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Report: Australia Hotel Sales Reach All-Time High

SYDNEY-During 2004, the Australian hotel market hosted 36 major transactions worth $1.2 billion, topping the previous record of $1.1 billion and doubling the results from 2003.

By Brian K. Miller | Updated on February 21, 2005

SYDNEY-During 2004, the Australian hotel market witnessed 36 major transactions worth a record $1.2 billion (A$1.56 billion). The total tops the previous record (set in 1994) by $100 million and is nearly double the total from 2003, according to a new report from Jones Lang LaSalle. JLL Hotels Asia Pacific CEO David Gibson says the record trading performance was the result of low interest rates, competitive debt environment and a significant amount of product on the market. The record was achieved thanks to three significant portfolio sales, including P&O Australian Resorts, Principal Hotel Group and Travelodge Hotel Group. Sales remain concentrated in Queensland, New South Wales and Victoria, says Gibson. According to the report, the activity was dominated by domestic investors, who accounted for 65.2% of buyers and 39.3% of vendors. Malaysian interests, mainly due to Mulpha’s acquisition of the Principal Hotel Group, also were active.On average, investors paid $189,000 per room for hotels across Australia. The prices paid ranged from $112,000 per key for hotels in the three-star range to $239,000 per key for five-star hotels, according to the report. The average initial yield on purchases decreased from 2003′s 7.7% to 6.7%. The drop is due to expectations of future trading growth, competition for deals and the high proportion of upper tier hotel sales, according to the report.Looking to 2005, Jones Lang LaSalle Hotels managing director Geordie Clark believes the favorable conditions for purchasing hotels will continue. “However, limited stock may send domestic investors off shore, to Asia,” he says.

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