The Australian mid-markets accommodation asset class (≤ A$40 million) has shown strong resilience through 2024 in comparison to other commercial investment markets with transactional volumes only slightly down on previous years.

In a first for the industry, JLL’s Hotels & Hospitality Group has undertaken a survey of investors in this sub-sector to get a detailed understanding of current requirements and what to expect moving forward.

Respondents to JLL’s survey own in excess of $5 billion (approx.) in mid-market assets, and they want more! The theme of existing owners in the mid-markets accommodation sector looking to amalgamate more assets was a standout, with 87% of those surveyed looking to add to their existing portfolio. 

“Asset amalgamation in the mid-market sector is becoming increasingly common. Around 75% of transaction volumes in 2024 were from purchasers who already own one or more hotel assets, and this is a trend we expect to continue,” said Andrew Langsford, Senior Vice President – Investment Sales.

“Buyers in the mid-market space are becoming increasingly sophisticated as we see an “institutionalisation” of the market, in what has historically been a ‘mum and dad’ or fragmented ownership profile” he continued.

In what is expected to continue to drive activity in the sector, 60% of respondents are looking to purchase an asset in the next six months, while 80% want to buy within the next twelve months. 

“One of the key takeaways is that there is significant capital ready to pounce in this asset class,” said Gareth Closter, Senior Vice President – Investment Sales. 

“In comparison to the larger-scale institutional hotel space, the mid-markets sector has been highly transactional, and we expect this to continue and intensify, translating into increased deal flow in the coming months and into 2025,” he continued.

The Australia wide mid-market sector has recorded approximately A$400 million in total transactional volume (YTD September), 11% down on 2023 (YTD Sept), which is considered extremely healthy in comparison to other CRE capital markets sectors.

To put that in perspective, total transaction volumes for the overall Australian hotel market is currently 40% down year-on-year (YoY), sitting at A$961.6 million as at YTD September.

Whilst there have been fewer mid-market transactions recorded YoY, (23 in YTD 2024 compared to 30 in the same period last year), they have had a higher average sale price, up 16% to almost $17.5 million. This was confirmed in the survey results with investors identifying scale (both ticket size and number of rooms) as a key factor when looking to purchase.

Year-to-date mid-market transactions have been strongly weighted to New South Wales (40%), Western Australia (22%) and Tasmania (13%), which is supporting a slight drop-off in activity across the other states. According to survey respondents we anticipate the majority of future activity will be across the eastern seaboard states, led by New South Wales and Queensland and followed by Victoria.

“Throughout the year, our specialist team has been very active in selling a number of notable mid-market assets, attracting significant enquiry levels and strong bids from a number of different buyer types. Notable examples include the successful sales of the Great Eastern (A$40 m) and Flag Motor Lodge (A$17 m) in Perth, Mantra Bathurst (A$13 m) in New South Wales, and The Sebel Melbourne Ringwood (A$32 m),” said Nick MacFie, Vice President – Investment Sales.

The findings by JLL’s Hotels & Hospitality Group provides an investor sentiment snapshot into the mid-markets segment and is invaluable information to those in the market.  The report shows insights such as what geography buyers are looking at, what drivers are most attractive and other useful insights such as yield expectations.

To request a copy of the report please reach out to our national team.

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