Shake up of Australia's top accommodation operators - a "Stella" Performance.

According to Jones Lang LaSalle Hotels' annual Top Operator Survey, Accor Asia Pacific Corporation (AAPC) remains Australia's Top Accommodation Operator with almost 17,000 rooms under management.  Many hotel operators achieved solid growth during 2006 resulting from a range of Merger & Acquisition (M&A) activity, management changes and new developments.

Jones Lang LaSalle Hotels' annual Top Operators survey spans 98 hotel and serviced apartment operators around Australia and covers over 100,000 rooms.

At the end of 2005 AAPC recorded almost twice the number of rooms under management when compared to the next largest operator - InterContinental Hotels Group (IHG).  At the end of 2006 this margin has been reduced by approximately 50%.  "Following four major acquisitions, MFS saw its operating company, Stella Hotels & Resorts, catapult past IHG into 2nd position with growth of almost 140%," said Mr David Gibson, CEO Asia Pacific, Jones Lang LaSalle Hotels. 

MFS has emerged as an aggressive acquirer, most notably in the previously fragmented Management Rights sector.  Acquisitions in 2006 include competing leisure operators, Outrigger Hotels & Resorts[1]  (1,500 rooms) and S8 Limited (3,546 rooms) and CBD operators, THL's Pacific International (1,817 rooms) and Stockland's Saville Hotel Group (1,725 rooms).  "Many of these properties will be rebranded to one of Stella's existing brands – Mantra, Peppers, Breakfree or Bale," said Mr Gibson.

"These acquisitions will not only give Stella a dominant competitive position across the leisure market in Queensland but also diversify income streams to include city hotels which are benefiting from an upswing in business travel on the back of the strong economy," said Mr Gibson.

Having achieved a dominant position in Australia, MFS are said to be looking offshore to United Arab Emirates, India, Singapore, Pakistan and different parts of Europe.  "With a reported pipeline of 2,220 rooms across 21 properties over the next two to three years, we expect MFS to gain further ground throughout 2007," said Mr Gibson.

Mirvac Hotels & Resorts also made significant gains in the number of rooms under management most notably following the acquisition of the Carlton Portfolio through a joint venture between Bank of Scotland (UK) and Mirvac Funds Management.  This acquisition led to the establishment of a new unlisted hotel fund.  "Mirvac increased the number of rooms under management by 1,842 rooms or 66.5%," said Mr Gibson.

Mr Gibson said, "Interestingly, the top ten operator list is now dominated by domestic players with internationally branded operators limited to Accor and IHG in 1st and 3rd position respectively, and Hilton and Starwood in 9th and 10th positions respectively."

Top 10 Accommodation Operators as at the end of December 2006

Source: Jones Lang LaSalle Hotels

Holiday apartments (Management Rights) evolved from a desire by "beach house" owners to recoup some income when not in use and began to proliferate in tourist areas.  The standard of serviced apartment management underwent improvement in quality and performance.  Chains or "brands" of serviced apartments emerged and have extended to include business-oriented hotels located in many city centres.  "In many cases these operators are starting to offer service levels fast approaching those available in many hotels as the sectors converge," said Mr Gibson.

Jones Lang LaSalle Hotels, the first and leading global hotel investment services firm, is uniquely positioned to provide both the depth and breadth of advice required by hotel investors and hotel companies, through a robust and integrated local network. In 2006, Jones Lang LaSalle Hotels provided sale and purchase advice on 186 hotel transactions globally; representing a combined value of US$9.3 billion, a total of 43,272 hotel rooms in 78 cities.

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[1] Note – MFS acquired Outrigger's Australia and New Zealand operations only