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13 March 2010 - According to the results of Jones Lang LaSalle Hotels’ annual Top Owner Survey, the ten biggest hotel owners across Australia account for around 12.2% of total room supply. This figure represents a 3.5% reduction in their overall room count (998 rooms), and was the result of one owner exiting the sector, with several others reducing their holdings.
Among the Top 10 Hotel Owners in Australia, Singapore owners – Thakral Holdings and Stamford Land Corporation were among that list. Together they have an ownership of 15 hotels and 4,370 rooms. Both Owners did not see any change in their holdings with the sell down coming from Australian domestic players and retained their ranking positions.Commenting on the ownership shift, Jones Lang LaSalle Hotels, Managing Director for Investments Asia, Mr. Mike Batchelor said, “We did however see one top owner take a counter-cyclical view in 2009 and grow their portfolio. Amalgamated Holdings Group undertook three acquisitions which saw their portfolio increase by over 400 rooms or 24%.”
On the whole, Jones Lang LaSalle Hotels expect to see further changes throughout 2010 as some of the top owners move to take advantage of strong demand from domestic and offshore private investors.
Mr Batchelor noted that the most significant change was the exit of GPT who have held a position in the top ten for the last eight years. In 2009 they divested the Four Points by Sheraton Sydney and ten assets within their Voyages Hotels & Resort Portfolio.
Other hotel owners who sold assets in 2009 include Tourism Asset Holdings Limited (TAHL), who disposed of the Novotel Atrium Darwin (140 rooms); Eureka Funds Management, who sold the Holiday Inn Perth (181 rooms), and the Holiday Inn Melbourne (200 rooms); Abacus Funds Management who offloaded Rydges Gladstone and Rydges Southbank Townsville and Colonial First State with their disposal of the Surfers Paradise Marriott Resort.
The primary motivation to sell was to pay down debt or the disposal of non-core assets. However, while trading results have declined they have not fallen to such an extent where interest cover covenants are in jeopardy. Where previously sentiment and capital were key drivers of value, now it is the underlying performance of the asset and the potential for income growth.
Mr. Batchelor noted, “Investors in 2009 were mainly high net worth individuals from Asia, having snared around $900 million of hotels in Australia over the past two years. Whilst these acquisitions have not been sufficient to see any new entrants to the top ten, Thailand’s TCC ‘s acquisition of three hotels gave them a high profile with a total of 845 rooms across three capital cities.”
“It is likely that investment will be dominated by private investors and select owner-operators for the short to medium term until managed funds return to the market. While having emerged as one of the primary selling groups in 2009, many of the fundamentals which attracted them to the sector have not changed, and the weight of capital being driven by the superannuation guarantee still has more than a decade to build before significant withdrawals are made,” he added.
Mr. Batchelor also added, “The shift in hotel ownership is also occurring in Asia as we witness an increasing volume of intra regional hotel transactions. The recent purchase of the Swissotel Merchant Court in Singapore and the Niseko Village in Japan was fuelled by South East Asian based investors. I expect interest from Asian owners to continue as we start to see confidence return to the market as well as opportunities being marketed.”
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