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DEVELOPMENT: HOME AND AWAY
Home and away
APARTMENT HOTELS AND EXTENDED STAY PROPERTIES ARE ON THE RISE AS GUEST SEEK PREMIUM EXPERIENCES WITH MANY OF THE COMFORTS OF HOME.
ACCOR PACIFIC
Lindsay Leeser, Chief Development Officer
ACCOR IS THE largest operator of serviced apartment and extended stay properties in Australia and New Zealand. Our Group currently has a portfolio of more than 140 serviced apartment properties across the Pacific, including 22,800+ apartments. And, with so many travellers seeking longer stays, space, flexibility and quality amenities, the variety and calibre of our apartment offering continues to grow.
Some of our recent apartment hotel openings include The Sebel Wellington Lower Hutt in New Zealand, The Sebel Melbourne Ringwood, The Sebel Melbourne Moonee Ponds, The Sebel Melbourne Malvern, FV Brisbane by Peppers, and Shadow Play Melbourne by Peppers.
We are currently experiencing record interest from developers as they recognise the growth potential, cash flow consistency, and high ROI of serviced apartment hotels with short, medium and extended stay capabilities.
With this increased demand for serviced apartments, hoteliers are looking to partner with leading brands with experienced asset management teams. A strong asset management team brings huge benefit for investors.
Accor’s trusted apartment brands, such as The Sebel, Mantra, Peppers, Pullman and Art Series, bring quality and credibility to the sector. They continue to be as popular with guests as they are with property owners, due to their strong brand awareness and local market leadership.
BWH HOTELS AUSTRALASIA
Danilo Curcuruto, Director of Development
The extended stay accommodation segment is experiencing a significant transformation driven by emerging trends and traveller demands that are reshaping the industry. Developers in Australasia recognise the potential of repurposing assets to meet the growing demand for flexible and temporary accommodations, shifting away from traditional permanent residences and corporate-focused developments.
This enables them to tap into the thriving short term accommodation market and adapt to changing traveller preferences.
Investing in apartment-style accommodations offers investors various benefits, including flexibility and peace of mind with future options to repurpose their asset. BWH Hotels acknowledges the value of such investments and looks to the long term to actively seek opportunities to offer partner investors flexible options that cater to their unique needs.
As the segment evolves, there is a growing emphasis on exploring new destinations and expanding market presence. Projects in emerging locations allow for a broader reach, catering to the ever-changing preferences of travellers seeking extended stay experiences. This strategic expansion empowers the industry to capitalise on diverse markets and create unique and memorable guest experiences.
In this evolving landscape, the extended stay market is redefined by numerous projects, with BWH Hotels standing out through its impressive pipeline of segment-focused developments. Notably, the anticipated opening of the thoughtfully designed Executive Residency by Best Western in Brisbane promises unparalleled comfort and convenience for longer term stays. Additionally, South Harbour, BW Signature Collection in Hervey Bay showcases BWH Hotels’ commitment to strategic growth and establishing a presence in emerging, sought-after locations.
Moreover, BWH Hotels’ upcoming developments in key markets including Perth, Western Sydney and regional NSW aim to enhance the extended stay experience. These developments demonstrate BWH Hotels’ dedication to meeting the evolving needs of travellers by providing exceptional accommodation options that create an inviting “home away from home” atmosphere for guests seeking comfortable and convenient long-term accommodation.
DAIWA LIVING NESUTO HOTELS
Matthew Abrahams, Development Manager
With travel returning we are seeing patterns have materially changed from 2019. Travel is less frequent, however when people do travel, they are staying for longer which is driving demand for apartment hotels over traditional hotel rooms.
It’s no secret that it is more difficult today than it has been for some time to make a new-build hotel stack up financially. This has been driven by increasing and unpredictable construction costs, rising interest rates and hesitant capital markets with some uncertainty for the wider economy and how this may affect the tourism industry.
We see opportunity in taking over properties that have not received the capital investment required to keep pace with new stock coming into key markets, undertaking refurbishments to reposition and improve owner returns.
The conversion of B-Grade office space is ripe for new accommodation product as the commercial office market continues to be negatively impacted by work from home trends. Office conversions have the dual benefit of reduced construction costs and reduced environmental impact compared to demolition/new builds.
Hotel owners are looking for operators who understand the underlying drivers of real estate investment and can achieve the best overall outcome for their asset. Nesuto has this capability and works collaboratively to find the right solution for both parties. We are flexible and nimble when it comes to commercial terms and agreement structures.
Nesuto operates serviced apartments, apartment hotels and traditional hotels. The benefit of the Nesuto brand for owners/investors is we collaborate with owners to design properties that fit the local area and accommodate the needs of the travellers; bringing the owners’ vision for the property to life.
TFE HOTELS
John Sutcliffe, Director of Development
Adina Apartment Hotels and Serviced Apartments continues to offer a compelling option for hotel developers, combining a strong global brand reputation and flexible accommodation options to create commercially strong assets.
Our Adina products are in prime locations across Australia, New Zealand, Europe, and now Singapore, catering to various market segments, from business professionals to families and long-term guests.
Each project aims to prioritise optimising operational efficiency while ensuring high returns for owners.
-James Shields, The Ascott Limited
Adina’s extended stay focus sets it apart from traditional hotels and, with these fully equipped kitchens, laundry facilities, and larger living spaces, Adina is ideal for guests looking for a home-away-from-home experience during longer stays ensuring revenue consistency for owners. Importantly, TFE’s operating model ensures that these strong revenues flow through to the bottom line.
Our Adina hotels are able to form part of larger mixed-use developments and can easily be installed into buildings previously used for an alternative use. Our newly opened Adina Pentridge Melbourne, forms part of the incredible redevelopment of the former Pentridge Prison site and joins the likes of Adina Bondi, as well as Adina Munich and Adina Geneva, in forming part of a larger precinct, with aligned food and beverage partners ensuring multiple options for our guests.
Adina has continued to evolve with the introduction of our high-end A by Adina hotels. Launched in 2021 with flagship hotels in Sydney and Canberra, A by Adina is a welcome new offering within the premium hotel category, known simply as Hotel Living – representing the perfect balance between a hotel and residential living. This brand has proved to be an instant hit with owners, with the recently announced A by Adina in Melbourne’s Docklands soon to be joined by others across ANZ, and further afield.
THE ASCOTT LIMITED
James Shields, General Manager Growth and Capital Strategy
The Ascott Limited, Australia (Ascott Australia) is experiencing great success through ongoing investments in strategic positioning, projects, properties, and partnerships.
Over the next few years, Ascott Australia will introduce 14 new property locations delivering more than 2000 rooms to the market via its Quest Apartment Hotels, Citadines, lyf, and Oakwood brands.
In 2023 alone, Quest Collingwood and Quest Watergardens opened, while Citadines North Sydney (August 2023), Quest Geelong (September 2023), and Quest Woolooware Bay (October 2023) are set to launch later this year. Rounding out the pipeline are 25 additional projects either signed or in negotiation, mostly with previous Ascott Australia developers.
The robust pipeline of projects highlights the group’s commitment to business format and brand franchising models, as well as tailored management agreements. Each project aims to prioritise optimising operational efficiency while ensuring high returns for owners. This intersection of operational efficiency and high returns is a challenge as the industry faces increased land costs and an ever-tightening regulatory environment. As competition in the extended-stay market grows, Ascott Australia will continue to focus on optimizing its inventory quantity and mix through a very granular analysis of demand drivers and building out room night volume accordingly.
When selecting new developers, Ascott Australia looks for a proven track record of delivering successful projects for the group. The company’s design and construction teams work closely with developers to maximize project feasibility and delivery, particularly in the face of rising construction costs, all while ensuring minimal impact on the guest experience.
Factoring in the challenges present, it remains an opportune time to capitalize on the strength of the domestic markets and drive sustainable, high-value growth across Ascott Australia’s brand portfolio.
VERIU GROUP
Zed Sanjana, CEO
The significant pent-up demand for travel has resulted in remarkable growth in ADR by the end of December 2022, surpassing pre-pandemic rates in all major markets. Nationally, ADR has increased by 24% over the year, reaching AU$228, which is 23% higher than the rates observed in 2019. Additionally, occupancy levels are only 10% lower than pre-pandemic levels, currently standing at 65%. This indicates a strong recovery in the hospitality industry, with both ADR and occupancy trending positively and approaching, or even surpassing, the levels seen before the pandemic. Increased top line performance significantly assists the ability for the industry to provide developers with more compelling cashflows to support the increasing pressures on hotel developments.
Nationally, ADR has increased by 24% over the year, reaching AU$228, which is 23% higher than the rates observed in 2019.
-Zed Sanjana, Veriu Group
Overall, the Veriu Group has enjoyed a strong 12 months, with the continued expansion of its apartment hotel accommodation model nationally. Since 2020, it’s opened and added 7 new hotels to its portfolio, representing network growth of 50% in 4 years, and an increase in inventory of 80%, taking the number of rooms operated by the Group from 759 to over 1300 nationally.
June alone saw the opening of its second Victorian Veriu property –Veriu Collingwood, as well as the new Punthill Parramatta, which will serve as a further springboard to its strategy for growth in the NSW market under both its Punthill and Veriu brands. This follows on from the recent opening of Punthill Norwest, as well as the commencement of construction earlier this year on several greenfield sites including Punthill Maitland in regional NSW, Punthill Sunshine and Punthill Liverpool. Additionally, four to six more hotels are in the pipeline including Punthill Ryde.
Key to the Group’s success has been its unique long-term lease model which has continued to prove a really attractive option for developers who are looking for certainty of income and ability to finance large scale developments more easily in the current market.
