HOTELS REELING FROM VIRUS, FUNDS SQUEEZE
AUSTRALIA’S hotel market was hard hit over the past year with the level of planning, construction and the sale of hotels plummeting, compared with rival markets such as Europe, Asia Pacific and the Middle East which fared reasonably well.
The only market to perform worse than Australia over the 12 months to December was the Americas where the planning of new hotel construction dropped 39 per cent and the number of hotels under construction fell nearly 17 per cent.
In Australia, hotel construction dropped about 13 per cent, hotel planning decreased by 11 per cent and hotel transactions were down 10.7 per cent, according to STR research.
In comparison, the entire AsiaPacific region saw a 16.3 per cent increase in hotels under construction and in the Middle East planning of hotels shot up by nearly 3 per cent.
While banks refused to lend on Australian hotel construction and investment, there were several local transactions late last year, including the sale of the Sofitel Wentworth for $315m and the sale of the Chineseowned Primus Hotel also in Sydney for $130m. Other hotels remain under construction such as the Greatonowned W Hotel at Darling Harbour.
Despite the STR data, industry experts said the lack of construction of new hotels would lead to conversions of secondary hotels into build-to-rent apartments or major refurbishments of existing hotels.
JLL Hotels managing director Peter Harper said any slowdown was “symbolic of the Australian hotel market coming to the end of what is arguably an unprecedented supply cycle” and nothing to do with Covid.