Hotel operators who have developed serviced apartment products as a preference over hotels, have been more successful at growing their portfolio in recent years.
According to Jones Lang LaSalle Hotels' annual Top Operator Survey, this has been the main growth engine for the Australian accommodation market over the last seven years but there are signs that hotels are coming back into favour.
The Survey indicates that rooms under management by the Top 10 Operators have increased by approximately 64% since 2000.
"In 2007, Australia's largest hotel operators, Accor Asia Pacific Corporation (AAPC) and Stella Hospitality Group both increased rooms under management by concentrating on the serviced apartment sector - both primarily in the 4-star arena," said Mr Gus Moors, Senior Vice President, Jones Lang LaSalle Hotels.
AAPC remains Australia's Top Accommodation Operator with 18,591 rooms under management – having grown by 11% during 2007. Stella Hospitality Group maintained 2nd place and continued on an aggressive path, increasing rooms under management by 27%. InterContinental Hotels Group (IHG) also retained 3rd spot.
"AAPC introduced 12 new Mercure properties during 2007, many of which were apartments in regional destinations," said Mr Moors. He added, "AAPC also grew their Ibis, Novotel and Formule 1 brands around Australia throughout the year."
AAPC will also launch new developments in 2008 including the entry of its new upscale Pullman brand to the Australian market. The Pullman Sydney Olympic Park is scheduled to open in August 2008. A Formule 1 hotel is also planned nearby, bringing the number of rooms operated by Accor at Sydney Olympic Park to over 600.
Stella swallowed a number of property and hospitality groups in 2006/07, including the Saville Hotel Group, the Outrigger Resorts Group and the S8 Property Trust. "One of Stella's larger changes also included the addition of five Gold Coast properties to its stable through the takeover of hotel manager Sunleisure Group Limited which included Q1 Resort & Spa, Legends Hotel, Circle on Cavill, Avalon Riverfront Apartments and Lumiere Apartments – the majority being serviced apartments," said Mr Moors.
MFS Limited also recently finalised the sale of a 65% stake ($406 million) in the Stella tourism business to CVC Asia Pacific and signalled its intention to grow its Mantra brand of hotels into Australia's largest 4-4.5 star brand.
Evidence of branding consolidation is also emerging as a prominent feature in the lower star categories, with Constellation Hotel Group making significant gains in the number of rooms under management following the acquisition of the Sundowner Motor Inns brand. "Constellation increased the number of rooms under management by 857 rooms or an impressive 31.5% during 2007," said Mr Moors.
Constellation's brands now include Country Comfort (3-4 star), Sundowner (3-4.5 star), Chifley (4-4.5 star) and Australis Hotels, Resorts and Apartments (4-4.5 star).
"With 87,000 motel rooms across Australia accounting for 40% of the total accommodation market, we see huge potential for quality brands to add value within this sector," said Mr Moors. He added, "RevPAR (Revenue per Available Room) growth increased 9.8% for year ending September 2007 – the highest growth achieved since 1994/95."
The addition of a brand can make a considerable impact on the cash flows for operators and owners alike. "Significant advantages by way of increased market share, additional revenue channels and in some instances more favourable financing terms can also be achieved," said Mr Moors.
"AAPC's portfolio of budget hotels is also expanding with the Formule One (1,661) and Ibis (2,003) brands now accounting for 20% of their portfolio," said Mr Moors.
As the hotel trading cycle advances, changed market conditions may also result in more traditional hotel operators once again coming to the fore. "Australia's accommodation development pipeline is expanding with rooms under construction and likely proposed increasing by 10% since November 2007," said Mr Moors. He added, "86% of proposed rooms are now hotels compared to 77% of rooms under construction being serviced apartments."
Whilst InterContinental Hotels Group (IHG) recorded only slight growth in 2007 with rooms under management increasing by 1.2%, 2008 has more activity in store. "With a strong development pipeline and several recent hotels and resorts opening, we expect IHG to remain in the top order during 2008," said Mr Moors. IHG have already introduced Crowne Plaza Torquay and Crowne Plaza Pelican Waters Golf Resort & Spa this year.
Quest Apartments, who enjoyed the highest growth out of the Top Ten Operators, is primarily a franchised based system experiencing great success expanding from its city base to suburban and regional markets.
The obvious omission from the top operator list is Hilton International – recently acquired by Blackstone. "Notwithstanding, Hilton International currently have the 364 room Hilton South Wharf in Melbourne under construction - scheduled to open in early 2009," said Mr Moors.
Jones Lang LaSalle Hotels' annual Top Operators survey spans over 100 hotel and serviced apartment operators around Australia and covers around 100,000 rooms.