Year in review: Down Under is tops for hotel deals

2015 was a great year for Australia’s hospitality scene, with brands moving into new cities and transactions reaching impressively high numbers. Here’s a look back at some of the bigger deals of the year, and the numbers that explain why so many investors are keen to buy Down Under.

The Figures
Earlier this year, Matt Whitby, group director, research & consulting at Knight Frank Australia, cited four key draws for foreign investment in Sydney hotels:
1) growing short-term visitor arrivals
2) a rise in Chinese visitors
3) greater spending and longer stays
4) high occupancy and returns

Virtual Event

HOTEL OPTIMIZATION PART 2 | SEPTEMBER 10 & 24, 2020

Survival in these times is highly dependent on a hotel's ability to quickly adapt and pivot their business to meet the current needs of travelers and the surrounding community. Join us for Optimization Part 2 – a FREE virtual event – as we bring together top players in the industry to discuss alternative uses when occupancy is down, ways to boost F&B revenue, how to help your staff adjust to new challenges and more, in a series of panels focused on how you can regain profitability during this crisis.


All of these conditions were strong throughout 2015. Monthly short-term arrivals to Australia have been growing continuously since February 2013, surpassing 612,000 in June. The current trend estimate for short-term visitor arrivals is 6.16 percent higher than a year ago. The biggest growth in Chinese visitors to Australia has occurred in the past six years, with the annual number of short-term visitors more than doubling from 347,900 in June 2009 to 933,500 in June 2015. And in November, demand for hotel rooms in Sydney rose 2.9 percent, while supply of new hotel rooms increased only 2.1 percent.

Australia saw healthy RevPAR growth throughout 2015. According to CBRE Hotels' mid-year Australian Hotel Market Update, RevPAR grew by 3.4 percent across Australia's major hotel markets in the first two quarters of the year.

These strengths lead to continued high-level investment that continued the trend that began in late 2013. By September, Sydney had seen two hotel sales that reached AUD$450 million (USD$310 million) each: the Westin Hotel sold to Singapore developer Far East Organisation and Hong Kong's Sino Group, while the Hilton Hotel went to Singaporean investment house Bright Ruby. (More details on those below.)

The deals were not limited to Sydney: The northern Queensland city of Cairns was seeing a "revenue surge" in its hotel industry, credited to strong investments and a "thriving" tourism industry. JLL Hotels and Hospitality Group chief executive Craig Collins said most major hotels had shown RevPAR growth, with Queensland leisure markets displaying the strongest. Hotel sales – driven by Asian buyers – had reached nearly $2 billion in the first half of the year, up 150 percent. That included the Pullman Cairns International and Pacific Hotel Cairns both selling.

The Deals
In March, Australia-based Mantra Group Limited entered into an agreement to acquire Outrigger Hotels & Resorts Australia for $29.5 million, getting Outrigger Surfers Paradise; Outrigger Twin Towns Resorts, Coolangatta; Outrigger Little Hastings Street Resort & Spa, Noosa; and Boathouse Apartments by Outrigger Airlie Beach. As a result, Mantra Group launched a fully underwritten institutional placement to raise approximately $50 million to assist in funding the Outrigger acquisition as well as providing Mantra Group with additional capital to fund identified pipeline opportunities.

May was a notable month for deals: In the beginning of the month, Chinese investment group Bright Ruby finalized its ­largest ­Australian property acquisition with the purchase of the Hilton Hotel Sydney for $442 million.

Ascendas Hospitality Trust sold the Pullman Cairns International hotel, which it co-owned with TMG Developments, for $30.6 million to the Shakespeare Property Group.

At the same time, The Westin Sydney hotel was sold to a joint venture between Singaporean developer Far East Land and the Hong Kong-listed Sino Land Co. for $445.3 million. Far East Land is part of the sprawling Far East Organisation, which has purchased more than $1 billion of Australian real estate since the beginning of last year.

Singapore-listed Frasers Hospitality acquired the the Sofitel Wentworth in Sydney for an estimated US$176 million in May, marking the company’s first acquisition since its initial public offering in June of 2014, and its third hospitality asset in Sydney.

By August, Singapore-based Park Hotel Group had inked a deal to manage an upcoming hotel in Adelaide, Australia. The A$175 million Park Hotel Adelaide will be owned by LGB Corp, a real estate developer based in Singapore—with an office in Adelaide. It will also be Park Hotel's first Australian outlet. Building is due to start in 2017, with completion set for late 2018. 

At the same time, U.S. REIT Host Hotels & Resorts and developer Plenary Group announced that they would put the Hilton Melbourne South Wharf Hotel on the market, offering their stakes in the asset (the U.S. group owns 75 percent and the local player 25 percent) as a package, allowing a new owner to take full control of the hotel. Pricing at the time was tipped at more than $250 million.

In November, Starwood Hotels & Resorts Worldwide announced plans to debut its Sheraton brand in South Australia with the signing of the Sheraton Adelaide. The hotel will be owned by the Makris Group, a South Australian privately owned retail property group. The 160-room hotel is slated to open in 2019.

By year’s end, M&L Hospitality announced that it would sell its $1.5+ billion Australian and New Zealand hospitality collection. The Singapore-based Kum family appointed Rothschild and UBS to market six hotel assets together, including Melbourne’s Travelodge Docklands, the Hilton Auckland, Christchurch’s Chateau on the Park, and Sydney’s Swissotel, as well as Sydney’s Sheraton Four Points and Melbourne’s Hilton DoubleTree. The sale is expected to command a record price for an Australian hotels portfolio, and the Australian is calling it the biggest sale process in local hotel circles for more than a decade.

And the deals seem poised to keep coming: AFR predicted that the next 12 months "will be the year Chinese investors also turn their attention to commercial property, in particular hotel investments and development." Global hospitality investment by Chinese could grow between 5 and 15 percent more than 2015 investments.

Suggested Articles

Many hotel owners will find themselves in the uncomfortable and unfamiliar position of deciding on a course of action for negotiating with their lende

The company intends to raise $100 million from investors to source mezzanine loan and preferred equity transactions in the hospitality sector.

The three-month deferral of debt service payments helped provide immediate relief for hoteliers struggling with closed or empty properties.