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Hotel sector preparing for a shake-up

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The Australian hotel sector is set for a major shake-up following news that Mantra Group has entered into an agreement with the Paris-based Accor in a deal valued at about $1.2 billion.

If successful, AccorHotels’ reach across Australia will more than double and will give it greater exposure across all capital cites and county regions. One of Mantra’s strongholds is the Gold Coast, Queensland, which will be in high demand when the city hosts the 2018 Commonwealth Games.

M&L Hospitality, the Singapore-based real estate investment group, will grow its stake of Sydney's Central Business ... M&L Hospitality, the Singapore-based real estate investment group, will grow its stake of Sydney’s Central Business District hotel accommodation with the commencement of its new hotel development at 65 Sussex Street. Photo: Supplied

AccorHotels is one of the largest hotel operators in the world with 4200 hotels. In Australia, it operates the Sofitel, Novotel, Grand Mercure, Mercure and IBIS brands and in 2012 it acquired Mirvac’s hotel operations for $320 million. In 2015 Accor bought the Fairmont, Raffles & Swissotel operations.

Its newest asset is the $500 million Sofitel Sydney Darling Harbour, which opened last week.

Mantra owns and operates more than 125 properties and more than 20,000 rooms across Australia, Indonesia and Hawaii under the Mantra, Peppers and Breakfree brands.

On Thursday, Folkestone Funds Management said its recently established Folkestone Sydney Airport Hotel Fund has exchanged contracts for the acquisition of the Mercure Sydney Airport Hotel for $76.4 million. FFM will be launching the fund in late October 2017 to raise $50 million to assist with the acquisition of the Hotel.

Last year the fund bought a site at Green Square, Sydney with a hotel project, which will branded Veriu.

Another hotel set to open is by the Singapore-based M&L Hospitality, controlled by the country’s Kum family’s West Hotel at 65 Sussex Street in the Sydney CBD.

M&L, which owns Australia’s biggest hotel, the Hyatt Regency, also on Sussex Street at Darling Harbour, will launch the new “upper scale” hotel in December, after a year-long construction, led by Multiplex.

Curio Collection by Hilton has been named as the operator. Curio Collection by Hilton is a global, upscale collection of distinctive hotels and resorts that offer guests one-of-a-kind experiences, each unique to the destination they call home. This is Australia’s first Curio property.

Located near Barangaroo, West Hotel is named after its position in the emerging western corridor of Sydney, sitting between Sydney Harbour and the CBD. 

Comprising 182 guest rooms including four suites, a restaurant, bar and meeting space, the hotel features a three-storey high open-air garden atrium. 

The architects were Fitzpatrick + Partners, and Woods Bagot designed the interiors scheme referening the colours and textures of the Australian landscape. It will feature bespoke artworks, graphic floors, sculptural lighting and natural stones and the lobby will have a bespoke White Waratah artwork from botanical and wildlife artist, Heidi Willis. 

According to ​Michael Simpson, Savills managing director of Hotels, the hotel property sector is currently outperforming all other property classes in the Australian market, with Sydney and Melbourne the standout performers, thanks to the continued achievement of strong market key performance indicators against a backdrop of compressing yields.

Mr Simpson said Melbourne is the second highest performing market in with an increase in occupancy for the fourth consecutive year. 

“Melbourne’s construction boom of Residential apartments, commercial space and continuing development of Docklands, has also encompassed new hotel development,” he said.

In September, superfund-backed developer Cbus Property revealed plans to build an upmarket 34-storey apartment tower on the Mercure hotel site in Melbourne which it has purchased for more than $70 million.

Cbus also settled on a deal to snap up the Mercure Melbourne Treasury Gardens building, a 12-storey brick hotel next to Spring Street’s most prominent tower, the Harry Seidler-designed Shell House on the corner of Flinders Street.

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