Tourism resurgence sparks boom in new hotel builds, refurbishments

The hotel was bought by a fund managed by global investment firm KKR in partnership with Futuro Capital and Marprop Real Estate Investors in 2021 for $315 million. Accor is the hotel’s operator.

Sam Panetta, general manager, Sofitel Sydney Wentworth, said the business was excited to reignite and “add layers to the history of this landmark hotel”.

“The repositioning of the Sofitel will enhance the luxury services on offer and reinforce the value of the brand,” Panetta said.

Led by architecture and interior design firm Fender Katsalidis, the refurbishment of the heritage-listed property will include a comprehensive redesign of all 436 guest rooms and suites, corridors, club lounge and lobby areas. It will also include a new dining precinct, with a range of restaurants and bars.

Loading

In Melbourne, the StandardX hotel is the latest “lifestyle hotel” – a smaller, boutique-style hotel – to open early next year. Located in the city fringe suburb of Fitzroy, the 125-room hotel will reflect the rebellious spirit of the suburb’s “heyday” of the ’70s and ’80s.

The hotel will have an elevated loft with a fireplace, columns wrapped in macrame by local artist Sarah Smalltown, a rooftop Mexican restaurant and minimalist rooms where a millwork ledge doubles as a writing corner and open closet.

It comes as hotel operators are being pushed to change the way they run their properties, in response to new demands from guests. Increasingly, guests expect to have access to offerings such as bikes to see the city, along with fresh local produce or the latest technology.

Gone are the days of pilfering the shampoo bottles from the bathroom; now, guests want to see pump packs and organic sheets that are high in sustainability. Welcome to the new age of hotels where the guests want an experience they will remember.

The hotel sector was one of the hardest hit by the global pandemic and the enforced lockdowns and border closures in mid-2020, but with the opening up for tourists, it has started to gradually emerge as one of the strongest growth sectors.

Australia’s hotel sector attracted about 14 per cent of the $US9.1 billion ($A13.86 billion) funds deployed during the first nine months of 2023.

Nick Lower, state director of hotels at Savills Australia and New Zealand, said the outlook for the Australian hotel sector in 2024 remains positive, fuelled by the strong tourism rebound late last year.

“Ongoing pent-up demand for accommodation throughout 2023 underpins hotels as a robust asset class and has made them even more attractive to investors,” Lower said.

Loading

“Australia is regarded as a safe haven in the Asia-Pacific hotel market, backed by our favourable demographic tailwinds and rapid tourism recovery. Offshore investors continue to take a keen interest in Australian hotels, and it now ranks third as an asset class in terms of investor market share across the Asia Pacific region.”

Accommodation Australia chief executive Michael Johnson said there are 20,000 new rooms coming on line and more than 200 hotels opening nationally since the end of 2020.

Johnson says the latest data from STR, which provides analysis of market data on the hotel industry worldwide, shows occupancy rates are back to pre-pandemic levels, and he’s confident the sector will also see the benefit of tour groups returning from China, after Australia was put back on China’s list of approved outgoing group travel destinations in August 2023.

“Hotel operators across the country – but particularly in our gateway cities – are seeing occupancies rebuilding to pre-pandemic levels,” he says.

“The recovery of the sector after COVID-19 is phenomenal, and we expect this to continue into 2024 as international tourism increases,” Johnson says.

In November, Sydney’s hotels were 88 per cent full, with an average daily room rate (ADR) of $333 per night; Melbourne was at 76.5 per cent with an ADR of $227 per night. The lower rate was attributed to the large number of new hotels that have opened or coming up in the coming year.

In Brisbane, where the Amora Hotel Brisbane has unveiled its $30 million transformation, the STR data shows occupancy at 79 per cent, Perth was at 86 per cent and Adelaide was 82 per cent full.

The new Amora Brisbane has 296 guest rooms, across 14 floors, with the top two floors featuring Amora’s premier rooms and suites. Facilities include an elevated outdoor pool and deck, with a fitness studio and sauna, and 11 revived conference and event spaces.

IHG Resort and Hotels’ fast-growing Hotel Indigo has opened a new hotel in Potts Point behind the famous Coca-Cola sign in 2023, and it will open a new hotel in Sydney at the City Tattersalls Club in 2024. It also re-branded a hotel in Melbourne in Flinders Lane in 2023. The brand offers food from local restaurants, artwork and interactive general gathering areas for guests.

Marriott International has been one of the busiest operators, opening the Le Meridien, which is its 10th hotel in the Melbourne CBD and its 42nd in Australia, New Zealand and the Pacific. Another 24 are in the pipeline in Australia, including a W Hotel that has opened in the Ribbon building at Darling Harbour, Sydney.

Its latest boutique hotel is the Moxy Sydney Pitt Street, scheduled to open in August 2025. It is expected to feature 314 rooms in Sydney’s CBD, close to retail hot spots such as Pitt Street Mall and Martin Place.