Hotel sector seen as red hot for growth Media Man Int

Hotel sector seen as red hot for growth - 17th March 2018

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InterContinental Hotels Group has bought a 51% per cent stake in Regent Hotels and Resorts, including the Regent Porto Montenegro Photo: Toshiko Kawana

by Carolyn Cummins

The hotel sector is one of the most active for investors with the InterContinental Hotels Group snapping up a controlling stake in the luxe Regents Hotel and Resorts operations.

It will expand IHG's footprint into the high-end hotel sector. Having paid $39 million for 51 per cent, IHG has the right to buy the remaining 49 per cent interest in a phased manner from 2026.

IHG will bring Regent into its brand portfolio at the top end of the luxury segment and will accelerate its growth globally, supported by IHG’s powerful enterprise.

IHG’s intention is to grow the brand from six hotels today to over 40 hotels in key global gateway city and resort locations over the long term.

Keith Barr, chief executive of IHG, said the there is ''significant potential to further develop our global footprint in the fast-growing luxury segment''.

''As one of the pioneers in defining luxury hotels both in Asia and around the world, Regent is an excellent addition to IHG’s portfolio of brands. We see a real opportunity to unlock Regent’s enormous potential and accelerate its growth globally,'' Mr Barr said.

IHG also said that following an extensive refurbishment due to commence in early 2020, the InterContinental Hong Kong will become a Regent Hotel in early 2021. The hotel originally opened its doors in 1980.

In Australia, TFE Hotels is also expanding to take advantage of the forecast growth in the sector.

The group 26 hotels in development, which will bring us to a portfolio of 100 in the next five years, mostly in Australia and a few in NZ and Europe.

One of the latest is the Vibe Hotel North Sydney, being a 187 room hotel, set to open on the corner of Miller Street and Pacific Highway, in the Northpoint property developed by Cromwell Property Group and designed by Nettleton Tribe Architects.

TFE Hotels chief executive Rachel Argaman said North Sydney had seen very few hotel openings in the past 40 years – serviced apartments opened there in October 2016 and hotels in 1973 and 1978 – so the new Vibe Hotel North Sydney would be well received by the corporate market, meeting a supply shortfall.

''This will be the first Vibe Hotel to be incorporated into a mixed-use development, highlighting the growing trend for emerging lifestyle precincts featuring drinking, dining and retail together with a hotel at their hub and heart,'' Ms Argaman said.

According to CBRE, despite more than $400 million worth of assets transacting in the fourth quarter of 2017, it was the lowest sales volume since 2011.

However, CBRE Hotel national director Wayne Bunz said the amount of activity the market has already experienced in the first month of the year points to a much stronger 2018.

''2018 is already shaping up to be a busier year for the national hotels market. The volume of capital seeking opportunities across the country is substantial and tourism is surging – so I predict a greater number of investors will shift their interest away from the tightly held markets of Sydney and Melbourne and start looking for quality assets in markets that are forecast to strengthen significantly in the next few years,” Mr Bunz said.

(The Sydney Morning Herald)