2023 Hotel & Tourism Update

Throughout 2023 the CIVIC MJD team has valued various hotels, serviced apartments and tourism related specialised properties on behalf of major and specialized banking clients. These included development projects in the Sydney CBD and Parramatta CBD for proposed brand-new facilities and refurbishments.

Our research shows that the Australian hotel and tourism property segment is in a stage expediated post COVID 19 recovery being driven by the leisure tourism sector increased demand in the MICE (meetings, incentives, conferences, and exhibitions) business sector. The recovery is further highlighted by the substantial rebound in passenger traffic at major airports in Sydney and Melbourne, indicating a strong resurgence in air travel.

In Sydney’s Centre this has resulted in significant improvements in Occupancy Rates, Average Daily Rate and Revenue Per Available Room. For example, June Q 2021 in Sydney’s Centre reflected occupancy rates of 52%, Average Daily Rate of $218 and Revenue Per Available Room of $112. However, June Q 2023 witnessed increases to Occupancy of 73%, Average Daily Rate $284 and Revenue Per Available Room of $207. This shows significant post COVID 19 recoveries on track to reach and exceed pre COVID 19 Revenue Per Room metrics and where occupancy rates should hover between 80% and 90%.

2022 and 2023 has seen good investment activity including activity focused on assets with aspirational qualities and those offering value-add potential such as refurbishments, particularly in line with significant delays in new projects due to rising construction and financial costs. While domestic investors are the primary drivers of these investments, there are transactions involving overseas capital.

Selected 2022 and 2023 transactions include:

  • The Old Grace Hotel, Chippendale: refurbished five star hotel sold for $61,800,000 showing rate per room of $895,652. The property was sold to the high-net-worth Karim family being the fifth acquisition in a national hotel portfolio estimated to have a value of circa $270,000,000.
  • Novotel Sydney Parramatta & Courtyard by Marriott, North Ryde: 194 room and 196 room older four-star hotels divested in one line to local investors for $109,000,000 showing a combined rate per room of $279,487 and a reported initial yield of 4.4% which is considered sharp and advised to be above valuation. The buyer of both was Huangs’ Silversea Investments, which also owns the Holiday Inn Sydney Airport hotel at Mascot, Royal Pacific Hotel at Lane Cove and Mercure Sydney Parramatta.
  • Hunts Hotel, Casula: Older suburban Western Sydney hotel providing 140 rooms sold circa September 2022 for $42,700,000 showing a rate per room of $305,000 and an initial yield estimate of 5.85%. The property was purchased by Laundy Hotels Group, a prominent pub and hotelier with views of extensively refurbishing the improvements.
  • Ridges, Sydney Harbour, The Rocks: situated adjacent Sydney harbour providing for 176 rooms sold circa September 2022 for $100,750,000 showing a rate per room of $572,443. Comprises of two leasehold buildings including an eight-level heritage building accompanied by a six level 1980s development. there is a rooftop pool which provides a view profile over the Sydney Harbour.

The Civic MJD valuation team are consistently undertaking hotel, tourism, and specialised valuation assignment on behalf of major and specialised lenders. Clients are encouraged to reach out to the team to discuss any valuation requirements.