GREATER SYDNEY SUPPLY & DEMAND. Tourism Accommodation Australia 31 May 2017

Transcription

1 GREATER SYDNEY SUPPLY & DEMAND Tourism Accommodation Australia 31 May 2017

2 OVERVIEW 1 Trading Performance 4 Summary 2 Supply & Demand 5 Questions 3 Hotel Investment Market

3 TRADING PERFORMANCE

4 Sydney City Cairns Hobart Gold Coast Melbourne City Canberra Adelaide Growth Brisbane Perth Darwin SYDNEY SHINES 40% 30% 20% 10% 0% -10% -20% -30% -40% Occupancy Average Daily Rate Source: STR Global, Colliers International

5 STRONG TRAJECTORY On an upward trajectory Occupancy levels continue to climb to new highs with many hotels operating close to full throughout the week > Occupancy levels averaged 88.5% over the past year ADR is on a strong upward trajectory, delivering strong returns to owners. > ADR averaged $250 over the past year Strong performance is expected to continue, supported by significant investment in tourism & transport infrastructure. Notably opening of ICC Sydney in late 2016 Source: STR Global, Colliers International

6 $A $A LUXURY COMPARISON Growth in Sydney s luxury segment has outpaced Melbourne over the past three years Occupancy levels are highest in Melbourne s luxury segment, trade above the general market Sydney luxury hotels now command a $55 premium over Melbourne Comparison of Sydney Luxury Hotels Vs All Grades Comparison of Melbourne Luxury Hotels Vs All Grades % 85.6% % 89.8% 0.0 ARR RevPAR Occupancy 0.0 ARR RevPAR Occupancy All Grades Luxury All Grades Luxury Source: STR & Colliers International Source: STR & Colliers International Source: STR Global, Colliers International

7 MIXED PERFORMANCE Lower yielding demand being pushed to the city fringe, airport precinct is the primary beneficiary The city is trading at a 30%-55% ADR premium compared to the metro markets Performance in Western Sydney continues to lag Market 2016 OCC 2016 ADR 2016 RevPAR RevPAR Growth YOY % YTD April RevPAR YTD Growth % Sydney City 88.1% $244 $ % $ % Outer & North Sydney 82.4% $186 $ % $ % Western Sydney 77.6% $156 $ % $127* 0.8%* Sydney Airport 92.1% $169 $ % $ % Source: STR Global, Colliers International

8 OPERATING MARGINS Basket of hotels for which we have 2015 and 2016 P&L s Highlights the dichotomy in the market, CBD recording strong gains but profitability in the metro under pressure Metro hotel markets are smaller and therefore new supply has a greater impact Metric Metro CBD Total Revenue per Available Room (TRevPAR) 0.9% 4.9% Departmental Profit -1.2% 5.0% Undistributed Expenses -0.2% 2.2% Gross Operating Profit (GOP) -1.7% 5.9% Source: Colliers International

9 SUPPLY & DEMAND

10 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Room Nights SYDNEY A LONG TERM VIEW Sydney Tourism Region Supply & Demand Growth, QMA Mar 98 to Jun 16 4% 3% 2% 1% 0% -1% -2% -3% Room Nights Available Room Nights Sold Source: Colliers International

11 SOURCES OF DEMAND - CITY 14,000 Sydney City Visitor Nights in HMSAG 12,000 10,000 8,000 6,000 4,000 2, Domestic Leisure Domestic Business Domestic Other International Leisure International Business International Other 11 Source: Tourism Research Australia, Colliers International

12 SUPPLY RESPONSE - CITY Sydney CBD had 20,831 rooms at the end of 2016 over 1,000 rooms less than Melbourne CBD! Weighted supply is forecast to increase by approximately 4,600 rooms by 2022 Some projects in planning may not proceed given the strength of the residential and office markets Sydney City Weighted Accommodation Pipeline Supply Increases, 2015 to 2022F Net Rooms 4,000 3,500 3,000 2,500 2,000 1,500 1, , F 2017F 2018F 2019F 2020F 2021F 2022F Completed Construction Proposed Mooted - Approved Mooted - Submitted % Increase 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% Growth % Source: Colliers International

13 LUXURY FOCUS - UNDERWAY Primus Sydney Sofitel Darling Harbour The Ribbon W Sydney Wanda Vista Sydney M Gallery by Sofitel The Patina Sydney 172 rooms 595 rooms 402 rooms 168 rooms 121 rooms 240 rooms Open 2015 U/C 2017 U/C 2020 Proposed 2019 Proposed 2020 Proposed 2021 Greenland Schwarz Family Greaton Dalian Wanda Shanghai United Pontiac Land China Domestic China China China Singapore Source: Colliers International

14 LUXURY FOCUS - PLANNING 333 Kent St Sydney Luxury Hotel Sydney Crown Resort Sydney Ritz Carlton Sydney The Quincy (TBC) Sydney 220 rooms 350 rooms 352 rooms 360 rooms c.200 rooms Proposed 2020 Planning 2020 Planning 2020 Planning 2021 Planning 2021 I-prosperity Dexus Property Crown Resorts Consortium FEO China/Australia Domestic Domestic HK / Australia Singapore Source: Colliers International

15 Occupancy ADR (AUD) INTERNATIONAL COMPARISON Australian luxury hotels have some of the highest occupancies globally Room rates are well below other global cities which indicates there is scope for growth Product/brands would widely be regarded as business hotels with few true luxury offerings Comparison of Australian Luxury Hotels Vs International Melbourne Sydney Hong Kong Source: STR & Colliers International Tokyo New York Singapore London Paris Occ Comparison of Australian Luxury Hotels Vs International 1, , Paris New York London Tokyo Hong Kong Singapore Sydney Melbourne ADR Source: STR & Colliers International Source: STR Global, Colliers International

16 SOURCES OF DEMAND - METRO 6,000 Sydney Metro Visitor Nights in HMSAG 5,000 4,000 3,000 2,000 1, Domestic Leisure Domestic Business Domestic Other International Leisure International Business International Other 16 Source: Tourism Research Australia, Colliers International

17 Net Rooms Growth % SUPPLY RESPONSE METRO Sydney Metro had 16,964 rooms at the end of 2016, making it Australia s fifth largest accommodation market Supply is forecast to increase by approximately 6,400 (unweighted) rooms by Sydney Metro Weighted Accommodation Pipeline Supply Increases, 2015 to 2022F 3,500 2,500 1, F 2017F 2018F 2019F 2020F 2021F 2022F 13.0% 11.0% 9.0% 7.0% 5.0% 3.0% 1.0% -1.0% Completed Construction Proposed Mooted - Approved Mooted - Submitted % Increase Source: Colliers International

18 MEDIUM TO HIGH SUPPLY RISK Supply risk is greatest in the airport precinct and in Parramatta New additions in and around the airport are likely to draw demand out from the CBD Many markets face a doubling of supply, should all projects proceed Market Opened Construction Proposed Approved Total Risk Airport , ,028 High North Sydney/Chatswood Low Macquarie Park Medium Parramatta ,056 Medium Source: Colliers International

19 Visitor Nights VISITOR FORECAST 140, , ,000 80,000 60,000 40,000 20,000 0 Domestic Holiday International Holiday Domestic VFR International VFR Domestic Business International Business Domestic Other International Other Source: Tourism Research Australia, Colliers International

20 Visitor Nights VISITOR FORECAST 140, , ,000 80,000 60,000 40,000 20,000 0 Domestic Holiday International Holiday Domestic VFR International VFR Domestic Business International Business Source: Tourism Research Australia, Colliers International

21 Visitor Nights RENTED HOUSE SEGMENT 2.5 times as many nights were spent in a rented house in Sydney TR in 2016 This increases to almost six times as many nights in Sydney metro! The VFR segment dominates a/c for 53% of nights in a rented house Growth has been strongest in the business (+13.4%) & holiday segments (+9.3%) Growth in the business segment is being sourced domestically Growth in the international segment is being sourced from overseas 40,000 Sydney City Sydney Metro 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Domestic Holiday International Holiday Domestic VFR International VFR Domestic Business International Business 21 Source: Tourism Research Australia, Colliers International

22 HOTEL INVESTMENT MARKET

23 Billions ASIAN OUTBOUND CAPITAL $90 APAC Outbound Capital (USD) $80 $70 $60 $50 $40 $30 $20 $10 $ YTD

24 Billions AUSTRALIA RANKS FAVOURABLY $20.0 Destinations for offshore capital 2016 ($US bn) $18.0 $16.0 $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $-

25 Billions CHINESE INVESTMENT $3.5 Australian commercial property - Chinese investment YTD $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $

26 YTD Millions HOTEL INVESTMENT TRENDS Origin of Hotel Purchasers by Value ( >$5 million) $3,750 $3,500 $3,250 $3,000 $2,750 $2,500 $2,250 $2,000 $1,750 $1,500 $1,250 $1,000 $750 $500 $250 $0 Australia Hong Kong Other Singapore USA Japan China Source: Colliers International

27 RETURN PERFORMANCE FOR HOTEL SECTOR Source: Colliers International

28 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Index DEVELOPMENT FEASIBILITY Strong uplift in hotel values over the past four years, outpacing construction costs First time for twenty years that new hotel development looks feasible cost versus value Building Price Index - Sydney Value Per Room - Sydney 4-Star Hotels Source: PCA, Rawlinsons, Colliers International

29 COMPETITION FOR LAND Unprecedented rental growth in CY2016 on the back of tightening supply and steady demand Record year of withdrawals approx. 240,000sqm Office vacancy is projected to fall to 3.5% by January 2020 Supply & Withdrawals Volumes Average Net Effective Rents Source: Colliers International

30 SUMMARY Sydney is the best performing hotel market in Australia Performance across the metropolitan is more mixed and impacted by local supply/demand balance Tourism expected to remain on a growth trajectory Supply outlook in Sydney city is relatively benign with slight uptick projected in 2020 The luxury segment is a key focus bringing new product into the CBD market Supply increases in the metropolitan are greater than in Sydney City and impacts will be localised Hotel sector faces ongoing competition from short term letting platforms Chinese capital has had a material impact on the sector, improving feasibility Strong office market may see fewer hotel projects put forward in the coming years 30

31 THANK YOU CONTACT: KAREN WALES MOB