Starwood could add up to three more properties in Melbourne after signing a letter of intent to manage potential projects being built by Singaporean developer company Hiap Hoe.
Two of the projects are in the planning stages and are located in the Docklands at 6-22 Pearl River Road and the city at 380 Lonsdale Street.
HM understands the projects will be flagged under the Four Points by Sheraton (in the Docklands) and Aloft Hotels (the CBD) respectively. However, these could not be confirmed by Starwood at the time of publication.
Hiap Hoe is also reviewing an opportunity to build a third hotel in the city at 206 Bourke Street.
The news comes as Starwood yesterday (15 Jan) confirmed to HM the opening of the new-build Sheraton Melbourne has been scheduled for late-March.
In a statement released to HM, Hiap Hoe confirmed the company had “executed a letter of intent with Starwood’s Asia Pacific Hotels and Resorts in relation to the proposed development of their two hotel properties situated at Pearl River Road and Lonsdale Street, Melbourne”.
“[The] Letter of Intent is subject to deal execution and agreement finalization,” the company said.
Hiap Hoe’s Executive Director, Tracy Wun, said the acquisition of 6-22 Pearl River Road and 380 Lonsdale Street is a considered response to the tourism boom that Victoria is currently experiencing.
She said Melbourne hotel occupancies hover around 80% with average room rates of $250, making hotel development an attractive proposition for Hiap Hoe.
Wun said when combined with 7.1 million domestic visitors who stayed in Melbourne last financial year, 1.8 million of those visitors from overseas, it “clearly demonstrated a need for more quality accommodation in Melbourne”.
“Each hotel location attracts a different target market,” she said. “For the Lonsdale Street site, we acknowledge the close proximity of universities and the Melbourne CBD retail core and we project corporate travellers will be attracted to the Docklands site.”
Hiap Hoe’s hotel portfolio already includes two quality hotels in Singapore, the Ramada Singapore and the Days Hotel Singapore at Zhongshan Park, which feature over 700 rooms.
Tourism Australia’s General Manager of Destination Development, Katherine Droga, welcomed the new projects.
“Delivering two important new hotel projects to Melbourne, would significantly boost the city’s room availability,” she said.
“Tourism is an important industry and one which makes a significant contribution to the Australian economy, generating economic wealth and supporting jobs.
“And, importantly, there are good returns to be made for smart investors, particularly in hotels which historically outperform other property asset classes in Australia’s cities.
“For investors this presents very attractive opportunities, translating into strong returns and high yields.
“Hiap Hoe’s strategic decision to invest in Melbourne hotels demonstrates confidence in the future growth of capital city Australia and meets future tourism facility needs.”
The signing continues Starwood’s rapid growth in Australia in recent months, particularly on the back of The Westin Perth signing and the impending opening of Four Points by Sheraton Brisbane and Sheraton Melbourne over the next two months.