Australian hotel research forecast rreport   q3 2012
 

Australian hotel research forecast rreport q3 2012

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    Australian hotel research forecast rreport   q3 2012 Australian hotel research forecast rreport q3 2012 Document Transcript

    • Q3 2012 | HOTEL INVESTMENTRESEARCH & FORECAST REPORTAUSTRALIAN HOTEL INVESTMENT Asian Buyers and Visitor Arrivals Drive Hotel Sector Outperformance The hotel sector continues to outperform on a total return basis compared to other commercial assets. According to the latest IPD Property Investment Index, for the year to June 2012, Australian hotel property showed annualised total returns of 13.5%. While this result is below the annualised return to June 2011 of 16.6%, it is significantly higher than returns generated by office (10.5%), industrial (9.7%) and retail (9.1%) property. While a comparatively strong result, the decline in returns was driven by a slowdown in capital growth, which fell from 7.3% in June 2011, to 4.6% in June 2012. During 2011/12, returns were particularly strong for CBD hotels, which showed a total return of 15%. New South Wales hotels returned 13.7%, outperforming Victoria and Queensland, which returned 13% and 9.6% respectively. AUSTRALIAN HOTEL PROPERTY INDEX RETURNSPalazzo Versace, Gold CoastSold by the Sunland Group for $68.5 million to aconsortium of Chinese investors. Built in 2000, the 25resort was one of the first luxury-branded hotels in 20the world. 15 Annualised Rolling Return % 10 5 0 -5 -10 -15 -20 Jun-06 Jun-07 Sep-06 Dec-06 Jun-08 Jun-09 Sep-07 Dec-07 Mar-06 Sep-08 Dec-08 Jun-10 Jun-11 Mar-07 Sep-09 Dec-09 Jun-12 Mar-08 Sep-10 Dec-10 Mar-09 Sep-11 Dec-11 Mar-10 Mar-11 Mar-12 Capital Return Income Return Total Return Source: IPD/Colliers International Research Sales activity during the third quarter of 2012 continued to be buoyant with five transactions occurring with a total value of $214.3 million. Of the sales that concluded, 60% were to domestic investors, with the remainder going to offshore purchasers. Calendar year-to-date there have been thirteen major hotel sales across Australia worth just over $1.085 billion, with all but three having sold to overseas purchasers. During 2012, there has been strong interest in Australian tourism assets from Asian investors, particularly from Singapore, who have accounted for nearly half of all purchases so far this year. Investors from Malaysia and China have also been active, reflecting the strong growth in visitor numbers from these regions. Visitor arrivals from China continue to grow at record levels. During the year to July 2012 visitor numbers from China were up 13.9%, followed by strong growth from Singapore (+9.3%), Japan (+7%) and Malaysia (+5.3%). Figures from the ABS confirm that China is now Australia’s second largest inbound tourism market behind New Zealand, having recently overtaken arrivals from the United Kingdom.www.colliers.com.au/research
    • RESEARCH & FORECAST REPORT | Q3 2012 | HOTEL INVESTMENT The following graph illustrates that from 2003 through to 2007 domestic institutions were the main purchasers of hotel assets in Australia. However, over the past five years, this trend has reversed with Australian domestic institutions being the main vendors, and overseas investors dominating purchasing activity.During 2012, there ORIGIN OF HOTEL PURCHASERS BY VALUEhas been strong $1,800interest in Australian $1,600 $1,400tourism assets from $1,200Asian investors, Millions $1,000 $800particularly from $600Singapore, who have $400 $200accounted for nearly $0 Pre 1989 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012half of all purchases Australia Hong Kong Other Singapore UK USA Japanso far this year During the September quarter 2012, Challenger sold the 4-star Rendezvous Hotel on Flinders Street in the Melbourne CBD for $61 million. The purchaser was Singaporean property group the Straits Trading Company (Rendezvous Trading) who currently lease and operate the hotel. In Australia, the group also owns two other Rendezvous branded hotels located in Perth and leases and manages others in Melbourne, Sydney, Brisbane Adelaide and Port Douglas. Over the course of 2012, we have seen a number of hotel operator’s move to ownership of assets, to secure their presence in the market. Most recently the purchase of the Shangri-La Hotel in The Rocks by the Hong Kong-based Shangri-La Asia. The company had been managing the hotel on behalf of the vendor. The Diplomat Hotel located in the suburb of Griffith in Canberra has traded for $13.3 million to the Roundhouse Unit Trust, a syndicate of local buyers. The 4-star hotel is strata titled and trades under the name Belconnen Premier Motor Inn. The vendor was the Abacus Hospitality Fund and the sale price achieved was reported to be similar to the carrying value on the fund’s balance sheet. In the largest transaction of the quarter, the 5-star Palazzo Versace hotel on the Gold Coast was sold by the Sunland Group for $68.5 million, to a group of mainland Chinese investors. The sale is subject to approval by the Foreign Investment Review Board and the House of Versace, who still own the brand name. The hotel was opened 12 years ago, and was one of the first fashion-branded hotels in the world. The Sydney-based Barana Group has purchased the Novotel St Kilda in Melbourne for $55 million. The 4-star hotel is located on The Esplanade opposite St Kilda beach, and is operated on a management agreement by Accor. Due to the location and size of the site, it is considered to have residential development potential. The property was sold by Tourism Asset Holdings Limited (TAHL). The Novotel Newcastle has reportedly been sold by Accor Hotels for approximately $16.5 million. Accor only secured the asset late last year as part of its acquisition of the Mirvac portfolio. The transaction is a sale and leaseback arrangement for the group. Private investor Jerry Schwartz, who also owns the nearby Hunter Crowne Plaza, and the Crowne Plaza in Newcastle, purchased the hotel. The 4-star hotel comprises 88 rooms and was rebranded from a Sebel to the Novotel in the middle of the year. With the Brookfield Asset Management takeover and privatisation of the Thakral Holdings Group set to proceed, they will gain control of six hotel assets. The portfolio of 4-star and 5-star hotels comprises the Sofitel Brisbane and Sofitel Gold Coast (managed by Accor), The Menzies in Sydney, the Novotel Brighton and Novotel Wollongong, and the Hilton on the Park in Melbourne. The strong performance of the Perth market has resulted in TAHL reportedly taking the Novotel Perth Hotel Langley off the market, preferring to hold the asset for the medium term and benefit from the strong cash flow the asset is generating. The hotel market in Perth continues to be the standout performer across the country, with growth in average room rates running at 11.7%, and occupancy levels of around 85%, resulting in RevPAR growth of 15.3%. COLLIERS INTERNATIONAL | P. 2
    • RESEARCH & FORECAST REPORT | Q3 2012 | HOTEL INVESTMENTInter Market ComparisonREVPAR CHANGES IN REVPAR OVER 12 MONTH PERIOD TO MARCH 2012• Average growth in RevPAR across Australia was 4.5% for the 12 months to March 2012;• Over the year to March 2012, Perth recorded 18% the highest increase in RevPAR with 15.3% 16% growth followed by Brisbane at 9.8%; 14%• For the same period, all cities except Hobart 12% (-0.8%) recorded increases in RevPAR. 10% % Change 8% 6% 4% 2% 0% -2% Source: ABS/ Colliers International ResearchAverage Room Rates CHANGES IN AVERAGE ROOM RATE OVER 12 MONTH PERIOD TO MARCH 2012• Perth recorded the largest increase in annualised average room rates, growing by 11.7% to $188.92; 14%• Sydney and Canberra recorded healthy 12% growth in annualised average room rates with 6.4% and 5.8% respectively; 10%• Cairns was the only city measured that 8% recorded a decrease (-1.4%) in annualised 6% % Change average room rates; 4%• Across all regions measured, the average 2% room rate increased by 3.5%. 0% -2% -4% Source: ABS/ Colliers International ResearchOccupancy PERCENT CHANGE IN OCCUPANCY RATE OVER 12 MONTH PERIOD TO MARCH 2012• Perth and Sydney had the highest occupancy rates of all cities measured, each with 85.3%. These were followed by Brisbane at 80.3% occupancy and Melbourne with 79.3%;• The average occupancy rate across all regions measured was 75.0%;• Hobart experienced the largest decline in occupancy, with a drop of 2.1 percentage points, taking its annual occupancy rate to 71.9%. Source: ABS/ Colliers International Research COLLIERS INTERNATIONAL | P. 3
    • RESEARCH & FORECAST REPORT | Q3 2012 | HOTEL INVESTMENTCity ComparisonSydney City SYDNEY CITY TOTAL STAR GRADEDTotal Star Graded $220 100%• In Sydney, annualised average room rates 95% increased 4.7% to $188.59 over the year to $200 March 2012; 90% Room Rate & RevPAR• RevPAR also increased during the time 85% $180 period, recording growth of 3.6%; Occupancy 80%• However, occupancy rates declined over the $160 75% 12 months to March 2012, falling from 86.1% 70% to 85.3%. $140 65% 60% $120 55% $100 50% Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Average Room Rate RevPAR Occupancy Source: ABS/ Colliers International ResearchMelbourne City MELBOURNE CITY TOTAL STAR GRADEDTotal Star Graded $200 100%• Annualised average room rates in Melbourne increased by 1.8% from $169.48 to $172.62 $190 95% over the year to March 2012; $180 90% Room Rate & RevPAR• RevPAR recorded an increase of 2.6% over $170 85% the same period; Occupancy $160 80%• Occupancy rates in Melbourne increased $150 75% marginally from March 2011 to March 2012 to $140 70% be 79.3%. $130 65% $120 60% $110 55% $100 50% Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Average Room Rate RevPAR Occupancy Source: ABS/ Colliers International ResearchBrisbane City BRISBANE CITY TOTAL STAR GRADEDTotal Star Graded• The average room rate rose 6.4% from $170 100% $153.30 in March 2011, to $163.81 in March $160 95% 2012; $150 90% Room Rate & RevPAR• Over this same time period RevPAR increased 85% from $118.55 to $131.50, an increase of 9.8%; $140 Occupancy 80%• Occupancy rates in Brisbane increased 3.0% $130 75% over the year to March 2012. $120 70% $110 65% $100 60% $90 55% $80 50% Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Average Room Rate RevPAR Occupancy Source: ABS/ Colliers International Research COLLIERS INTERNATIONAL | P. 4
    • RESEARCH & FORECAST REPORT | Q3 2012 | HOTEL INVESTMENTCity Comparison continued GOLD COAST TOTAL STAR GRADEDGold Coast CityTotal Star Graded $140 100%• The average room rate rose one and a half 95% $130 percentage points on the Gold Coast over the 90% Room Rate & RevPAR year to March 2012, to $134.11; 85% $120• From March 2011 to March 2012 RevPAR Occupancy 80% increased 0.6%; $110 75%• Annualised occupancy rates on the Gold 70% Coast increased by three percentage points to $100 65% 80.3% over the year to March 2012. 60% $90 55% $80 50% Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Average Room Rate RevPAR Occupancy Source: ABS/ Colliers International ResearchCairns City CAIRNS TOTAL STAR GRADEDTotal Star Graded• Annualised average room rates in Cairns $120 100% decreased from $116.28 in March 2011 to 95% $114.70 in March 2012, or 1.4%; $110 90% Room Rate & RevPAR• Over the same 12-month period RevPAR 85% increased 2.9%, moving from $65.33 to $100 Occupancy $67.26; 80%• Occupancy rates also increased 2.4%, to $90 75% 58.6% over the year to March 2012. 70% $80 65% 60% $70 55% $60 50% Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Average Room Rate RevPAR Occupancy Source: ABS/ Colliers International ResearchAdelaide City ADELAIDE TOTAL STAR GRADEDTotal Star Graded• In Adelaide, annualised average room rates $150 100% increased over the year to March 2012 from $145 95% $141.50 to $144.86; $140 90% Room Rate & RevPAR• RevPAR moved 6.4%, from $106.47 to $135 85% $109.28, over the year to March 2012; $130 80% Occupancy• Annualised occupancy rates increased from $125 75% 75.2% to 75.9% during the period from March $120 70% 2011 to March 2012. $115 65% $110 60% $105 55% $100 50% Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Average Room Rate RevPAR Occupancy Source: ABS/ Colliers International Research COLLIERS INTERNATIONAL | P. 5
    • RESEARCH & FORECAST REPORT | Q3 2012 | HOTEL INVESTMENTCity Comparison continuedPerth City PERTH CITY TOTAL STAR GRADEDTotal Star Graded $200 100%• From March 2011 to March 2012 annualised average room rates in Perth increased from $190 95% $166.74 to $188.92, or 11.7%; $180 90% Room Rate & RevPAR• Over the year to March 2012 RevPAR $170 85% Occupancy increased 15.3%; $160 80%• Occupancy rates in Perth increased 3.5% to $150 75% 85.3% over the 12 months to March 2012. $140 70% This is the highest occupancy rate recorded $130 65% in all the measured cities. $120 60% $110 55% $100 50% Average Room Rate RevPAR Occupancy Source: ABS/ Colliers International ResearchCanberra Tourism Region CANBERRA TOURISM REGION TOTAL STAR GRADEDTotal Star Graded• The average room rate in the Canberra $170 100% Tourism Region increased by 5.8% to $161.24 95% over the 12 months to March 2012; $160 90% Room Rate & RevPAR• Over the year to March 2012 RevPAR $150 85% increased 6.4% to $119.34; Occupancy 80%• Occupancy increased by half a percentage $140 75% point to 74% from March 2011 to March 2012. $130 70% $120 65% 60% $110 55% $100 50% Average Room Rate RevPAR Occupancy Source: ABS/ Colliers International ResearchDarwin Tourism Region DARWIN TOURSIM REGION TOTAL STAR GRADEDTotal Star Graded• Annualised average room rates in the Darwin $145 100% Tourism Region decreased marginally to $140 95% $142.05 over the 12-month period to March $135 90% Room Rate & RevPAR 2012; $130 85%• RevPAR increased 1.8% from $100.81 in $125 Occupancy 80% March 2011 to $102.65 in March 2012; $120 75%• Occupancy rates in the Darwin Tourism $115 70% Region increased one and a half percentage $110 points to 72.3% over the year. $105 65% $100 60% $95 55% $90 50% Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Average Room Rate RevPAR Occupancy Source: ABS/ Colliers International Research COLLIERS INTERNATIONAL | P. 6
    • RESEARCH & FORECAST REPORT | Q3 2012 | HOTEL INVESTMENTCity Comparison continued HOBART AND SURROUNDS TOURISM REGION TOTAL STAR GRADED $140 100%Hobart and Surrounds Tourism RegionTotal Star Graded 95% $130• Over the year to March 2012 average room 90% Room Rate & RevPAR rates in the Hobart and Surrounds Tourism 85% $120 Region increased from $129.25 to $132.00; Occupancy 80%• During this time period RevPAR decreased $110 75% 0.8% from $95.69 to $94.93; 70%• Annualised occupancy rates also decreased $100 in the region from 74.0% to 71.9% over the 65% 12-month period to March 2012. 60% $90 55% $80 50% Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Average Room Rate RevPAR Occupancy Source: ABS/ Colliers International Research Due to changes made by the Australian Bureau of Statistics (ABS) to their geographic framework for survey data, the regions covered in this report have changed slightly. COLLIERS INTERNATIONAL | P. 7
    • RESEARCH & FORECAST REPORT | Q3 2012 | HOTEL INVESTMENTOutlookDespite the strong Australian dollar, there are signs emerging that the growth in outbound travel 522 offices inby Australians is moderating. We anticipate that this will continue over the next few years 62 countries on(especially if the value of the Australian Dollar starts to decline), with the focus returning todomestic travel. According to the Tourism Research Australia, there were 75.1 million overnight 6 continentsdomestic trips taken by Australian residents during the year to June 2012. This figure is up 6% on United States: 147 officesthe previous year. Expenditure by Australians on domestic tourism was $50.8 billion for the year Canada: 37 officesended June 2012, an increase of 9% compared with the corresponding period last year. Latin America: 19 offices Asia Pacific: 201 officesFurther to the announcement that the Sydney Convention and Exhibition Centre will close at the EMEA: 118 officesend of 2013 until late 2016 for redevelopment, interim facilities will be established at Glebe Island.The Glebe Island Expo will provide 15,000 sq m of exhibition space, plus an extra 10,000 sq m for • $1.8 billion in annual revenuelarger shows, whilst the new 20-hectare Sydney International Convention, Exhibition and • 1.25 billion square feet under managementEntertainment Precinct (SICEEP) takes shape. Other venues expected to benefit from the • Over 12,300 professionals worldwidetemporary closure include Sydney Olympic Park, Moore Park, Sydney’s hotels, the AustralianTechnology Park, and Allphones Arena, which will all play an expanded role in hosting conferences,exhibitions and entertainment during the construction period.The pace of hotel development activity across Australia continues, with several new schemesconfirmed recently. In the Sydney CBD, the Singapore-based M & L Hospitality Group, the owners COLLIERS INTERNATIONALof the Four Points by Sheraton Darling Harbour, are seeking approval for a $150 million expansion. Level 12, Grosvenor PlaceThe plans comprise the addition of 231 rooms, 4,810 sq m of convention space and 5,775 sq m of 225 George Streetcommercial office space. Construction is expected to start in 2013, with completion in 2015. In Sydney, NSW, 2000Western Australia, Crown Limited has finalised an agreement with the state premier to open the TEL 02 9257 0222Crown Towers Perth in 2016. The hotel will feature 500 rooms, restaurants, bars and convention FAX 02 9347 0710facilities. Also in Perth, plans have been announced for a 120 room, 4.5-star hotel to replace theFremantle Myer store. The department store will close next year, with the building owner SironaCapital reportedly in talks with potential hotel operators. In addition to activity in Western Australia,Crown Limited has now signed an exclusive dealing arrangement with Lend Lease for thedevelopment of a luxury hotel at Barangaroo in the Sydney CBD. Building approvals will still be RESEARCHERrequired from the New South Wales Government once a concept is agreed upon. Nora FarrenWe expect investment activity in the sector to continue at a strong pace over the remainder of the Director | Researchyear, with a number of major hotel assets currently on the market. Being advertised with TEL 02 9257 0289residential conversion potential is The Mercure Sydney Potts Point (formerly The Crest Hotel). FAX 02 9347 0789The refurbished 4-star hotel is managed by Accor and owned by Australand. It has 227 rooms, a EMAIL nora.farren@colliers.com60 bay basement car park, as well as conference and restaurant facilities.In what will be the first transaction of a major hotel in Tasmania for about six years, the LeisureInn Hobart Macquarie is for sale. The 10-storey hotel is located in the Hobart CBD and comprises131 rooms. A major refurbishment was completed in 2010/11 and the asset is available with Colliers International does not give any warranty invacant possession providing potential for rebranding and repositioning. Also on the market is the relation to the accuracy of the information containedPark Regis City Centre in the Sydney CBD. Located opposite Hyde Park, the 3.5-star hotel has 122 in this report. If you intend to rely upon the information contained herein, you must take note that therooms, a rooftop swimming pool and parking for 39 vehicles. The last refurbishment was information, figures and projections have been providedcompleted in 2008, and the property is currently managed by the StayWell Hospitality Group. by various sources and have not been verified by us. We have no belief one way or the other in relation to theSingapore-based Lasseters International has listed for sale its Cypress Lakes Resort in the Hunter accuracy of such information, figures and projections.Valley and its four Golden Door branded health retreats across Australia. The Cypress Lakes Colliers International will not be liable for any loss orresort is situated on approximately 100 hectare of land and comprises extensive conference damage resulting from any statement, figure, calculation or any other information that you rely upon that isfacilities across four venues, leisure facilities and an 18-hole golf course. Guest accommodation is contained in the material. COPYRIGHT - Colliersprovided through the management rights of circa 125 strata titled villas, currently branded the International 2012.Grand Mercure Apartments. The property also encompasses two development sites of 9.1 and 3.2hectares.Overall, we have continued to see growth in revenue across most of the major hotel markets inAustralia during the first three quarters of the year. Perth and Darwin, followed by Cairns andBrisbane in Queensland, have led revenue growth. Sydney continues to achieve one of the highestoccupancy rates (at approximately 84%) in Australia, but rate growth in 2012 on a year-to-datebasis has been disappointing. Similar to Melbourne, current occupancy levels suggest theopportunity for further rate growth in 2013, but this will ultimately be dependent on macro-economic factors and shifts in global economic sentiment. Accelerating success.www.colliers.com.au/research