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07 Apr

Hotel investment welcomes higher visitations

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The Radisson Sydney hotel has been upgraded under the Blu brand. Photo: Mark HeriotHotel investment is tipped to escalate in the coming year as investors seek to take advantage of the growth in overseas and domestic tourism in a market that is deemed under-supplied.

Development will also increase as operators look to introduce new brands to the sector as well as upgrade existing sites to cater for the up-and-coming traveller that expects technology to be part of the standard room rate.

The owners of the Radisson chain, Carlson Rezidor​ has recently completed an upgrade of its Radisson Blu brand in its Sydney, O’Connell Street property and is looking for new sites for the more “agile” Radisson RED brand.

Carlson Rezidor has been in takeover talks with conglomerate HNA Group, which consists of six core areas of business, aviation, holdings, tourism, capital, logistics and eco-technology, with annual revenue of US$25.6 billion.

The HNA Group is expected to acquire the hotel group by the end of 2016.

Thorsten Kirschke​, president of Carlson Rezidor Asia Pacific said the group has significant growth ambitions for Australia and New Zealand and the deal will ensure new levels of investment across the region. Also, significant plans are being formulated to make the group’s hotel brands more contemporary and relevant to better meet changing consumer tastes.

He said the Radisson RED brand is proving an interesting investment proposition for wealthy Chinese families who want to pass on some of the wealth to the next generation through hotel ownership.

The brand offers a range of communal areas with wifi connectivity and a bar/lounge where guests can interact as opposed to a quieter, more traditional hotel bar/lobby area.

On a recent trip to Sydney Mr Thorsten said he believes Australia remains a highly compelling hospitality market given the record occupancy rates and significant shortage in room supply.

“In addition, hotel companies can no longer look at just the hub and spoke structure in the ‘Big 5’ Australian anchor markets,” he said.

“Carlson Rezidor has noticed 80 per cent of Australian hotel inventory is small to mid-scale hotels.

This positive outlook has been reinforced by the latest Deloitte Access Economics Tourism and Hotel Market Outlook, which has identified that growth in leisure travel to Australia has seen international visitor numbers surge 10 per cent in the year ended June 2016.

That was the fastest rate of growth since the mid-1990s. Australians’ desire for “staycation” has also increased considerably.

According to the report, in the past year, international visitor expenditure has grown by 17.6 per cent, more than double the 7.9 per cent average of the past five years. At the same time, the number of Australians travelling domestically is growing at its fastest pace since formal records began in 1998 (7.6 per cent).

Lachlan Smirl​, Deloitte Access Economics partner, said the growth tourism is posting – and the impact that’s having on activity across the economy – is a very clear sign the transition that needs to take place and its contribution to the Australian economy is occurring. A three-fold out-pacing of growth across the economy is no mean feat, Mr Smirl said.

“What is remarkable about the tourism growth we are observing is that it is being achieved against a relatively soft economic backdrop – both internationally and here in Australia. Yes, the Australian dollar remains relatively favourable, and the sustained growth of the middle class in Asia continues to buoy international travel. But as income growth in China slows, travel to Australia is in fact accelerating. And this pattern is observable across a number of markets.”

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