Hotel investment in Tasmania could surpass $500 million

In the Australian island state of Tasmania, hotel investment in and around the capital city of Hobart could reach $500 million if several proposals get off the ground to meet the "soaring demand" from visitors to the state, The Mercury is reporting.

With the coming summer poised to top the record tourist numbers during the last peak season, developers are "in a race" to keep up with visitor growth. Six major hotel developments are in the pipeline for Hobart, and an estimated 1,000 beds already have, or are close to receiving, development approval. Construction is already under way on three hotel projects, including projects at Macquarie Wharf, the ICON centre’s Crowne Plaza and Singapore-based Fragrance Group’s 296-room Macquarie St deve­lopment. 

Proposals for another Macquarie St site, a Vibe hotel in Argyle St and a Parliament Square project are all in advanced stages. Outside the capital, Federal Group has flagged a luxury Port Arthur resort, Graeme Wood has proposed 40 rooms at his Spring Bay Mill and Jan Cameron is believed to be in discussions with a Danish architect to rebuild the Silver Sands motel on prime real estate at ­Bicheno.

At least a dozen more have been approved for the South and East Coast. With hotel building costs averaging $30 million – or about $300,000 per room – the South could be looking at investment of more than $500 million in the next three to five years. 

“There’s a lot of hotel [chains], investors and entrepreneurs who are looking at Hobart accommodation opportunities at the moment,” Tasmanian Tourism Industry Council chief Luke Martin told the Sunday Tasmanian. “They haven’t come forward but they have sites in mind. We’re going to have a hell of a lot of cranes in the skyline for the next couple of years.”

Deloitte Access Econo­mics’ Tourism and Hotel Market Outlook for August described Tasmania as a “standout performer” with domestic visitor growth of 22 percent and international a “remarkable” 28 percent.

One of the report’s ­authors, Lachlan Smirl, said occupancy rates in Hobart averaged 77 percent but were as high as 90 percent on Saturday nights. Deloitte’s forecasts to the end of 2017 had Hobart pushing towards rates in Sydney and Melbourne, which both can hit the 90s midweek. “We’ve got occupancies pushing up to 81 percent for 2017,” Smirl told the paper. “Hobart’s not in that [Sydney and Melbourne] territory yet—90 percent on Saturday night is getting close to a full house, and if demand keeps growing at the pace we’ve seen, there’s going to be a need for more rooms.”