[+] ‘Swift’ Recovery for Sydney Hotels as Record Year Beckons

There is barely an empty bed in any hotel between the Sydney CBD and Parramatta for February 23 to 27 unless you willing to pay north of $700 a night. The impact of Taylor Swift’s concert, the likes of Beyonce and even the Matildas are poised to push the hotel sector skywards into positive territory this year. However, Sydney is already making a swift recovery, recording results among the best in the country, according to a Colliers/STR report released this week. For 2023, occupancies averaged 78.3 per cent with an average daily rate of $312 and revenue per available room at $245—in December it went up again to 81.3 per cent occupancy, ADR was $373 and RevPAR at $303. Colliers head of hotels Australia Wales said the market had bounced back more strongly than many in the sector anticipated. “Sydney is performing extremely strongly, it’s probably the best performing hotel market in the country,” Wales said. “Assets are performing really well ... increasing event demand from people coming out of Covid is still showing a willingness to travel for experiences and events. “That is particularly true for music and sporting events as we will see when Tay Tay arrives on our shores—if you look at the forward demand for that month, it’s quite phenomenal. “So anything that increases the ability to host these large-scale events is positive, particularly close to the city but Sydney Olympic Park does a fantastic job hosting larger events out there.” The NSW government hopes to boost the economy in other parts of Sydney, lifting the “archaic” Sydney Cricket Ground precinct concert cap from an average of four events a year to 20. The announcement made on Wednesday follows an eight-month community and stakeholder process and is expected to inject a further $120 million into the state’s visitor economy. ▲ Of the 20 major events per year in the SCG precinct, two will be permitted to operate as 10-hour festivals, such as Wave Aid, ending at 11pm. For surrounding hoteliers this is welcome news, including IHG Hotels and Resorts and Pro-invest Group, which opened Hotel Indigo Sydney Potts Point, a 105-room offering, in November. Pro-invest Group APAC chief executive Jan Smits said the hospitality industry plays a pivotal role in extending the allure of these events. “The recent Taylor Swift and Beyonce effect, observed in cities worldwide, highlights the significant economic impact of events on the local economy,” Smits ayd. “So, the recent decision by the NSW government to lift the SCG precinct concert cap is a very welcome development for the city, residents and visitors; and will certainly open up opportunities for the industry. “Hotels, restaurants, and bars near the SCG, and beyond in the case of large concerts, will absolutely see increased demand during and around concert dates, translating into higher occupancy rates and generally higher room rates. “And this will factor into development opportunities too, as it creates an additional, sustainable market driver that helps investment numbers stack up.” ▲ Taylor Swift’s Sydney dates have all but sold out hotels in the NSW capital. However, the allure of concerts and immediate changes might not be enough to turn decision-makers in favour of developing or buying hotels, just yet. Wales said hotel values at a broad level could increase but whether at a micro level the changes would seed more hotel developments in that vicinity remains to be seen. “The challenge, living not too far from there, is competing with residential so I don’t know whether a hotel will be more feasible just because of that demand compared to residential prices in the area,” the Colliers head of hotels said. “There’s a lot of investment going into different parts of the city which is supporting the long-term fundamentals of the sector and everyone is pretty positive about the outlook for Sydney’s hotel market. “Generally, deals are taking longer at the movement thanks to the rapid rise in interest rates.” After a hiatus of visitors and development applications during the pandemic, hotels are back on the cards and performing strongly for investors and hoteliers alike. For IHG Hotels &amp; Resorts, its a matter of when the time is right for its Double Bay InterContinental, which was tipped to have transacted for more than $210 million last year. ▲ The InterContinental Hotel Double Bay was put on the market by Melbourne developer Paul Fridman and Piety Group’s Bilal El-Cheikh in January, 2023. “It is normal practice for hotel owners to review their portfolio and put properties on the market when the conditions are right,” an IHG spokesperson said. “The hotel management remains in place, and IHG Hotels &amp; Resorts will continue to operate the hotel as InterContinental Sydney Double Bay. “We would look forward to working with any new owners if and when that sale occurs.” Nearby, Marriot International revealed a new-build planned for Pitt Street , a 314-room Moxy branded hotel announced in December. KKR, Futuro Capital and Marprop Real Estate Investors will spend $60 million refurbishing the Sofitel Sydney Wentworth ahead of a spring 2024 relaunch. Mulpha is also expected to move ahead on a 17-storey, $200-million hotel in Chinatown after winning approval in September. Anson Group took the brakes off its 16-storey development in Haymarket retouching its pre-pandemic plans in September which are still under assessment. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] ‘Swift’ Recovery for Sydney Hotels as Record Year Beckons

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