Outlook for the Canberra hotel market is positive: Colliers

Outlook for the Canberra hotel market is positive: Colliers
Outlook for the Canberra hotel market is positive: Colliers

Average room rates and occupancy levels largely in line with those reported last year for the Canberra hotel market, according to Colliers International’s latest report.

The ACT hotel market continues to be tightly held with just three significant hotel transactions since late 2015, being the Best Western Tall Trees, Crowne Plaza Canberra and the Clifton Suites.

The sale of the Crowne Plaza Canberra was part of the property sale of Eureka assets to SB &G Hotel Group in late 2015.

There has only been one major transaction for year to date 2016 being the Clifton Suites on Northbourne Canberra, according to the Colliers report.

Facilimate together with Perth-based investment group Ascot Capital acquired the 153-room Clifton Suites hotel for a reported $65 million. This transaction represented one of the largest hotel transactions in Canberra since the global financial crisis.

The Canberra Airport has experienced declines in passenger numbers since 2009-2010, with 2015-16 being the first year that the airport has recorded positive growth (of 0.4 per cent).

“We highlight that historically the Airport has only catered for domestic traffic but Singapore Airlines has commenced direct services operating from Canberra to Singapore and Canberra to Wellington as at late September 2016. These direct flights will undoubtedly assist demand for Canberra hotels.

“For August 2016 YTD, we note that the Canberra hotel market has recorded occupancy levels of 72 per cent for YTD August 2016 (down marginally at 0.6 percentage points), average room rates of $162 (up marginally at 0.1 per cent) and RevPAR over $117 (down marginally at -0.8 per cent),” the report stated.

Click to enlarge

Outlook for the Canberra hotel market is positive: Colliers

Data from Colliers Edge highlights increased tenant activity which has seen a steady decline in the headline vacancy rate from 15.4 per cent in January 2015 to 13 per cent in July 2016 as recorded in the latest Property Council figures.

Vacancy in A and B grade stock is tightening significantly in Canberra with a number of town centres recording 0 per cent vacancy and the CBD with very limited options for potential tenants.

C and D grade conversely have increasing levels of vacancy, however a number of adaptive re-use projects will see this trend begin to reverse in the near future.

“We note that in particular the office vacancy level of A grade office space has been declining over the past three years, and hence it could be expected that corporate demand remains stable for Canberra hotels.

We highlight however that the Canberra hotel market is also heavily dependent on demand from government activity and demand is influenced by parliament sitting weeks and election cycles,” the report stated.

Click to enlarge

Outlook for the Canberra hotel market is positive: Colliers

There have been two new hotel openings in the past year including the 120 room Little National developed and operated by Doma Group which opened in early September 2015 and the new 191 room Vibe Hotel at Canberra Airport.

“We highlight that there is limited additional new supply anticipated for the Canberra hotel market, especially in comparison to other key hotel markets around Australia,” the report states.

In mid-June 2015 an announcement was made that the ACT government had allocated $5.4 million over two years to the refurbishment of the National Convention Centre.

This refurbishment is currently taking place and the final component of the refurbishment program will be completed in January 2017.

Early planning is also being completed for the construction of a new multi-purpose sporting stadium and entertainment centre to cater for between 20,000 to 30,500 seats.

The project is not anticipated to commence until mid-2020 with construction not anticipated to be completed until mid-2024.

Click to enlarge

Outlook for the Canberra hotel market is positive: Colliers

The Canberra market has traditionally been dominated by local players, however the purchase of the Abode in October 2014 by a Melbourne based fund manager, together the with the recent transaction of the Clifton Suites on Northbourne (to Facilimate together with Perth-based investment group Ascot Capital) suggests that there may be greater ownership diversity in the future.

Colliers International is not aware of any open market campaigns for any Canberra hotels at present apart from part interest in a hotel in Braddon.

STR data supports that the Canberra hotel market performed well in 2015, up significantly from the lows of 2014, and has continued to be stable in YTD August 2016, performing well despite the recent supply additions.

With only minor new supply anticipated for the future, Colliers anticipate that the Canberra market should be stable, supported by demand from corporate, government and domestic tourism sources.

Tags: 
Canberra Colliers International

Comments

Be the first one to comment on this article
What would you like to say about this project?