Australia's hot hotel streak predicts strong 2016

Last month was a good one for hoteliers in Sydney, with occupancy rates rising to 91 percent and room rates up almost eight percent to $235 a night, according to stats published by STR Global in the Australian Financial Review. Notably, these numbers are the highest for November in 20 years. 

The paper credits the rise in occupancy to a weaker Australian dollar, an increase in aviation capacity and rising numbers of overseas visitors. Sydney got more than half of the 7.1 million overseas visitors who arrived in Australia during the first half of the year. These numbers, the paper notes, were up 6.6 percent on the previous 12 months, according to Tourism Research Australia. 

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In November, demand for hotel rooms in Sydney rose 2.9 percent, while supply of new hotel rooms increased only 2.1 percent.

Simon McGrath, chief operating officer of Accor Pacific, the largest operator of hotel accommodation in Australia, said that Sydney was emerging as one of the "strongest tier-one city markets worldwide." Rudolf van Dijk, general manager at the Four Seasons Hotel Sydney, noted that November was a record month for the hotel's catering and events business. 

What this means for investment
Sydney's record November performance will reassure hotel investors and developers who have spent billions on hotel investments in the city in the past two years.  

Just last month, JLL Hotels & Hospitality Group chief executive, Australasia, Craig Collins told the Sydney Morning Herald that Sydney's strong hotel scene has corresponded with one of the most active periods the Sydney hotel investment market has ever experienced, with the sale of The Westin Sydney, Hilton Sydney, Sofitel Wentworth, Sheraton on the Park and Four Seasons Hotel Sydney all taking place in the span of a little over two years. "Global investors now perceive Sydney the same way they do Paris, New York, London and Hong Kong," Collins told the paper at the time. "They see Sydney as having excellent fundamentals and a very positive growth outlook."

Days later, investment bank Moelis Australia Asset Management and hotel investor Nelson Meers Hotel Group began seeking cornerstone investors ahead of the float of a new "pub fund" next year that is reportedly looking to nab the Redcape Hotel Group. The acquisition could involve the purchase of 20-odd properties.

Earlier this week, the Banksia Hotel was purchased by a Singaporean group for $13.5 million, one of several notable recent sales, including the Woolloomooloo Bay Hotel and the soon-to-be-reopened Newport Arms Hotel purchased earlier this year by Justin Hemmes for an estimated $46 million.

Ray White’s Andrew Jolliffe said that his company has sold more than 25 gaming hotels recently, including the Belmore, Padstow and Panania Hotels. "This remains the most active, most aggressive and most robust of sectors within the national hotel landscape,” Jolliffe told the Australian.