Hotel Industry

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From hip lobbies with a coffee shop ambiance to shared living spaces linking guest rooms, more hotels are turning their focus to providing inviting community areas.
For corporate travellers, it may mean sending a few emails from a co-working alcove complete with power and USB outlets, while leisure visitors may linger around tables stacked with board games or post photos to social media from the lounging zones.
“Today’s travelers often place greater value on convenience, sense of place and community than they do on the traditional luxuries offered by hotels,” says David A. Black, Americas Hotels Lead, JLL Project and Development Services. “That’s one reason why hotel companies are developing so many soft brands that have an emphasis on communal areas with spaces and experiences that bring people together in new ways.” 
The forthcoming Tru by Hilton is just one of the growing number of hotel brands encouraging its guests to spend less time in their rooms and more in specially designed communal areas. Aimed at Millennials — or people with a “Millennial mindset” — who want to connect with other travelers, the hotel’s innovative space called “The Hive” embodies the brand. Instead of a traditional lobby, guests have access to four zones — work, play, lounge, and eat — all designed for interaction and engagement.
Moxy Hotels, Marriott’s new boutique hotel brand, offers an industrial-style lobby with fun games on hand, along with coffee and full-service bars. And while not everyone will fancy the hotel’s signature feature, a communal ironing nook, Moxy Hotels is banking on Millennials appreciating its fresh approach.
“Some of this communal space is nothing new,” says Lauro Ferroni, JLL’s Global Head of Hotels &amp; Hospitality Research. “Hotels have always had lobbies, pools, bars and restaurants. But now the design and features of these communal spaces are being driven by hotels wanting to appeal to younger travelers.”
Going beyond the idea of a pool and sun-loungers as an outdoor communal space, one New Jersey hotel, The Asbury, has created a perennial backyard barbecue zone with Ping-Pong tables, live music, craft beer (served from a converted VW van), and food trucks.
<h2>Getting travelers together</h2>
The growing popularity of home rental platforms, such as Airbnb and HomeAway, and boutique hostels is also driving hotels to find new ways to accommodate larger groups of friends and families traveling together.
Marriott’s mid-range brand Element, which is aimed at guests staying beyond a few nights, is testing blocks of private rooms built around a communal kitchen and living room. “Really it’s about a much more shared economy these days. It’s much more about socializing and a sense of community when you travel,” says Toni Stoeckl, a Global Brand Leader at Marriott, in an interview with KTLA earlier this year.
The challenge for hotels is designing their communal areas in a way that appeals to their target guests – and provides them the requisite amount of privacy.
“Although there has been a growing focus on the Millennial traveler, hotel brands can’t afford to ignore their more “seasoned” travelers,” says Black. “That’s why design solutions must be flexible enough to provide both communal spaces which appeal to the co-working, co-living generation as well as spaces which appeal to baby boomers.  It’s not a one size fits all approach.”
In addition, people traveling in a group have different needs and expectations to those traveling in a couple.
“When you’re traveling, the communal experiences could turn out to be the most memorable part of the trip,” says Ferroni. “Yet you’re also going to have a lot of people who will say right off the bat that they have no interest in trying something like this, whether they’re business travelers who need their own space to get the job done or leisure travelers who want some time on their own.”
<h2>Is communal the way forward?</h2>
With the concepts of co-living and co-working taking off, bigger and more innovative social areas in hotels could well be in the cards – especially for brands targeting younger segments of the market.
Within the U.S., Ferroni believes it’s a concept that will take root in the bigger cities.
“I think it’s going to gain traction in large gateway markets like New York, Miami, or San Francisco where you have a large share of people coming from Europe who might be more comfortable with this concept,” he says.
Hotel executives might not be sure whether this is the next big thing, speculates Ferroni, but he says that it would be foolish for them not to give it a try. “They’re looking at it from a trial-and-error standpoint. Large hotel companies that want to be innovative can’t afford to ignore the potential of shared spaces – even if Millennials are not their key audience.”
This article by Laura Agadoni was featured in <a href="https://www.jllrealviews.com/industries/hotels-take-a-fresh-look-at-communal-spaces/" target="_blank">JLL Real Views</a>.
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Hotels take a fresh look at communal spaces

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Property developer Sunland Group (ASX ) has acquired the popular 3-star Greenmount Resort in Coolangatta on the Gold Coast's southern beaches for $26 million (plus GST), the company said in a regulatory announcement.
The beachside property adjoining Greenmount Highland was bought as a going concern and the deal is expected to be complete by December this year. It will continue to operate as a resort pending future Council planning approvals, the announcement said.
The resort has 151 rooms and is a stone's throw from the Greenmount and Rainbow Bay beaches. It is also close to Coolangatta's retail and restaurant precincts and is 3.7 km to the Gold Coast airport.
"We see great opportunity on the southern Gold Coast, where the surge in urban renewal and investment is accompanied by a collective understanding that preserving the vibrant village atmosphere of these communities is fundamental to their success," said Sahba Abedian, managing director of Sunland.
“Our vision for this landmark site is to conceive an architectural outcome which complements the existing scale, character and beauty of Coolangatta, while contributing to its ongoing renaissance.”
There has been speculation that a new owner could demolish the old resort and create room to build two or three new buildings, adds the Courier Mail.
Sunland said earlier this year it had spent $40 million in site acquisitions through its first half, while reporting a dip in <a href="/expert-insights/buying/50978-sunland-secures-25-percent-returns-on-its-residential-development" target="_blank">first-half profit to $3.2 million</a> after taxes.
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Sunland Group buys resort in Coolangatta for $26 million

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The ACT-government’s goal of promoting Canberra as an international destination has received a boost with the completion of the Canberra Airport’s first luxury hotel.
The Bates Smart-designed Canberra Vibe Hotel, operated by Toga Far East Hotels, has a  circular form inspired by the geometry of Walter Burley Griffin’s Canberra.
The hotel has 191 rooms, including 12 suites over six levels and nine apartments. Other features include conferencing facilities, a restaurant and bar and lounges. 
The $50 million, 4.5 star hotel is close to the airport terminal and Parliament House and is part of a resurgence of new hotel developments in Australia.
Canberra Airport Group CEO Stephen Byron said the hotel’s completion was a key piece of the puzzle in attracting international flights. 
He said as the only 24-hour airport between Brisbane and Melbourne, Canberra Airport was strategically positioned to expand internationally and expected to draw its first international carrier in 2016.
“This hotel is on a key strategic site of great importance to the future growth of the airport and is why we held a major design competition to arrive at the perfect outcome,” he said.
“In terms of expanding internationally, it is a question of when not if. Our strategy is to connect to a key Asian hub and every day we get closer to that. We expect it to become a reality in 2016.”
Appointed to the project after winning the 2013 design competition, Bates Smart based the design around a dramatic full height circular atrium that draws references from Griffin’s plan for Canberra with its circular and radial geometries.
“We have created a unique destination for travellers to be, one that will attract visitors with its timeless design that combines circular and axial geometries to create a distinctive form, drawn from its context,” Bates Smart director Philip Vivian said.
“A signature space for the hotel is its striking black and white atrium rising above a large-scale ground floor entertaining space catering for intimate gatherings as well as large-scale events.”
Vivian said Bates Smart had a number of hotel projects on the cards, including a new hotel at Barangaroo in collaboration with the UK’s Wilkinson Eyre Architects.
“It’s no secret that new hotel developments have been scarce in recent years due to the expense associated with purchasing sites in Australia,” Vivian said.
“New hotel developments are on the increase and we’ve been looking at a number in the Sydney CBD. The economy here is performing well, stimulating business travel, and the lower dollar is attracting the tourist market. Consequently, hotel occupancy rates are up, stimulating the need for new supply.”
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Bates Smart unveil new Canberra Vibe Hotel, as new build hotel industry gains momentum

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The hotel industry was characterised by mixed fortunes in 2015, with the second half continuing the trend from the first, according to Deloitte Access Economics' Tourism and Hotel Market Outlook.
Sydney had the country's highest hotel occupancy at 88%, with a room rate growth of 8.8% annualised for the second half of the year, signalling that room rate growth expected to accompany such lofty occupancies is finally materialising.
Across Australia, room nights sold were up 3.3% from the 2.5% observed over the year to June. National room rates growth similarly accelerated over the second half of the year.
Fortunes were mixed across the major markets, with key outlook highlights:
- While rates in Melbourne grew 4.5% for the year, 93% occupancies in November were a record for the city
- Hobart, a market an eighth the size of Melbourne by turnover, recorded the same feat in the same month
- Queensland’s beaches posted the biggest gains in occupancy, with the Gold Coast and Tropical North Queensland recording increases of 3.0% and 4.8% respectively from a year earlier, although the latter was due to some properties being taken out of service for renovation
- Mining hubs lagged as supply increases combined with softening demand to drag both occupancy and room rates lower in Brisbane, Perth and, especially, Darwin
- Brisbane hoteliers, who had a good run during the G20 meeting at the end of 2014 with room rates at record highs, struggled to see growth for most of 2015
- Despite significant supply increases, the Darwin market effectively contracted 8.4% over 2015, as measured by total takings
- Canberra was the quiet achiever, where additions to supply masked 10% growth in room nights sold.
Hotel market outlook
Looking forward, 64 properties are due online before the end of 2018 across the nine major hotel markets analysed in the outlook. This represents a significant increase in the supply pipeline from Deloitte's August 2015 report, with the new room count up 12% in likelihood adjusted terms. Another 30 projects are mooted for regional hotel markets, although many are in the 50-room category.
Activity is not limited to additions in supply, with transaction volumes well up on previous years. Sixty-two existing hotel sales were recorded in 2015, with an aggregate value of AU$3.77bn, AU$1.2bn more than 2014.
Key Outlook forecast points, include:
- 8,650 rooms are expected to be added to the nation’s major hotel markets, and a further 3,900 in other regional markets, over the next two-and-a-half years, pushing supply higher at an average annual pace of 1.7%
- The supply growth outlook is led by Perth, with likelihood-adjusted expectations of an additional 1,900 rooms by the end of 2018
- Hobart has nine properties in the pipeline, and will undergo its own small boom in hotel construction, with room nights available increasing at 5.6% per year
- Over the next three years, supply growth is expected to be healthy, but more moderate, in Brisbane (4.1% per year) and Adelaide (4.0% per year)
- In Sydney and Melbourne, where 90% average occupancy is in sight, supply is still forecast to trail demand despite a number of high profile projects coming onto the market over the next three years
- Of any market, the relative growth prospects have improved most for Canberra given its hotel stock upgrades and refurbishments, and the expected arrival of direct international flights from Singapore and Wellington
- The projected national performance outlook remains one of demand growth (3% per year) outstripping supply growth (1.6%) and occupancies forecast to climb 2 percentage points to just above 71% by December 2018.
“The range of forecast performance across markets is widening as the sector’s growth drivers shift. With corporate travel following the nation’s economic transition back to the south east, so too is short stay accommodation demand, in turn putting further pressure on the already stretched Melbourne and, particularly, Sydney markets," Deloitte Access Economics partner Lachlan Smirl said.
“At the same time, a resurgent domestic leisure segment is buoying demand for holiday hot spots from Tasmania to Queensland’s beaches and emerging Asia continues to propel markets successful in luring these high growth segments."
The Gold Coast is projected to post the largest occupancy gains leading up to the 126,000 visitors expected for the Commonwealth Games in April 2018.
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Sydney leads hotel occupancy, rest share mixed fortunes in 2015 second-half: Deloitte study 

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GUEST OBSERVER
Fears of a hotel glut in Perth are overstated, with more than 50% of the city’s current supply becoming potentially obsolete in the not too distant future and no rush sell-offs.
More than 50% of the current 6,710 existing rooms in the Burswood, Perth and West Perth areas were over 30 years old – and 32% over 40 years old. 
Besides the 48-room Como The Treasury hotel and The Richardson in West Perth, the city hasn’t received a new five-star hotel for some 30 years, however the tide has turned with a surge of development under construction across the city. 
Rather than an oversupply issue, we’re seeing a market shift – with new projects offering a range of high quality accommodation options across the city. This will take Perth in line with the other main capital city markets across the country.
The steady trading of hotels across Perth is also further evidence of the market’s resilience. Hotels are outperforming other sectors of the market, such as office, industrial and residential apartments.”
There has been a lot of speculation of a hotel glut, however, if there was real panic in the air, we would be seeing a sell-off of assets, whereby in reality, there is not one established city hotel for sale.  
Although hotel trading has continued to subside, they are still trading at very profitable levels, with an average daily rate of $200 and occupancies of 80%, which is above the national average.
CBRE’s Q1 Australia Hotel MarketView highlighted record tourist levels in 2015, with an 8% rise in international visitors to post 6.9 million and 7% spike in domestic tourism to 87 million. 
WA, along with NSW and QLD, emerged the top destinations for domestic travellers, accounting for 75% of national visitor nights in 2015.
The weakened Australian dollar is a major attraction for international visitors and also means domestic visitors are being forced to cut back on international travel and holiday locally. This is subsequently assisting occupancy rates across the Perth market.
In a further boost to the domestic hotel sector, the overnight spend on domestic trips increased 6% to $58 billion, while international spend was a record $24.5 billion – reflecting a jump of 20%. 
There are currently 1500 rooms under construction, with five star hotels including the Westin, Intercontinental and Crown at Burswood to complement the recently completed Como The Treasury hotel. 
There were also several demand drivers in play that would boost both existing as well as new hotels in the immediate to long term, such as: 
-   State government initiatives such as Elizabeth Quay, City Link the cultural centre, Cathedral Square and new Burswood Stadium. 
-   Consolidation of domestic and international airports will facilitate passenger movement to the city both by rail and vehicular. 
-   New hotels will attract more visitors by lifting the standard of accommodation, which is desperately needed. 
We will need to endure the economic gloom over the next 18 months, but that provides a prime time to develop. The predication is that Perth will sing in 2020 when government and private development is established and the economy rebounds.
Perth will be a truly international city, which it deserves to be.
The notes/comments are from CBRE Hotels Senior Director David Kennedy’s speech at a recent Perth Hotel and Venue Development seminar.
 
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Fears of a Perth hotel glut overstated: CBRE Hotels' David Kennedy

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Malaysian group Tune Hotels has bought an infill site in Melbourne’s CBD from AMP for $18.5 million.
The 1,741 sqm property stretches between Flinders Street and Flinders Lane.
CBRE’s Josh Rutman, Mark Wizel and Paul Tzamalis negotiated the sale. 
Tune Hotels CEO Mark Lankester said the group was thrilled to make its foray into the Melbourne market. 
“Melbourne is a city that we are very familiar with and the opportunity for the hotel accommodation market, coupled with strong overall visitor growth, ticks all the boxes for us,” he said.
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Malaysia's Tune Hotels buys Melbourne site for $18.5 million

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Development work totalling $74 million has begun on the Shellharbour Workers Club south of Sydney to renovate the existing clubhouse and build new facilities which include a hotel and fitness centre.
Design firm The Buchan Group developed the masterplan to guide development over the next 20 years.
<img src="/images/2016/07/20/Screen%20Shot%202016-07-20%20at%202.31.26%20PM.png" alt="">
Slated for development is a childcare centre ($4.7m), hotel ($32m), aquatic and fitness centres ($8m), function centre ($4m), commercial and medical facilities ($10m) and associated multi-deck car parking facilities ($15m).  
Refurbishments to the existing club include a new VIP gaming area, auditorium, billiards and sports bars. 
Buchan implemented a rolling three-year furniture, fittings and equipment audit and refurbishment program for the clubhouse, as well as a 10-year expansion strategy for its gaming, and food and beverage offering.
<img src="/images/2016/07/20/Screen%20Shot%202016-07-20%20at%202.32.27%20PM.png" alt="">
Liam Kelly, senior associate, The Buchan Group said the current program of works, combined with the development masterplan, would ensure the Club met the needs of a rapidly growing population.
“The Shellharbour Workers Club is an institution in the area and a leader in providing club facilities and services to members and guests,” he said.
“It has remained at the forefront of local club culture through a tradition of innovation, forward thinking and a focus on what a club can be to its community. 
“This masterplan and the works that follow will ensure the club continues to be a key provider of leisure, social and entertainment facilities in the region.
<img src="/images/2016/07/20/Screen%20Shot%202016-07-20%20at%202.33.17%20PM.png" alt="">
 “From our perspective, we’ve enjoyed a close and productive working relationship with the club as we have channelled their passion and commitment into a masterplan that provides a solid future for the club and delivers significant new facilities to the local community.
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Buchan masterplan guides Shellharbour Workers Club development

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Following the approval of shareholders, AccorHotels Group will acquire FRHI Hotels &amp; Resorts (FRHI) and its three prestigious luxury hotel brands: Fairmont, Raffles and Swissôtel. 
“Today is a great day for our group.
"It will open up amazing growth prospects, lift our international presence to unprecedented heights, and build value over the long term,” said Sébastien Bazin, Chairman and Chief Executive Officer of AccorHotels.
Joining AccorHotels’ global network is a portfolio of globally admired brands, which includes management of many of the world’s most iconic and historic hotels located in key strategic cities around the world, including: The Savoy in London, Raffles Singapore, Fairmont San Francisco, New York’s The Plaza, Fairmont Le Château Frontenac in Quebec City, and Le Royal Monceau Raffles Paris.
Bazin said by leveraging the operational synergies between FRHI and AccorHotels, they were well-positioned to accelerate the growth of our luxury brands.
The transaction with Qatar Investment Authority (QIA) and Kingdom Holding Company (KHC) of Saudi Arabia provided $840 million (€768 million) cash payment and the issuance of 46.7 million AccorHotels shares in consideration for the contributed FRHI shares.
The transaction gives QIA and KHC respective stakes of 10.4% and 5.8% in Accor’s share capital. Ali Bouzarif and Aziz Aluthman Fakhroo from QIA and Sarmad Zok from KHC will now join AccorHotels’ Board of Directors.
AccorHotels plans to generate approximately €65 million in revenue and cost synergies. Significant enhancements will also be made in terms of customer data, thanks to the integration of FRHI’s customer base that includes three million loyalty members, of which 75 percent are in North America.
The vast majority of Fairmont, Raffles and Swissôtel’s 154 hotels and resorts (of which 40 are under development) and 56,000 rooms spanning 34 countries and five continents are operated under long-term management contracts, with an average term of nearly 30 years; six hotels are leased and one hotel is owned. The Fairmont, Raffles and Swissôtel brands employ more than 45,000 worldwide.
AccorHotels is a world-leading travel and lifestyle group and digital innovator offering unique experiences in more than 4,000 hotels, resorts and residences.
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AccorHotels acquires FRHI hotels

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Sydney publican Paddy Coughlan has acquired The Botany View Hotel in Newtown for $6.4 million in the latest sign of strong demand for inner city food and beverage pubs.
The BVH, as it is affectionately known, is situated at the southern end of King Street.
It boasts an expansive two-level trading footprint, extended trading hours and a first floor beer garden with a 2am license approval.
CBRE Hotels' Sam Handy and Daniel Dragicevich negotiated the sale on behalf of the Murphy family who have owned and operated the pub for the past 26 years.
The deal marks the third inner west pub acquisition for Mr Coughlan, who recently acquired the Lady Hampshire in Camperdown and the Lord Gladstone in Chippendale. It comes at a time when the private equity backed Riversdale Group, a business that Coughlan founded (and is still an investor in), seeks an exit with the group's assets being sold down for significant premiums.
Coughlan said he'd noticed a real shift in recent years, with many Newtown locals gravitating towards the southern end of King Street.
"The recent acquisition of the Sydney Park Hotel by Ray Reilly and the Queen Victoria Hotel by Justin Hemmes has highlighted this migration trend.”
Mr Coughlan added that he would look to replicate the success that had been achieved at the Lord Gladstone with a revised food and beverage proposition at the Botany View.
CBRE Director Sam Handy noted that the sale follows a spate of bullish food and beverage pub sales within inner Sydney, most of which have been transacted through CBRE Hotels.
These sales include the Winery (Surry Hills), Cargo Bar (Darling Harbour), the Sydney Park Hotel (Newtown) and the Trinity Bar (Surry Hills).
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Paddy Coughlan buys Newtown pub, The Botany View Hotel

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Performance in 2017 will differ markedly across the major cities throughout Australia as further divergence will occur in the hotel sector, according to CBRE’s latest report.
Some markets struggling to cope with unfavourable trading conditions and increases in supply.
However, the star performers of 2016 – Cairns, the Gold Coast, Hobart – will continue their rise off the back of renewed interest in their locale by both foreign and domestic tourists.
Figure 14 illustrates Sydney’s continued strong revenue per available room (RevPAR) growth off the back of favourable trading conditions in 2015.
<a href="https://www.propertyobserver.com.au/images/2017/02/17/Figure%2014.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/02/17/Figure%2014.jpg" alt="">
In particular attracting a good mix of corporate and leisure tourists that enabled operators to increase room rates.
With the International Convention Centre opening in early 2017 Sydney room rates are expected to continue to climb off the back of increased corporate travel, albeit at a more moderate pace due to increases in supply.
Despite Melbourne’s strong start to the year there are signs that the market is struggling to cope with the increases in supply entering the market.
Melbourne’s strong performance historically has been largely driven by occupancy rather than room rate growth so any sign of occupancy pressure will see rates decline somewhat in 2017 before stabilising in 2018.
The resource markets of Brisbane and Perth continue to lag the rest of the nation; both saw revenue per available room (RevPAR) declines in the double digits.
The downturn in mining coincided with significant increases in supply in Brisbane which exacerbated the decline in performance.
A problem that Perth will have to contend with in the coming years as it nears the peak of the development cycle in 2018-19.
The more leisure-based destinations of Cairns, the Gold Coast and Hobart have been the star performers in the market as they continue to attract large volumes of both domestic and international visitors.
Admittedly these three markets are coming off a low base as a result of tough trading conditions pre and post GFC.
However 2016’s performance has still been impressive and is set to continue in the coming years as all three benefit from limited supply pipelines coupled with renewed tourist interest.
The year ahead will see increases in supply for the majority of key markets including Melbourne, Sydney, Brisbane and Perth.
However, they will all cope in different ways with Perth and Brisbane forecast to see further declines in hotel performance.
Whilst Sydney is expected to cope well with this increased supply, Melbourne will likely see small falls in room rates and occupancy levels.
Cairns and the Gold Coast have limited pipeline with no major new supply coming into the market in 2017.
“However, such is the interest in these regions we can expect to see developers announcing plans to enter the market, particularly the Gold Coast,” the report stated.
What will be of interest is the style of hotels that are announced in 2017 as recent trends reflect a shift towards greater tailoring of guest experiences such as Accor’s Mama Shelter or IHG’s EVEN Hotels.
In order to stand out from the crowd operators are offering unique experiences to pique interest and capture market share, particularly from the millennial generation, so we will see further announcements regarding these lifestyle brands coming to Australia.
The investment market has been dominated by overseas capital in the last three years and 2017 will likely be no different.
The current capital flight from China should continue to unfold and be the dominant source of capital in 2017 as investors seek safe-havens and long-term income generating assets.
Due to the tightly held nature of CBD markets investors will continue to look at fringe-CBD hotels as well as those in more regional locations such as Cairns and the Gold Coast.
Investors keen to move further up the risk curve will start to look at assets in Brisbane and Perth for potential counter-cyclical investment opportunities.
These markets have seen limited transaction activity over the last few years but such is the dearth of quality stock available in Sydney and Melbourne CBDs that investors may start to turn their attention back to these resource states.
<div>
Office to residential conversions have been popular with investors and developers alike over the last few years, particularly in Melbourne and Sydney.
But with the residential market showing signs of cooling, the potential for conversions earmarked for residential to change to hotels is increasing.
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