AccorInvest to offload $300m hotel portfolio

AccorInvest to offload $300m hotel portfolio

27 July 2018

French hotel giant, AccorInvest, is selling a portfolio of 23 Australian hotels, its entire local real estate holdings, for more than $300 million in one of the biggest-ever hotel portfolio offerings of its kind, reports the AFR.

The predominantly freehold portfolio of economy-style hotels comprises over 3,000 rooms spread across the major capital cities and regional areas are managed by Accor on long-term agreements.

“Never before has an offering of this nature been presented to the open market in Australia,” said JLL Hotels & Hospitality Group’s Craig Collins, one of two agents handling the sale.

“The pure scale of this portfolio and its diversity—in terms of location, market positioning and income profile—presents investors with an opportunity to immediately establish an unparalleled foothold in one of Asia Pacific’s most highly sought-after hotel investment destinations,” Mr Collins said.

This latest offering means $1.1 billion worth of Accor-branded hotels have hit the market this year leaving the Australian real estate sector awash with hotels for sale, says The Australian.

And according to the latest hotel performance data from industry analyst STR Global, it’s a good time to go to market, adds The Urban Developer.

STR said that Australian hotel occupancy was the highest for any second quarter on record, with analysts pointing to the overall health of the Australian hotel industry in absorbing new supply.

“The 73.2 per cent absolute occupancy level was the highest for any Q2 on record in the country. That came even with 2.1 per cent more room nights available compared with Q2 2017,” STR analysts said.

Economy hotels are a highly proven and successful hotel model and have low operating costs and high level of profitability, notes The Australian.

It hotel portfolio on offer includes the 412-room dual ibis Brisbane and Mercure Brisbane CBD hotels, the 296-room Novotel Brisbane, the 250-room Ibis Melbourne Hotel, the 200-room ibis Sydney Airport, the 239-room Mercure Perth.

All hotels are managed by Accor on long term agreements of 30 to 50 years whilst delivering investors partners a five per cent dividend yield.

Accor, like other major hotel groups, have divested or spun off their real estate assets to focus on the operational side of their businesses as they face a growing threat from unregulated disrupter Airbnb and online travel agents, led by the Expedia Group, says the AFR.

Interest is expected from local hotel investor groups like fund managers SB&G, iProsperity and Oscar Hotels as well as overseas investors.

While the preference is to sell the hotels as a single portfolio, AccorInvest will also consider offers for individual or batches of hotels in the portfolio.