Hotel investment appetite in Australia remains strong

About 90 percent of participants in Australia and New Zealand wanted to keep or increase their exposure to the industry

CBRE recently conducted a hotel survey of more than 70 hotel owners, investors, developers, and industry consultants, covering topics such as asset values and revenue recovery.

One of the main conclusions from the survey was that, even though it was generally agreed that it might take three to five years for per-room revenue in some major cities to return to pre-pandemic levels, about 90 percent of participants in Australia and New Zealand wanted to keep or increase their exposure to the industry.

When asked if their investment perspective for the industry had changed since early 2020, 50 percent of respondents said they would increase their investment. This is despite the 62 percent of participants thinking it would take three to five years for international arrival numbers in Australia and New Zealand to return to pre-pandemic levels.

Another reason to be optimistic is corporate travel, where more respondents anticipate demand to recover to 2019 levels next year (44 percent) than over three to five years (39 percent).

“The hotels sector continues to recover from the impact of closed borders,” said Troy Craig, hotels regional director for Valuation & Advisory Services at CBRE.

According to data from JLL, In Australia, transaction volumes during the first half of 2022 were comparatively low, decreasing by 66 percent from those during the same period in 2021.

More: Hotel investment in the Asia Pacific region go up 33% in H1 2022

Additionally, with a “flight-to-quality” strategy, investors are still keen to put money into mid-market properties where active asset management or use conversion can produce significant returns on investment.

The firm noted that Asia Pacific’s hotel sector continued to recover in 2022 with USD6.8 billion in investment volumes. Investments in H1 2022 saw a 33 percent growth YoY and an 11.9 percent increase on 2019. This shows capital deployment into the Asia Pacific sector returning to pre-pandemic levels. 

Deal activity increased as institutional investors sought to deploy their capital more efficiently, leading to a spike in portfolio transactions.

The Property Report editors wrote this article. For more information, email: [email protected].