spotlight april 2019pdf.savills.asia/.../hotels-market-update-april2019.pdf · 2019-06-27 ·...

Hotel Market Update April 2019

Australia & New Zealand

SPOTLIGHT

Savills Research

Australia Int’l visitors up 4.8% Australia Domestic visitors up 8.6% Hobart RevPAR up 8.9%

Welcome to the latest Savills Australia & New Zealand April 2019 update. This report covers economic indicators likely to affect performance across the hotels sector, key performance indicators across Australia and New Zealand’s major hotel destinations, trends in domestic and international visitors, plus recent sales transactions.

Whilst the average revenue per available room across Australia fell in the year to date April reporting period, a lower than average Australian dollar, positive forward looking economic indicators in conjunction with a rapidly growing Asian middle class will likely help to boost international tourists over the short to medium term.

Hotel performance in Hobart was the strongest nationally, in line with a notable increase in both domestic and international tourist numbers. Recently, we have seen increased attention in the ‘Apple Isle’, with visitors capitalising on the growing “food tourism” the state has to offer. In line with this future growth potential, it is not surprising that we have seen a number of large institutional funds compete for the 50% stake in Hobart airport, which was put to market earlier this year by Macquarie Bank.

We hope that you find this report of use and interest.

Shrabastee Mallik

Director

Research & Consultancy

+61 2 8215 8880

[email protected]

The Australian economy grew at a rate of 2.8% on a rolling annual basis (corresponding to QoQ annual growth rate of 2.3%) in the 12 months to December 2018. Overall, growth was a reflection of subdued household spending and a continuation in the slowdown of the residential housing market.

After record construction activity in the first half of 2018, the last quarter of 2018 saw falls in private, mining and dwelling investments.

Looking at growth across individual industries, the Health Care once again was the strongest contributor to growth, growing at a rate of 7.1%, followed closely by the Mining sector (6.3%). Continued strength in government expenditure was evident, with government final consumption increasing 5.6% in the 2018 calendar year.

RBA cash rate remained at 1.5% in April 2019, though swap markets are now pricing in further rate cuts, particularly as the US Fed signalled an end to tightening monetary policy.

Residential property markets have no doubt softened over the past 12 months, with macroprudential tightening having the desired tempering effect on investor only loans, and rents falling in all capital cities (but Hobart and Adelaide) though further rate cuts will likely help to boost demand for residential property

The current risk free yield measured by the US Government 10 Year Bond is approximately 2.52% (May 2019). Research indicates this prevailing yield is at comparable levels to five years ago (2.8%) and same as ten years ago (2.7%), having traded in the range from 1.4% to 3.9% over the last ten years. Interestingly, the differential of AUS bond yields (currently at 1.82% as at May 2019) to US bonds is now in favour of the US for the first time since 1983.

Whilst economic growth, consumer and business sentiment softened somewhat over the first quarter of 2019, the are still higher than they were just after the GFC.

In spite of downward revisions to economic growth forecasts by the RBA at the start of the year, these forecasts are still above long-term averages.

The WorldThe World Bank revised down its Global Economic Growth forecast in January 2019 to 2.9% from 3.1% in June 2018.

Whilst there still remains uncertainty about what impact of the US’ trade restriction on global trade will have on global growth prospects, the potential downside risks associated with the potential trade wars on Australia are significantly less pronounced than they were this time last year. The potentially negative effects on the Australian economy may indeed have been overstated, with numbers from the ABS late last year showing that demand for Australian resources (particularly LNG exports) actually increased, on the back of China redirecting demand away from the US and to Australia. Capital Markets – AustraliaInvestment activity in Australian commercial property remained buoyant in the 12-month period to March 2019, with approximately $28.63 billion of assets transacted nationally. Though this was down on the near record high transaction levels recorded in the prior 12 month period, it still a strong result, cementing Australia’s place on the global stage as an attractive investment destination.

Tightening local lending restrictions has led to an inflow of funding from offshore sources, who are particularly keen to acquire stakes in existing development projects.

2savills.com/researchsavills.com/research

Australia & New Zealand Hotels - April 2019

savills.com/research

Economic Update - Australia

Sydney recorded declines across all KPI’s due to a 2.5% increase in rooms available (to sell) which exceeded a 1.6% increase in demand for room nights resulting in a 4.3% decline in ADR and an overall 5.1% decline in RevPAR. Notwithstanding the fall in RevPAR, Sydney was the top performer nationally (in terms of dollar value of RevPAR $191), outperforming the next best performing market (Hobart Area) by $12.

Hobart performed strongly due to a combination of a reduction in rooms available (to sell) and stable demand for room nights, which enabled this market to achieve the highest growth in ADR and RevPAR nationally.

Melbourne new rooms supply exceeded room night demand growth (supported by Melbourne’s sporting and arts events in January - April 2019) resulting in a moderate decline in occupancy whilst ADR grew marginally to record a small decline in RevPAR.

Gold Coast experienced further decline in RevPar due to a combination of an increase in rooms available (to sell) and a reduction in demand for room

nights, which was anticipated in contrast to staging the Commonwealth Games in April 2018.

Adelaide saw an increase in rooms available (to sell) which was matched by an increase in demand for room nights, resulting in stable occupancy however ADR fell moderately resulting in a corresponding decline in RevPAR.

Canberra remained resilient across all KPI’s achieving a RevPAR of $132.52 (up 1.2%) thanks to increased demand for room nights which marginally exceeded an increase in rooms available (to sell).

Perth recorded declines across all KPI’s due to an 8.3% increase in rooms available (to sell) which significantly exceeded a 3.2% increase in demand for room nights resulting in a 6.1% decline in RevPAR.

Cairns occupancy declined 10% due to a combination of a 5% increase in rooms available (to sell) and an 5.4% decrease in demand for room nights. Despite a modest increase in ADR, RevPAR recorded a significant decline of 7.6%.

Brisbane tracked a moderate decline across all KPI’s as new supply entered the market which was not matched by demand resulting in a lower RevPAR of $101.95 (down 1.8%).

Darwin saw a significant decline of 25.4% in demand for room nights, recording the worst RevPAR performing market for the period.

Worst RevPAR performing markets: Darwin Area (down 27.5%)Gold Coast (down 8.7%) Cairns (down 7.6%)

International Visitor Highlights (Y/E 2018) International Visitors were up 4.8% to 8.52mInternational Visitor Nights were up 3.8% to 273.79m

Domestic Visitor Highlights (Y/E 2018) Domestic Visitors were up 8.6% to 105.6mDomestic Visitor Nights were up 7.2% to 376m

NSW, QLD, WA, TAS, and ACT recorded double digit growth in domestic expenditure

Australia wide RevPAR decreased

-2.8%

Best RevPAR growth markets: Hobart Area

+ 8.9%

QLD, WA, and TAS recorded double digit growth in domestic visitors, with WA also showing strong growth in Visitor Nights

Australia and City Hotel Market Operating Performance Year to Date April 2019

City OccupancyOCC YTD Growth %

ADRADR YTD Growth %

RevPARRevPAR

YTD Growth %

Australia 74.4% -1.5% $190.24 -1.3% $141.55 -2.8%

Sydney 84.5% -0.9% $225.99 -4.3% $190.90 -5.1%

Hobart Area 90.3% 3.3% $197.85 5.4% $178.70 8.9%

Melbourne 82.4% -1.4% $193.41 0.5% $159.33 -0.9%

Gold Coast 71.5% -2.7% $207.83 -6.2% $148.70 -8.7%

ACT & Canberra Area 77.6% 0.3% $170.87 1.0% $132.52 1.2%

Adelaide 81.8% 0.7% $159.69 -2.2% $130.63 -1.5%

Perth 71.2% -4.7% $165.59 -1.5% $117.91 -6.1%

Cairns Area 72.2% -10.0% $145.47 2.6% $105.07 -7.6%

Brisbane 67.8% -1.5% $150.42 -0.3% $101.95 -1.8%

Darwin Area 46.7% -26.3% $118.19 -1.6% $55.23 -27.5%

Source STR

3


NSW Int'l Domestic

TV '000 4,370 34,554 STV 51.3% 32.7%VAG 3.0% 9.4%TVN '000 96,204 107,413 STVN 35.1% 28.6%VNAG 2.4% 7.3%

VIC Int'l Domestic


QLD Int'l Domestic


SA Int'l Domestic

TV '000 452 6,632 STV 5.3% 6.3%VAG -3.2% 4.7%TVN '000 9,874 24,131 STVN 3.6% 6.4%VNAG -9.0% 4.5%

NT Int'l Domestic

TV '000 298 2,745 STV 3.5% 2.6%VAG 1.9% -0.3%TVN '000 3,589 7,331 STVN 1.3% 1.9%VNAG -3.2% 4.0%

WA Int'l Domestic

TV '000 964 10,963 STV 11.3% 10.4%VAG 2.1% 14.2%TVN '000 24,928 46,904 STVN 9.1% 12.5%VNAG -5.0% 11.1%

TAS Int'l Domestic

TV '000 309 3,055 STV 3.6% 2.9%VAG 11.0% 12.8%TVN '000 4,911 12,420 STVN 1.8% 3.3%VNAG 6.2% 8.4%

ACT Int'l Domestic

TV '000 252 1,579 STV 3.0% 1.5%VAG 2.9% 0.7%TVN '000 5,838 9,270 STVN 2.1% 2.5%VNAG 11.8% -7.5%

Source TRA

RECENT SALES TRANSACTIONS

KEY : Total Visitors ('TV '000') | Share of Total Visitors (‘STV’) | Visitors Annual Growth YOY (‘VAG’) | Total Visitor Nights (‘TVN ‘000) Share of Total Visitor Nights (‘STVN’) | Visitor Nights Annual Growth YOY (‘VNAG’)

International & Domestic Visitors – Who Goes Where? Year Ending December 2018

80 Collins St Melb. Hotel - VIC

Number of Rooms

255

Price Per Room $1,361,305SOLD | May-19

Mayfair Hotel - SA

Number of Rooms

170

Price Per Room $414,226

SOLD | Apr-19

Skycity Darwin Casino - NT

Number of Rooms

152

Price Per Room $1,236,842SOLD | Apr-19

Hilton Surfers Paradise - QLD

Number of Rooms

169

Price Per Room $414,201SOLD | Jan-19

Novotel Sydney Olympic Park - NSW

Number of Rooms

177

Price Per Room $480,139.73SOLD | Nov-18

Pullman Sydney Olympic Park - NSW

Number of Rooms

218

Price Per Room $479,899SOLD | Nov-18

Ibis Sydney Olympic Park - NSW

Number of Rooms

150


Novotel Canberra - ACT

Number of Rooms

286


Source: RCA

Note: Recent hotel transactions over 100 rooms

01 - CHINA

02 - NEW ZEALAND 03 -USA

04 - UK 05 - JAPAN 06 - SINGAPORE

TV '000 1,322STV 15.5%VAG 5.2%TVN '000 58,781 STVN 21.5%VNAG 12.7%

TV '000 1,259STV 14.8%VAG 2.1%TVN '000 13,108 STVN 4.8%VNAG 0.5%

TV '000 744STV 8.7%VAG 1.3%TVN '000 13,380 STVN 4.9%VNAG -6.0%

TV '000 688STV 8.1%VAG -0.3%TVN '000 21,694 STVN 7.9%VNAG -7.4%



Top International Visitor Markets Year Ending December 2018

SAVIL

LS

TRANSA

CTIO

N

SAVIL

LS

TRANSA

CTIO

N

SAVIL

LS

TRANSA

CTIO

N

SAVIL

LS

TRANSA

CTIO

N

SAVIL

LS

TRANSA

CTIO

N

SAVIL

LS

TRANSA

CTIO

N



Total Visitors (National + International) Vistor annual growth12 Months Ending December 2018

Australia Year Ending December 2018

5

International & Domestic Visitors – Who Goes Where? Year Ending December 2018

+ 13%TV yoy

+ 1%TV yoy

+ 10%TV yoy

+ 4%TV yoy

+ 9%TV yoy

+ 13%TV yoy

+ 5%TV yoy NCH 0%

TV yoy

Top International Visitor Markets Year Ending December 2018

Visitation Nights up

5.7%Total Visitors up

8.3%Expenditure up

10.6%


New Zealand wide RevPAR decreased

Domestic visitor nights to the North Island were up 2.8%, while domestic visitor nights to the South Island were up 0.8%

Domestic Visitor Highlights (12 months ending March 2019) Domestic visitor nights were up 2.1% to 22.8m

+ 2.1%

International Visitor Highlights (12 months Ending March 2019) India, USA, and Canada recorded the highest growth in visitor arrivals

Best RevPAR growth markets: Wellington

+ 5.7%

Worst RevPAR performing market: Auckland

-

8.6%

Economic Update - New Zealand Economic growth in NZ moderated somewhat over the latter half of 2018, down from 2.8% in September 2018 to 2.6% December 2018.

Despite the Reserve Bank of NZ suggesting that interests rates will stay low for a period of time with potential to even fall further, property investment within New Zealand has fallen flat due to tight lending restrictions combined with low rental yields and fears of prices continuing to fall alike that nature of the current residential market in Australia.

With tourism helping to boost New Zealand’s economy we are beginning to see an increase in luxury retailing and growing investor interest in the hotels sector.

Queenstown recorded a marginal fall in RevPAR due to a combination of a 2.8% increase in rooms available (to sell) compounded by a 1.7% decrease in demand for room nights which was partly offset by a 2.6% increase in ADR. Nonetheless, Queenstown remained the top performer nationally (in terms of dollar value of RevPAR $248), outperforming the next best performing market (Auckland) by $70.

Wellington RevPAR performance increased due to significant ADR growth and stable occupancy.

Auckland recorded declines across all KPI’s due to a 4.5% increase in rooms available (to sell) which exceeded a 1.3% increase in demand for room nights and a 5.7% decrease in ADR, resulting in a 8.6% RevPAR decline.

International Visitor Highlights (12 Months Ending March 2019) International visitors were up 1.3% to 3.9 million for the 12 months ending March 2019.

Of the top 10 international visitor markets, Australia made up 38.5% of the total share of visitors, with China following at 11.2%. USA, Canada, and Singapore recorded the highest growth in Visitor arrivals. However, declines were recorded in Visitor arrivals for Australia, China, UK, Germany, Japan and Korea.

Domestic Visitor Highlights (12 Months Ending March 2019)Domestic visitor nights were up 2.1% to 22.8 million.Domestic visitor nights to the North Island were up 2.8%, while domestic visitor nights to the South Island were up 0.8%.

-3.1%

New Zealand & City Hotel Market Operating Performance Year to Date April 2019

Source STR

City OccupancyOCC YTD Growth %

ADRADR YTD Growth %

RevPARRevPAR YTD

Growth %

New Zealand 83.9% -2.1% $207.58 -1.1% $174.09 -3.1%

Queenstown 87.9% -4.4% $282.50 2.6% $248.43 -1.8%

Auckland 83.6% -3.1% $213.46 -5.7% $178.42 -8.6%

Wellington 80.6% -0.5% $194.45 6.3% $156.74 5.7%

Christchurch 86.8% 0.0% $165.79 -1.1% $143.89 -1.1%



International & Domestic Visitors – Who Goes Where? 12 Months Ending March 2019

SOUTH ISLAND

Int'l Domestic

TVN '000 9,018 7,625STVN 51.9% 33.4%VNAG 1.6% 0.8%

NORTH ISLANDInt'l Domestic

TVN '000 8,360 15,177STVN 48.1% 66.6%VNAG -4.1% 2.8%

KEY : Total Visitors ('TV '000') | Share of Total Visitors (‘STV’) | Visitors Annual Growth YOY (‘VAG’) | Total Visitor Nights (‘TVN ‘000)Share of Total Visitor Nights (‘STVN’) | Visitor Nights Annual Growth YOY (‘VNAG’)

RECENT SALES TRANSACTIONS

Novotel New Plymouth Hobson Hotel - NPL

Number of Rooms

85


Comfort Hotel, Wellington - WGN

Number of Rooms

115


Waldorf Stadium Apartment Hotel - AUK

Number of Rooms

178


Quality Hotel, Wellington - WGN

Number of Rooms

63


Source STATS NZ

SOLD | Nov-18

SOLD | Nov-18

SOLD | Nov-18

SOLD | Aug-18

Source: RCA

Note: Recent hotel transactions over 50 rooms

01 - AUSTRALIA

02 - CHINA

03 -USA 04 - UK TV '000 1,491STV 38.5%VAG -0.3%

TV '000 434STV 11.2%VAG -0.8%

TV '000 362STV 9.4%VAG 6.5%

TV '000 230STV 6.0%VAG -9.6%

TV '000 102STV 2.6%VAG -0.7%

Top International Visitor Markets 12 months ending March 2019

05 - GERMANY

New Zealand 12 Months ending March 2019

Total Visitor Nights up

2.1%Total Visitors up

1.3%

7


Paula Nassour

Executive Assistant

+61 (0) 404 111 738

[email protected]

Kayla Fishburn

Administration Assistant

+61 (0) 438 437 480

[email protected]

Michael Simpson

Managing Director

+61 (0) 431 649 724

[email protected]

Max Cooper

Director

+61 (0) 431 776 167

[email protected]

Vasso Zographou

Director

+61 (0) 449 979 039

[email protected]

James Cassidy

Associate Director

+61 (0) 478 333 858

[email protected]

Key Contacts

Rob Williamson

Director

+61 (0) 412 803 482

[email protected]

Adrian Archer

Director

+61 (0) 481 037 429

[email protected]

Savills plc: Savills plc is a global real estate services provider listed on the London Stock Exchange. We have an international network of more than 600 offices and associates throughout the Americas, the UK, continental Europe, Asia Pacific, Africa and the Middle East, offering a broad range of specialist advisory, management and transactional services to clients all over the world. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. While every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.

Savills Hotels ResearchSavills offers independent advice across hotel development & construction, hotel property investments and management of hotel real estate. With local and international clients including financial, investment and management entities, Savills has the experience to deliver on any project, no matter the size or scope.

Marsha Santoso

Analyst

+61 (0) 449 707 159

[email protected]

spotlight april 2019pdf.savills.asia/.../hotels-market-update-april2019.pdf · 2019-06-27 ·...

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