Inner-Melbourne Dual-Branded Hotel Changes Hands for $170m

The Novotel and Ibis Melbourne Central Hotel has changed hands for $170 million more than 12 months after the near-new property first came to market.

Singaporean multi-national Worldwide Hotels Group acquired the 472-key property at 399 Little Lonsdale Street through its subsidiary, Legend Land Melbourne.

CBRE Hotels, which brokered the sale in an off-market agreement, said it was the biggest hotel deal in more than six years, a sign of growing confidence in the Australian hotel market sector.

The five-year-old hotel was off-loaded by Well Smart Investment Holdings, which said it was shedding the asset as part the group’s capital recycling strategy.

Earlier this year Well Smart acquired the abandoned Lindeman Island in Queensland’s Whitsunday’s group for a cut-price rate.

CBRE Hotels national director Wayne Bunz said the Melbourne deal showed the confidence international capital sources have in Australia’s hotel market.

▲ The Novotel and Ibis Hotel in downtown Melbourne. The sale is the biggest hotel deal in six years, says CBRE.

“We have strong confidence in the Melbourne hotel market and its rapid recovery, given it is Australia’s most-populated city and the nation’s events capital, which has consistently demonstrated its ability to absorb new supply,” Bunz said.

“The market benefits from robust corporate visitation and tourist demand and boasts the country’s best cultural and sports events calendar.”

The Novotel and Ibis was Australia’s first dual-branded high-rise hotel.

The Ibis element counts 259 lower-level rooms and the Novotel 213 rooms. There are two restaurants, a bar, conference and meeting spaces as well as recreation facilities.

The deal is the latest CBRE Hotels transaction with Worldwide Hotels Group, following their acquisition of the Ibis Styles Brisbane and Holiday Inn Perth.

“The Melbourne transaction followed a strong recovery in the city’s hotel market, with Melbourne recording the country’s third-highest RevPAR (revenue per available room) growth rate in the year to April 2023, growing by 54 per cent compared with the same period through 2022,” Bunz said.

▲ The five-year-old hotel was sold by Well Smart Investment Holdings, which said it was part of the group’s capital recycling strategy.

“Importantly, this recovery highlights the strong absorption of the 10 hotels that have come online since the start of 2022 in Melbourne, largely supported by a continued recovery in domestic and international tourism.

“While the city’s elevated, high-quality supply pipeline dampened investment levels over 2021 and 2022, Melbourne is now showing its ability to absorb this new room supply, which is expected to underpin growing investor interest in the market as the year progresses.”

Most recently Worldwide Hotels Group announced it was acquiring Park Royal on Kitchener Road in Singapore for $US388 million, the biggest ever single-asset Singapore hotel transaction.