Research from CBRE Hotels highlights that over 80 per cent of the city’s new supply in the next 12 months will be in the luxury sector – catering to a new breed of travelers, including millennials and Asian tourists seeking out luxury hotels and boutique properties.
CBRE Hotels’ National Director Wayne Bunz said new openings this month in Brisbane included the W Brisbane (a 312 room, 5-star hotel) and the Novotel South Brisbane (a 238 room, 4-star hotel) with a further five properties due to open over the next six months.
“Brisbane is no longer going to be the poor cousin to Sydney and Melbourne,” Mr Bunz said, noting that the new wave of construction was focused on lifestyle and ‘designer’ hotels that appealed to individual needs and were taking luxury to new levels.
“Gone are the days of the cookie cutter approach to hotels, with these new properties catering to travelers seeking local experiences and eye catching designs.”
Mr Bunz added that the openings would provide strong, long-term benefits for Brisbane, although he noted that an ongoing challenge for hotel management companies would be to maintain rate integrity in the face of ongoing competition from Airbnb.
The openings of the W Brisbane and the Novotel South Brisbane will be the prelude for the following launches:
- Emporium Southpoint – 143 room 5-star hotel opening July 2018
- Adina George Street – 220 room 4.5-star hotel opening July 2018
- Westin Brisbane – 286 room 5-star hotel opening August 2018
- Calile Hotel James Street – 175 room 5-star hotel opening September 2018
- Art Series Howard Smith Wharves – 164 room 5-star hotel opening January 2019
CBRE Hotels’ Senior Negotiator Hayley Manvell said the new hotels being launched each had their own unique characteristics and demand generators, either being part of a major mixed use development such as the W in the Brisbane Quarter complex or a very strong location with a key demand generator such as convention centre, airport or casino – examples being the Novotel at South Brisbane and the Calile in the James Street precinct.
Mr Bunz added; “We are also eagerly watching the refurbishment and rebranding of ‘The Valley by Ovolo’, previously the Emporium Fortitude Valley, which will be making a splash in the market along with their Ovolo Inchcolm hotel”.
CFO & COO of the Ovolo Group, Dave Baswal, said; “Luxury & lifestyle hotels are a timely addition to Brisbane market and will help attract further business and leisure clientele to the city. Ovolo Inchcolm is already showing growth Y-O-Y and is on track to become market leader in lifestyle space. We expect Brisbane market to stabilise this year and start improving from 2019.”
The new supply coincides with counter-cyclical investment activity in the Brisbane hotel market, with CBRE Hotels having recently sold the Emporium Fortitude Valley and Ibis and Mercure Brisbane for sub 5% and 6% yields respectively.
“While Sydney and Melbourne are still the most sought after investment locations, limited availability is leading investors to widen their scope and consider other locations,” Mr Bunz said.
“Astute investors are looking for value in recovering hotel markets such as Perth and Brisbane, where new supply has dampened investor appetite. History shows that strong capital gains can be made in these markets for investors who did not simply follow the herd.”
CBRE Hotels’ Queensland Director of Valuations Jacqui Reiser added; “We expect the quality of the hotels coming into the market will assist in driving demand across all market sectors, with room rates forecast to increase due to the high standard of accommodation. STR Results reflect a positive return to RevPAR growth for the Brisbane market, which is expected to continue to strengthen.”
The new hotel supply coincides with an overall building boom in the Brisbane CBD, with $35 billion in major development and infrastructure projects reshaping the city skyline. Major projects include:
- $5.4bn Cross River Rail project
- $3bn Queens Wharf Casino and entertainment precinct
- $2bn Brisbane Live Entertainment Centre
- $1.7bn Airport expansion to double airport arrivals over the next 10 years
- $1.4bn Eagle Street Pier Waterfront redevelopment by Dexus
- $1bn Brisbane Quarter mixed use complex
- $940m Brisbane Metro
- $240m Mega Cruise Ship Terminal
- $110 million Howard Smith Wharves’ redevelopment.