Impressive results have been announced by Ray White Commercial’s Between the Lines report, which divulges over $2billion in transactions across Australian hotels over the 2016/2017 Financial Year. The bulk of these sales were completed in Sydney and Melbourne including a number of high profile transaction of brands such as Hilton, Sheraton and Novotel, most notably to overseas buyer groups.

A favourable Australian dollar has resulted in more international visitors and strong employment in Sydney and Melbourne has boosted corporate travel. The Sydney market has been one of the standout performers due to an undersupply position over the last few years. However, in more recent times there has been an uptick in the room nights available.

Despite this, the average occupancy rate has remained elevated. The high occupancy levels have translated into improvements in average daily room rates (ADR) and as a result RevPAR (revenue per available room) has been elevated. Meanwhile a surge of new hotels in Melbourne has reduced its occupancy rates.

Notable Transactions 2016/17

Source: Ray White Commercial

For a full list of all 20 notable transactions click here to view the report

In Sydney, with peak occupancy in February/March and again in October/November, "The 12-month moving average has seen good results this year, peaking in March 2017 at 87.7 per cent where the prior years had been in the 86 per cent range," says the report. The new International Convention Centre may have an impact on Sydney’s occupancy rate, but large-scale events will most likely put upward pressure on hotel occupancies. The month of June is consistently the low in the market, with the current ADR recorded at $207.20 in 2017 which is 5.6% up on the same period the prior year, which has seen RevPAR at $171.96.

In Melbourne, there has been an increase in supply. According to the Ray White report, "This increase as well as the rise in acceptance of Airbnb products particularly in the city fringe locations has put downward pressure on occupancy levels with the month of June 2017 recording 77.2 per cent, the lowest rate on record since June 2015.

Peak occupancy is recorded during the month of November, achieving an impressive 90.4% in 2016, above the prior high of 90.1% in November 2015 and 86.8% in November 2014. This high occupancy period can be attributed to the high profile Spring Carnival including Melbourne Cup which has all attention on city. Melbourne is home to a number of conventions, sporting events and theatre productions which drive tourism, while the robust employment growth in Melbourne over the past few years also emphasises the high need for business travel accommodation.” The current month of June 2017 is during the historic low of the year with ADR recorded at $174.11 and RevPAR at $134.46 which was similar to the 2016 and 2015 period.

Simon Manning, vice president of sales and marketing for the Langham Hospitality Group said it was expanding its Australian business:

• Refurbished its Sydney hotel near Barangaroo, room rates jumped 60 per cent in 2.5 years
• Signed a management contract in Glenelg, Adelaide, in a hotel by Lustro Group.
• Planning a $130 million renovation of its hotel in Melbourne's Southbank

"We believe Melbourne will be one of the great cities of the Pacific, there is huge potential," Mr Manning said, but “Australia is under supplied at the luxury end of the market.”

Source: Ray White Commercial’s Between the Lines report.

For more information including transaction details and other markets like New Zealand download Ray White Commercial’s Between the Lines report

To enquire directly with the authors of the report phone or email Andrew Jolliffe or Mark Bullock from Ray White Hotels 

See also:

The Australian hotel market continues to attract strong levels of foreign capital

Australia and Japan attract funding as their tourism markets deliver on growth​

Adelaide Convention Centre $397 million redevelopment complete