Despite the lockdowns and border closures decimating the hospitality industry with low occupancy and room rates, there has been a boom in property investment in Queenslands far north as a number of hotel properties are changing hands in Cairns.
from cairns post 31.08.2021
PHILOSOPHICAL disciples of Baron Rothschild have set compasses to the north as a struggling hotel industry spurs on investment despite being hammered by lockdowns and lockouts.
The legendary 18th-century contrarian investor famously said “the time to buy is when there’s blood in the streets, even if the blood is your own”.
He made a fortune during widespread investor panic after Napoleon lost the Battle of Waterloo – and his mantra rings true two centuries later as Covid-19 ravages the Far North accommodation sector.
The Cairns Post can now reveal the identity of a mystery buyer who became the region’s newest hotelier after forking out $10.88m for the Hotel Grand Chancellor in Palm Cove.
Fund manager Tyche Capital paid 17 per cent above book value despite the hotel bleeding $814,000 in 2020.
The purchase builds on the firm’s growing property portfolio including the 112-room Veriu Central Hotel in Sydney, which it bought for $58.9m in the midst of a hotel sale drought in 2019.
The Hotel Grand Chancellor – which includes its famous crocodile pool, 140 rooms, 3.67ha of land, restaurant, bar, meeting and function rooms, retail shops and a now-closed nearby convention centre – is now set for a major refurbishment.
It will relaunch in 2022 under the banner of a major accommodation franchise new to the region, although the identity is being kept tightly under wraps.
At the same time, CBRE Cairns managing director Danny Betros said an expressions of interest process for the sale of Ellis Beach Oceanfront Bungalows had been “phenomenal” so far.
He believed the Far North accommodation sector was set to rocket after the current lockdown disaster had finally ended.
“We’ve had massive interest from all over Australia for Ellis Beach,” he said.
“For what it is with pure beachfront position, it’s going to be interesting to see how it ends up.”
Data from leading global hospitality benchmarking firm STR reveals the occupancy rate across Cairns and Port Douglas was 55.6 per cent from January to July.
It was up from 37.5 per cent over the same period last year but equates to 6128 empty rooms out of a total 14,120 across the region.
Revenue per available room has also more than doubled from $46.42 last year to $105.17 – still considerably down on pre-Covid levels.
The immediate past looks grim and the market is only edging in the right direction, and yet the money still rolls in.
Ibis Styles Cairns also sold to ASX-listed financial services firm MA Financial in May for $9.5m.
Homegrown Cairns tycoon Adam Adams bought the former Rydges Plaza Hotel for $11m in November 2020 and has since renovated and relaunched the business as The Benson Hotel.
Major renovations are under way, including multimillion-dollar plans to build an entirely new top level for a swanky rooftop bar and Benson Bites restaurant.
He also built the $12m Oaks Hotel on the Cairns Esplanade and opened its doors in September last year.
Meanwhile, Syrian billionaire Ghassan Aboud is still waiting to realise his $400m investment across three Crystalbrook Collection hotels that opened with horrific timing as Covid-19 panic swept the globe – not to mention his planned $250m superyacht marina and hotel redevelopment in Port Douglas.
Mr Betros believed there was reason for investors to be confident, although continued lockdowns just before school holiday periods were not helping market confidence.
“There is a seriously positive mood,” Mr Betros said.
“Retail is still not good and that’s not going to change any time soon – I’d say more than half of those CBD businesses are never going to reopen.
“But the commercial market is rocketing along.”