Hotel transactions across the country are still occurring despite trading conditions being significantly impacted by coronavirus, JLL Hotels & Hospitality says.

Since the onset of the current crisis, JLL Hotels & Hospitality group have settled on two hotel transactions, the Holiday Inn Melbourne Airport and Ibis Melbourne Little Bourke Street, while also having agreed to terms or exchanged on another three hotel assets in Australia.

JLL Hotels & Hospitality Group Australasia CEO Craig Collins said the three most recent deals- totalling $150 million - all occured at different price points and markets.

At a glance: 

• JLL Hotels and Hospitality Group believes the future looks bright for Australia's hotel sector, despite the pandemic. 
• Since COVID-19 began, the group has settled on two hotel transactions and agreed to terms or exchanged on another three hotel assets.
• JLL expects transaction activity to pick up considerably towards the end of 2020 and into 2021 as divestment strategies are activated, providing pent up investor demand with much wanted opportunities.

“Whilst we can’t talk about them yet due to confidentiality, we do note that two of the three buyers had existing Australian hotel investments, with two of them also being based offshore," he said.

"This reflects how investors perceive the strength of the Australian hotel market and its prospects of a very positive future."

Mr Collins said the group's national brokerage team had received numerous from investors "across the world" throughout the past month seeking out Australian hotel investment opportunities.

"Some are obviously keen to buy at a lower cost base considering the crisis, however others are less focussed on price and just hoping the current situation frees up some prime CBD hotel assets so they may finally be able to gain entry into such tightly held and highly sought-after markets," he said.

"Many investors have been trying to buy prime hotels for years, especially across our capital cities however just can’t get a foothold. 

"They feel this could be the opportunity they’ve been waiting for."

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ibis Little Bourke Street in Melbourne. Source: JLL 

JLL's national transaction activity reached $1.9 billion across 43 deals in 2019, with the year characterised by a lack of investment grade assets coming to market in the major capitals and higher liquidity amongst smaller assets in metropolitan and regional locations.

The firm's original transaction volume forecast for 2020 was $1.3 billion due to an expectation that the market would become even more tightly held as existing major owners, happy with their investments, continue to hold long term.

It has since been revised to $500 million.

JLL Hotels & Hospitality Group Executive Vice President Peter Harper told WILLIAMS MEDIA investors recognised the current situation for what it was, meaning it was not impacting how they have always viewed long-term prospects of the Australian hotel market

“They acknowledge the pain the market has and will experience in the short term but also see the potential for a speedy recovery relative to other countries," he said.

"The way that our governments have put the country on the path to economic recovery has been the envy of the world.

"Furthermore, the underlying strength of domestic tourism and the potential for some of the 10 million Australians who travel to and spend $54 billion overseas each year to be diverted to domestic markets is a huge short-medium term opportunity, as is the way inbound markets are likely to view Australia as one of the safest places to travel moving forward.

“Ultimately, there’s every likelihood that the Australian hotel market will be in a better place in a few years’ time than what it was pre COVID-19.”

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