In the coming months, the hotel sector will be tested to the limit as sporting events and the lead-up to summer holidays sees an increase in demand for beds.
Next weekend is one of the busiest in Melbourne when the city hosts the AFL Grand Final, while the following weekend is the three-day labour day holiday in NSW.
The higher traffic comes as the market is tight with limited new developments being completed until next year and beyond. These include at Darling Harbour and Barangaroo.
Dr Jerry Schwartz bought the 600-room planned hotel at Darling Harbour (pictured) from Lend Lease and has appointed the Accor Sofitel brand has the manager.
There are also a number of key sales to be transacted including the Sheraton on the Park in Sydney and the Hines Property Group, which recently announced that they are on the lookout for new hotel sites in Melbourne, Brisbane and Adelaide.
According to Savills head of research, NSW, Simon Hemphill, the Hines group believes that there is growth in the 'premium economy' hotel market in Australia as a direct result of "...a new wave in austerity from those controlling corporate budgets."
Hemphill says, in his report on the sector, that Savills recorded hotel transactions totalling about $2.2 billion in the 12 months to June 2014 nationally. This is up 8 per cent from $2.1 billion in the previous year, and up on the five year average of $1.5 billion.
During the same period 70 properties were sold, with volumes up from the previous year (64), and up on the five year average of 46 properties.
Reflecting the recent sales, including the Sofitel Sydney Wentworth to the Singaporean Frasers Centrepoint for $201 million, the foreign investor buyer category was the most active in the Australian hotel investment market for the 12 months to June 2014, purchasing 87 percent of the stock sold, equating to $1.9 billion.
"Similarly, the foreign investor category accounted for the most transactions of 48 hotels," Hemphill said.
According to agents, the prospective buyers for the Sheraton on the Park, include overseas-based investors.
The Dransfield analysts have said the RevPAR (measure of revenue per room) for this year is forecast to grow by 5.5 per cent driven by rate growth of almost 5 per cent.
This forecast represents an upgrade from the 2.7 per cent expected in previous edition of Hotel Futures, from a lower 2013 base.
The Dransfield 2014 outlook is strong in most markets except Adelaide where new supply is expected, and demand growth has stalled.
"Supply growth forecasts of 2.7 per cent are consistent with prior expectations , again off a lower base. Demand growth of 3.3 per cent is an upgrade from 2.7 per cent previously expected, based on upgraded forecasts and a lower base enabling growth in some of the high occupancy major cities.
