. Non-CBD assets
continue to outperform CBD hotels, benefiting from strong income
growth. This trend emerged in late 2012 and has continued in
2013. Over the year to June 2013 total returns from non-CBD
assets were 8.9% compared with 5.0% for CBD properties.
Four Seasons Hotel, Sydney
Valued on behalf of Eureka.
Hotels | Research & Forecast Report | Second Half 2013
7
Millions
$1,200
price reported to be approximately $800 million. The properties
Hotels
International Visitor Arrivals
& Travel by Australians
Visitors
to Australia
Domestic Tourism
75.3 million
5.8M
Overnight trips taken in Australia
by Australian residents during
the year to June 2013
(This was 3% higher than for
the year to June 2012)
Short-term visitors to Australia
(across the year to June 2013).
This is up 5% from the year to
June 2012.
Visitors travelled within
+0.5% 2.0%
Top 5 International
Visitor Countries (% growth)
Year to June 2013
state or territory
67% their
of residence
33% Travelled interstate
NZ
UK
1.1M .57M
6.2%
14.3%
USA Singapore
.46M
.32M
17.4%
24% Queensland
China
.65M
33% New South Wales
24% Victoria
UK
Travel
by Australians
Thailand
.45M
6%
.53M 7%
8.4M
Short-term trips overseas in
2012-13, up from 8 million trips in 2011-12.
This is nearly three times the numbers
.9M
from ten years ago.
11%
31%
Visiting friends
and relatives
Indonesia
.74M 10%
.8M
47%
Holiday
traveller
USA
NZ
16%
Business
travel
Total Australia
Airline Passenger
Movements
(% growth year to June 2013)
14%
5.1%
International airlines
Top 5 Outbound Destinations
for Australians (% of total)
4.4%
Domestic airlines
-3.7%
Regional airlines
au.hotels@colliers.com
AUSTRALIA
Sales
Transactions
Biggest Transaction
for YTD 2013
0
4
3
$
This is the largest single hotel asset sale ever in Australia
Buyer Profile for YTD 2013
49%
Total Star Graded (in $)
Perth City
Sydney City
Melbourne City
Brisbane City
Canberra Tourism Region
Darwin Tourism Region
Adelaide City
Gold Coast City
Hobart and Surrounds Tourism Region
Cairns City
197.12
195.57
174.81
174.16
163.29
161.97
141.48
140.17
139.61
123.75
www.colliers.com.au
Purchasers fromAbu Dhabi
Total Return Over the past three years
10.0%
Average Room Rate Year to June 2013
Location
approx.
spent on Australian hotel assets through
the purchase of the TAHL portfolio
comprising 31 assets, accounting for
49% of all transactions by value to date in 2013.
Occupancy Rates Year to June 2013
Location
Total Star Graded (in %)
83.8
Sydney City
83.4
Perth City
78.8
Darwin Tourism Region
78.0
Melbourne City
77.0
Brisbane City
72.6
Adelaide City
71.4
Hobart and Surrounds Tourism Region
69.0
Canberra Tourism Region
67.8
Gold Coast City
56.2
Cairns City
$800 Million
Hotel Sector
9.5%
11.8%
9.7%
Industrial
Location
Total Star Graded (in $)
164.41
Perth City
163.83
Sydney City
136.35
Melbourne City
134.06
Brisbane City
127.65
Darwin Tourism Region
112.67
Canberra Tourism Region
102.67
Adelaide City
99.66
Hobart and Surrounds Tourism Region
95.02
Gold Coast City
69.55
Cairns City
Four Seasons Hotel, Sydney
Purchaser: Mirae Capital (from Korea)
Vendor: Eureka Funds Management
Retail
RevPAR Year to June 2013
n
io
Mill
Office
Hotel
Market
Indicators
Sydney City average room rates
– where to from here?
SYDNEY OFFICE NET EFFECTIVE RENTS VS. HOTEL
AVERAGE ROOM RATES
$500
$450
$400
$350
Rent/ARR
Average room rates in Sydney City, Australia’s
largest hotel market, have only grown at
a compound rate of 2.5% per annum over
eighteen years. However, office rents
have grown by 3.1% per annum. Why the
underperformance of room rates versus office
rentals?
$300
$250
$200
$150
According to Australian Bureau of Statistics (ABS) since 31 March
$100
$50
1995 average room rates (ARR) for Sydney City1 have escalated
of 2.5%. Over the same period, Sydney CBD office net effective
rents (being the average of Premium, A-Grade and B-Grade)
Sydney CBD Office
Mar-13
Mar-11
Mar-12
Mar-10
Mar-09
Mar-07
Mar-08
Mar-05
Mar-06
Mar-03
Mar-04
Mar-01
Mar-02
Mar-99
Mar-00
Mar-97
Mar-98
Mar-95
Mar-96
$0
from $127 to $189 delivering a compound average growth rate
Sydney City Total Star Graded Hotels
Source: ABS/Colliers International
have escalated from $219 to $377 delivering a compound average
growth rate of 3.1%2 .
The graph on the top right illustrates the nominal movement in
SYDNEY CBD OFFICE NET EFFECTIVE RENTS VS. SYDNEY CITY
HOTEL AVERAGE ROOM RATES AND SYDNEY CPI - INDEXED
ARR and net effective rents.
2.2
2
with CPI as a third variable, this reveals ARR in Sydney City
have grown at less than CPI over the approximate eighteen year
period to 30 June 2013 whereas Sydney CBD office rents have
consistently outperformed CPI.
1.8
Index Base Year = 1995
When the same two variables are examined on an indexed basis
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
Sydney CBD Office
Sydney City Total Star Graded Hotels
Jun-13
Jun-12
Jun-11
Jun-10
Jun-09
Jun-07
Jun-08
Jun-05
Jun-06
Jun-03
Jun-04
Jun-01
Jun-02
Jun-99
Jun-00
Jun-97
Jun-98
Jun-95
in the context that hotel room occupancies for Sydney City over
0
Jun-96
The underperformance in ARR growth against CPI is interesting
CPI Sydney
the same period have actually performed strongly and generally in
the range of 70% to 80% and at an average of 78%.
Source: ABS/Colliers International
1
Sydney City as defined by the ABS includes the areas: Sydney, Haymarket, The Rocks, Pyrmont, Ultimo, Surry Hills, Darlinghurst, Redfern, Chippendale, Potts
Point, Woolloomooloo, Glebe, Forest Lodge, Newtown, Camperdown, Darlington, Sydenham, Tempe, St Peters, Waterloo, Beacons Field and Sydney Airport.
2
The 31 March 1995 start point is chosen because this is first available data for Sydney CBD office.
Sebel Pier One
Colliers International appointed as advisor to owner on operator selection.
10
A Colliers International publication
Metro Office
HOTELS
SYDNEY CITY HOTEL OCCUPANCY RATES
• Widespread buying of room nights under disciplined
procurement programs operated by major corporations and
100%
95%
government agencies has resulted in large portions of room
90%
night demand being contracted at competitive rates.
Occupancy Rate
85%
80%
75%
Collectively, the above factors have inhibited room rate escalation
70%
despite an environment of good demand. However, there are
65%
some green shoots emerging in the Sydney hotel market which
60%
are likely to positively impact ARR over the medium term; namely:
55%
Jun-13
Jun-11
Jun-12
Jun-10
Jun-09
Jun-07
Jun-08
Jun-05
Jun-06
Jun-03
Jun-04
Jun-01
Jun-02
Jun-99
Jun-00
Jun-97
Jun-98
Jun-95
Jun-96
50%
• A significant component of the western CBD is either presently
or shortly to be redeveloped or revitalised. At Darling Harbour
Source: ABS/Colliers International
the redevelopment of the Sydney Exhibition and Convention
Explanations as to why ARR has not performed better in light of
Centre commences in early 2014. This is an important
strong market occupancy are numerous but key factors are:
component of tourism infrastructure for Sydney because
there is some evidence the existing facility has not attracted
• Certain hotels have consistently pursued volume sale
fair market share on the basis of a regional analysis. The new
strategies at the expense of ARR. This should not necessarily
facility will be Australia’s largest conference and exhibition
be considered a criticism because it is a legitimate strategy
facility. In addition, work commences shortly, on the nearby
provided it optimises gross operating profit;
Four Points Hotel which will see the addition of 283 rooms to
the existing 683 rooms plus 4,810 square metres of meeting
• The price of hotel rooms is very transparent due to the
multitude of third party internet sites consolidating hotel prices
and exhibition space. To the north of Darling Harbour the more
on a country, city, standard and type basis. This has significantly
significant redevelopment of Barangaroo has commenced on
increased the competitive nature of the hotel market. The same
what was previously 22 hectares of disused container wharves.
level of transparency is not presently available for Effective
Significant commercial and infrastructure works are presently
Office Rentals;
underway. Upon completion Barangaroo will deliver important
tourism inventory for Sydney City plus it will be a significant
new generator of hotel room demand;
• There has been a shift over the period of the analysis in the
geographical mix of inbound visitation resulting in a relative
• A number of luxury hotel brands are now pursuing investment
reduction in source markets (Japan, USA) that have historically
been prepared to stay in upscale hotels and a relative increase
opportunities in Sydney CBD with a view to developing hotels of
in source markets (China, Korea) that are generally more
a standard to deliver ARR in the order $650 plus. As previously
inclined to mid-market hotels. This is detailed in the table below;
stated it is the upscale hotels that set the ARR market and any
improvement in the upscale inventory will assist overall market
performance;
TOP FIVE INBOUND VISITOR SOURCE MARKETS
12 months to 30 June 1995
Country
Number
%
Japan
742,300
21%
12 months to 30 June 2013
Country
Number
• A further improvement in hotel room inventory will occur with
%
the imminent arrival of a new wave of “boutique” and “lifestyle”
New Zealand 1,086,974
19%
brands that will reinvigorate the Sydney hotel scene with their
New Zealand 501,800 14.2%
China
646,779
11%
design led focus and enhanced food and beverage offering.
UK
354,500 10%
UK
573,978
10%
Hotels of this ilk appeal to a customer base where room rate
US
295,200 8.4%
US
464,634
8%
Singapore
196,400 5.6%
Singapore
319,620
5%
47%
Other
1,445,100 40.8% Other
2,725,276
Total
3,535,300
5,817,261
Total
is not the predominant factor in hotel selection. A number of
rebranding and upgrade announcements are expected before
year end; and
• The popularity of these ‘boutique’ and ‘lifestyle’ hotels will also
be assisted by the growth of independent travellers that are now
emanating out of China.
• Room rate escalation in a city must be led by the five star
product. However, considering the size and prosperity of the
In summary, Sydney City is at the forefront of a significant
Sydney CBD it does not have a large inventory of true five star
enhancement in room inventory, tourism infrastructure and new
hotels as measured by just two key criteria of, room inventory
generators of room night demand that will positively impact the
comprising four point bathrooms, and room size being in the
range of minimum 35 square metres to 40+ square metres; and
rate of ARR escalation.
Hotels | Research & Forecast Report | Second Half 2013
11
Window of opportunity conversion of office to hotel
A dearth of available hotel investment opportunities together with
the difficulty of new build has resulted in hotel investors looking
at the option of converting well located B-grade and lower office
buildings to hotel accommodation. There is presently a window
of opportunity for office conversion due to hotel values rising
relative to B-grade and lower office space which is suffering from
rising vacancy, escalating incentives and obsolete design. The
• Floor height: Minimum floor to ceiling height of 2.7 metres.
• Lift Location: Centre core buildings are becoming increasingly
unpopular for office buildings but can work quite well for hotels.
Core to window depth generally requires about 9m. If it is too
big there may be difficulties planning rooms efficiently.
• Light access: Careful consideration should be given to the
feasibility of office conversion is particularly attractive in Brisbane
existing façade construction. The mullions and configuration of
and Sydney. Office leasing incentives in the Sydney CBD are now
the façade must work with the room module otherwise it may
over 30% for older buildings and the viability of alternate uses
need to be replaced.
are becoming increasingly compelling. According to Peter Black,
• Access: Generally, commercial office buildings have a goods
National Design Director Colliers Project Services, not all office
entry and dock. This is really essential for a hotel building.
buildings will make for a good hotel conversion but key factors
Ideally it should be have good separation from the proposed
are:
guest entry.
Department of Lands Building
23-33 Bridge Street Sydney.
Image supplied by Sydney Heritage.
12
A Colliers International publication
Metro Office
HOTELS
Major office conversions presently underway include 34 Hunter
as it is located in the geographical centre of the CBD, has a strong
Street, Sydney which will become a 282-room hotel. The B-grade
visual profile, together with floor plates that ideally suit conversion
building was constructed in 1963 and comprises 12 storeys. The
to serviced apartments. Frasers acquired the property in mid-
property is owned by Cititel Hotels from Malaysia, who purchased
2013 for $37.2 million.
the asset in 2011 for $36 million. The $45 million redevelopment
A good test of the office conversion market will be the NSW
is currently underway and will include a café and retail on the
Government’s forthcoming offering of two heritage buildings in
ground floor.
Bridge Street, Sydney. Both these buildings have great presence
Frasers Hospitality Group out of Singapore recently purchased 80
and will attract interest from the luxury brands. This is anticipated
Albert Street, Brisbane. Currently an office building, the property
to be a good outcome for Sydney’s premium hotel market and will
will be converted to an apartment hotel. The 19-storey building
actually provide impetus for growth in average rates.
was constructed in 1987 and is well suited to a hotel conversion,
Department of Education Building
35-39 Bridge Street Sydney
Image supplied by Sydney Heritage.
Hotels | Research & Forecast Report | Second Half 2013
13
Research and
Forecast report
Second Half 2013
KEY MARKET INDICATORS
International visitor arrivals
INTERNATIONAL VISTORS BY COUNTRY OF RESIDENCE
During the year ended June 2013, there were 5.8 million
19%
international visitors to Australia, showing an increase of 5%
from the previous year, significantly outpacing average growth of
the last decade. New Zealand continues to be the largest source
of international visitors to Australia, followed by China, the UK
38%
and the USA. The strongest growth in visitor arrivals was from
11%
China, which saw an increase of 17.4% over the 2012/13 financial
year. While only accounting for a small portion of overall visitors
(320,000) arrivals from Singapore grew by 14.3%. Strong growth
was also experienced in visitors from Malaysia, up 10%. Over the
10%
same period there was a decline in arrivals from Japan, Korea,
Canada and Switzerland.
4%
5%
Outbound travel by Australians
Despite a tentative decline in the Australian Dollar, outbound travel
5%
8%
New Zealand
China
UK
USA
Japan
Singapore
Malaysia
Other
by Australians continues to increase, outstripping the growth in
international visitor arrivals and domestic travel by Australian
Source: ABS/Colliers International
residents. However, the pace of growth has slowed from the
double-digit growth recorded in recent years, and is expected
to moderate further. During the year to March 2013 (the latest
AUSTRALIAN OUTBOUND TRAVEL BY MAIN COUNTRY OF
DESTINATION
figures available), Australians took 7.1 million international trips,
14%
spending a total of 143 million nights away on outbound travel.
This is an average of 20 nights abroad for each overseas trip. The
most popular offshore destination was New Zealand accounting
for 14%, followed by Indonesia (11%), the USA (10%), Thailand
11%
39%
(7%) and the UK (6%). The most popular reason for outbound
travel was holiday (58%), followed by visiting friends and relatives
(22%) and business (18%).
10%
7%
4%
4%
New Zealand
UK
China
5%
Indonesia
USA
Fiji
Singapore
Source: ABS/Colliers International
14
A Colliers International publication
6%
Thailand
Other
Metro Office
HOTELS
Domestic visitor market
DOMESTIC OVERNIGHT VISITS BY STATE
Domestic travel by Australians also increased over the year to
June 2013, with 75.3 million overnight trips taken in Australia by
Millions
residents, reflecting an increase of 3% over the previous year.
Two-thirds of visitors travelled within their state or territory of
residence, the remainder travelled interstate. New South Wales
received the most visitors (33%) while Queensland and Victoria
accounted for 24% each. The strongest growth in domestic
visitors was recorded in Tasmania (+12.1%) and the Australian
Capital Territory (+9.0%). Visitor numbers to Victoria were flat,
26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
NSW
VIC
QLD
while a large decline was recorded in the Northern Territory
SA
WA
2011/12
(-6.3%) and a marginal decline was experienced in Queensland
TAS
NT
ACT
2012/13
Source: ABS/Colliers International
(-0.1%). Expenditure by domestic overnight visitors amounted to
$51.4 billion, an increase of 3.0% compared with the same period
in 2011/12.
Passenger and aircraft movements
AUSTRALIAN PASSAGER AND AIRCRAFT MOVEMENTS
35%
Over the 2012/13 financial year total passenger movements
30%
25%
were 142.8 million showing an annual increase of 4.0%. Average
20%
annual growth over the last five years has been 3.5%, slower
Annual Growth
15%
5%
0%
-5%
Hobart which recorded an increase of 11.7%, followed by the Gold
-10%
Coast with 9.0% and Perth at 7.0%. Growth in aircraft movements
-20%
2011-12
2012-13
2010-11
20009-10
2007-08
2008-09
2006-07
1994-05
2005-06
2003-04
2001-02
2002-03
1999-00
2000-01
1997-98
Passenger
1998-99
1996-97
1995-96
1993-94
1994-95
1991-92
1992-93
1990-91
1989-90
4.1% occurring. This is stronger than both the five and ten year
-25%
1987-88
was strong during the 2012/13 financial year with an increase of
-15%
1988-89
strongest growth in passenger movements over 2012/13 was in
1986-87
than the long-term (ten year) average which sits at 6.3%. The
10%
Aircraft
average annual growth rates which currently measure 2.9% and
3.1% respectively.
Source: Bureau of Infrastructure, Transport and Regional Economics/Colliers
International
Parkroyal Melbourne Airport, Tullamarine
Valued on behalf of UOL Group Limited.
Hotels | Research & Forecast Report | Second Half 2013
15
Research and
Forecast report
Second Half 2013
HOTEL MARKET INDICATORS
National snapshot
RevPAR
CHANGE IN REVPAR 12 MONTHS TO JUNE 2013
20%
• Average growth in RevPAR across the major city markets
18%
16%
monitored was 2.5% for the year to June 2013;
14%
12%
• The highest annualised growth in RevPAR occurred in Darwin,
Coast (11.5%) and Hobart (5.5%);
% Change
with growth of 17.6% recorded; this was followed by the Gold
10%
8%
6%
4%
2%
0%
-2%
• Declines were recorded in Canberra (-6.0%), Adelaide (-4.4%)
-4%
and marginal falls in Perth (-0.8%) and Melbourne (-0.1%).
-6%
-8%
-10%
Sydney
Melbourne
Brisbane
Gold Coast
Cairns
Adelaide
Perth
Canberra
Darwin
Hobart
Source: ABS/Colliers International
Average room rates
CHANGE IN AVERAGE ROOM RATES 12 MONTHS TO JUNE 2013
• Average growth in annualised room rates across the major city
14%
markets monitored was 4.4% for the year to June 2013;
12%
10%
• The strongest growth in average room rates was achieved on
2012/13, followed closely by Darwin (+11.4%), Cairns (+6.4%),
8%
% Change
the Gold Coast, which showed an increase of 11.9% across
6%
4%
2%
and Hobart (+6.1%);
0%
• A fall in average room rates was recorded in both Adelaide
-2%
(-2.0%) and Canberra (0.7%) during the twelve months to
June 2013.
Occupancy
-4%
Sydney
Melbourne
Brisbane
Gold Coast
Cairns
Adelaide
Perth
Canberra
Darwin
Hobart
Darwin
Hobart
Source: ABS/Colliers International
CHANGE IN OCCUPANCY 12 MONTHS TO JUNE 2013
8%
• The average occupancy rate across the major city markets
6%
monitored for the year to June 2013 was 73.8%;
4%
• Of all the regions measures, only one market recorded an
2%
% Change
increase over 2012/13 – Darwin saw its occupancy rate
0%
increase 5.6% to 78.8%. Sydney recorded the highest
-2%
occupancy rate over the year at 83.8%, marginally ahead of
-4%
Perth with 83.4%;
-6%
• Declines in occupancy were recorded in all other regions
monitored over the 12 months to June 2013, with the largest
declines occurring in Cairns (-5.7%) and Canberra (-5.3%).
16
A Colliers International publication
-8%
Sydney
Melbourne
Brisbane
Gold Coast
Source: ABS/Colliers International
Cairns
Adelaide
Perth
Canberra
Metro Office
HOTELS
Market snapshots
Sydney city total star graded
SYDNEY CITY TOTAL STAR GRADED
88%
$220
• Over the year to June 2013, the annualised average room rate
$200
86%
$180
from $190.73, showing an increase of 2.5% but still slightly
Room Rate & RevPAR
$160
behind the Perth market;
• Over the same period, occupancy rates decreased 1.4% to
83.8%, with Sydney just overtaking Perth to have the highest
occupancy rate across Australia;
84%
$140
82%
$120
$100
80%
$80
Occupancy
across all star grades in Sydney City increased to $195.57 up
78%
$60
$40
76%
$20
• Across Sydney City, RevPAR increased from $162.12 to $163.83,
74%
$0
Jun-09
reflecting an increase of 1.1% for the year to June 2013.
Jun-10
Average Room Rate
Jun-11
Jun-12
RevPAR
Jun-13
Occupancy
Source: ABS/Colliers International
MELBOURNE CITY TOTAL STAR GRADED
$200
• The annualised average room rate across all star grades in
Melbourne City increased to $174.81 up from $172.41, growing
• Over the same period, occupancy rates fell by 1.4% to 78.0%;
• Across Melbourne City over the 12 months to June 2013,
80%
$160
Room Rate & RevPAR
by 1.4% over the year to June 2013;
81%
$180
RevPAR declined marginally (-0.1%) to $136.35.
79%
$140
$120
Occupancy
Melbourne city total star graded
78%
$100
77%
$80
$60
76%
$40
75%
$20
$0
74%
Jun-09
Jun-10
Average Room Rate
Jun-11
RevPAR
Jun-12
Jun-13
Occupancy
Source: ABS/Colliers International
BRISBANE CITY TOTAL STAR GRADED
• Over the 12 months to June 2013 the annualised average room
rate across all star grades in Brisbane City grew strongly to
• For the same period occupancy rates fell by 3.8% to be 77.0%;
• Across Brisbane City, RevPAR increased marginally from
$133.10 to $134.06 recording growth of 0.7%.
81%
$180
80%
$160
Room Rate & RevPAR
$174.16 up from $166.33, showing an increase of 4.7%;
$200
79%
$140
78%
$120
77%
$100
76%
$80
Occupancy
Brisbane city total star graded
75%
$60
74%
$40
73%
$20
$0
72%
Jun-09
Jun-10
Average Room Rate
Jun-11
RevPAR
Jun-12
Jun-13
Occupancy
Source: ABS/Colliers International
Hotels | Research & Forecast Report | Second Half 2013
17
GOLD COAST CITY TOTAL STAR GRADED
$160
69%
strongest growth in annualised average room rates across
$140
68%
Australia for the year to June 2013, rising to $140.17 from
$120
$125.25, showing a jump of 11.9%;
• Over the same period occupancy rates decline marginally (by
0.4%) to 67.8%;
Room Rate & RevPAR
• The Gold Coast City total star graded market recorded the
68%
$100
67%
$80
67%
$60
66%
$40
• Across the region RevPAR also improved markedly, growing by
66%
$20
11.5% to $95.02, up from $85.24.
Occupancy
Gold Coast city total star graded
65%
$0
Jun-09
Jun-10
Average Room Rate
Jun-11
RevPAR
Jun-12
Jun-13
Occupancy
Source: ABS/Colliers International
CAIRNS CITY TOTAL STAR GRADED
$140
60%
Cairns City recorded growth of 6.4% for the year to June 2013,
$120
59%
moving to $123.75, up from $116.27 the previous year;
$100
58%
$80
57%
$60
56%
$40
55%
$20
54%
• Occupancy rates for the 12 months to June 2013 saw a decline
of 5.7% to 56.2%, down from 59.6%;
Room Rate & RevPAR
• The annualised average room rate across all star grades in
• Across Cairns City RevPAR for the same period grew marginally
(by 0.4%) to $69.55.
Occupancy
Cairns city total star graded
53%
$0
Jun-09
Jun-10
Average Room Rate
Jun-11
RevPAR
Jun-12
Jun-13
Occupancy
Source: ABS/Colliers International
ADELAIDE CITY TOTAL STAR GRADED
$160
78%
average room rates declined by 2.0% for the 12 months to June
$140
77%
2013, to $141.48 down from $144.34;
$120
76%
$100
75%
• For the same period occupancy rates fell to 72.6% showing a
drop of 2.5% from 74.4% the previous year;
Room Rate & RevPAR
• Across the Adelaide City total star graded market annualised
• RevPAR for Adelaide City for the year to June 2013 was
$102.67, recording a fall of 4.4% from $107.42.
$80
74%
$60
73%
$40
72%
$20
71%
$0
Occupancy
Adelaide city total star graded
70%
Jun-09
Jun-10
Average Room Rate
Jun-11
RevPAR
Jun-12
Jun-13
Occupancy
Source: ABS/Colliers International
PERTH CITY TOTAL STAR GRADED
$220
• Growth in average annual room rates for the Perth City Total
Star Graded market slowed across the year to June 2013, rising
Average room rates in Perth remain the highest in the country;
• Occupancy rates over the same period also fell, down 2.6% to
83.4%, leaving the Perth market just behind Sydney, which sat
at 83.8% for the year to June 2013;
86%
$180
Room Rate & RevPAR
1.8% taking rates to $197.12, up from $193.66 the previous year.
88%
$200
$160
84%
$140
82%
$120
$100
80%
$80
78%
$60
$40
76%
$20
• RevPAR for Perth City was down marginally (0.8%) for the 12
months to June 2013, to be $164.41 having fallen from $165.82.
74%
$0
Jun-09
Jun-10
Average Room Rate
Source: ABS/Colliers International
18
A Colliers International publication
Jun-11
RevPAR
Jun-12
Occupancy
Jun-13
Occupancy
Perth city total star graded
Metro Office
HOTELS
Canberra tourism region total star graded
CANBERRA TOURISM REGION TOTAL STAR GRADED
Region declined marginally over the year to June 2013, falling
$180
76%
$160
75%
74%
$140
Room Rate & RevPAR
0.7% to $163.29 from $164.43;
• Occupancy rates for the same period fell by 5.3% to 69.0%
down from 72.9% the previous year;
• The Canberra Tourism Region recorded a sharp decline in
73%
$120
72%
$100
71%
$80
70%
$60
69%
$40
RevPAR, which declined 6.0% over the 12 months to June 2013
68%
$20
to be $112.67, down from $119.86.
Occupancy
• Annualised average room rates across the Canberra Tourism
67%
$0
66%
Jun-09
Jun-10
Average Room Rate
Jun-11
RevPAR
Jun-12
Jun-13
Occupancy
Source: ABS/Colliers International
Darwin tourism region total star graded
DARWIN TOURISM REGION TOTAL STAR GRADED
Star Graded market was the strongest performing across
$180
80%
$160
78%
$140
Room Rate & RevPAR
Australia, with all measures improving strongly. Average
annualised room rates increased by 11.4% to $161.97;
• Occupancy rates for the 12 months to June 2013 grew by 5.6%
to 78.8% up from 74.6% the previous year;
76%
$120
74%
$100
72%
$80
70%
$60
68%
$40
• Across the Darwin Tourism Region, RevPAR for the year to June
66%
$20
2013 jumped 17.6% to $127.65 up from $108.52.
Occupancy
• Over the year to June 2013 the Darwin Tourism Region Total
$0
64%
Jun-09
Jun-10
Average Room Rate
Jun-11
RevPAR
Jun-12
Jun-13
Occupancy
Source: ABS/Colliers International
Hobart and surrounds tourism region total star graded
HOBART AND SURROUNDS TOURISM REGION TOTAL STAR
GRADED
• The Hobart and Surrounds Tourism Region recorded strong
$160
76%
June 2013, increasing by 6.1% to $139.61, the highest rate over
$140
75%
the past five years;
$120
(0.5%) to 71.4%;
• RevPAR for the same period recorded strong growth of 5.5%
73%
$80
72%
$60
71%
$40
increasing to $99.66, up from $94.44 for the 12 months to June
2012.
74%
$100
70%
$20
$0
69%
Jun-09
Jun-10
Average Room Rate
Jun-11
RevPAR
Jun-12
Jun-13
Occupancy
Source: ABS/Colliers International
How else can we help you?
Speak to one of our property experts today.
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For further information about our research
please contact: Nora Farren
Director | Research | Tel +61 2 9257 0289
nora.farren@colliers.com.au
Hotels | Research & Forecast Report | Second Half 2013
19
Occupancy
• Over the 12 months to June 2013, occupancy rates fell negligibly
Room Rate & RevPAR
growth in annualised average room rates across the year to
Our experience
IN THE LAST 24 MONTHS
sold
58 properties with a value in excess of $450 million.
Crown Plaza
Hunter Valley, NSW
Magenta Shores Resort Site
Central Coast, NSW
Hotel Kurrajong
Barton, ACT
Hope Island Resort
Gold Coast, QLD
AUD$45 million
AUD$40 million
AUD$7.65 million
Confidential
4.5 star hotel accommodation with 18
hole golf course & Country Club.
Resort residential development land
and unsold stock.
Art-deco style heritage listed hotel
“Links” Golf course, including
development land approved for 400
room hotel.
Mercure Hotel
Bairnsdale, VIC
Mercure Hotel
Horsham, VIC
Eastern Golf Club
Doncaster, VIC
CBD Hotel Development Site
Melbourne CBD, VIC
AUD$5.26 million
AUD$5.91 million
AUD$99 million
Confidential
51 room hotel with modern facilities.
52 room hotel with modern facilities.
Residential development site of 47
hectares, 15km from Melbourne CBD.
Mixed use hotel development site of
3,000sqm.
Shoreline Motel
Napier, NZ
The Beach Front Motel
Napier, NZ
Quest New Plymouth
New Plymouth, NZ
Novotel & Hotel Ibis
Hamilton, NZ
NZD$6.64 million
NZD$8.4 million
NZD$11.9 million
NZD$12 million (Partial interest only)
Land Area is 2,481sqm with 38 rooms
plus Managers accommodation.
Freehold land of 3,046sqm, 46 rooms
together with 3 bedroom managers
accommodation.
Multi-tenanted with 36 car parks,
floor area 4527sqm, land area approx.
3070sqm
4 star Novotel hotel with 177 rooms
and 3 star Hotel Ibis with 126 room.
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AUSTRALIA & NEW ZEALAND
valued
552 assets with a value in excess of $11.6 billion.
TAHL Portfolio
Australian Portfolio
Four Seasons Hotel
Sydney, NSW
Travelodge
Brisbane, QLD & Sydney, NSW
Exchange Hotel
Brisbane, QLD
Portfolio
Full service hotel
Limited service hotel
Pub
31 hotels across Australia
Five star rating hotel overlooking
Sydney Harbour and offering 531
guest rooms and suites.
Three Travelodge hotels located in
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CBD freehold going concern pub
RD Jones Group Hotel Portfolio
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Marriott
Sydney, Melbourne & Brisbane
Ibis Budget
Redcliffe, WA
Next Generation Fitness and Tennis Clubs
Ryde, NSW; Perth, WA & Adelaide, SA
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Limited service hotel
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Portfolio of eight freehold and leasehold
hotels throughout metropolitan Adelaide
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Three Marriott hotels located in
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2 Star hotel with 73 rooms built
in 2005. Forms part of the TPIG
Portfolio.
Four Next Generation Fitness and
Tennis Clubs located in Ryde, Perth &
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CP Group Portfolio
New Zealand Portfolio
Stamford
Sydney, NSW & Brisbane, QLD
Ibis Budget
Melbourne CBD, VIC
Sydney University Village
Newtown, NSW
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Full service hotel
Limited service hotel
Student accommodation
A portfolio of nine hotels spread
across New Zealand.
Two Stamford hotels located in
Sydney & Brisbane.
2 Star hotel with 143 rooms in the
heart of the Melbourne CBD. Forms
part of the historic former London
Hotel building.
Student accommodation complex
offering a total of 650 bedrooms.
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