Melbourne set for hotel development boom

2017 came to a grand conclusion in the local hotel sector with the announcement of a hotel to be developed at Chadstone Shopping Centre to be operated by Accor Hotels under the MGallery by Sofitel Brand.

The operator was selected after a competitive tender process managed by Colliers International’s Guy Wells and Gus Moors, involving a variety of local and offshore hotel operators.

Accor was selected to operate the $130million hotel which is to consist of 250 rooms and is due to open in late 2019. Situated alongside Colliers International’s Chadstone office, the development of the hotel will be the next major expansion for Australia’s largest shopping centre and will continue to evolve the precinct from a traditional shopping centre to major entertainment and office precinct.

“The development of a hotel at Chadstone will further service the surrounding office parks and university precincts, while also catering to regional and international visitors to the shopping centre,” Mr Wells said.

He said the Melbourne CBD would witness a number of hotel openings in 2018, marking the commencement of the local hotel development boom. He said around 900 rooms were due to come onto the inner Melbourne market.

“Major hotel openings this year will include the Novotel at the Convention Centre in Southbank, and an Ibis and a Novotel each on Little Lonsdale Street in the CBD,” Mr Wells said. “Further openings are scheduled for 2019 and moving forward over the medium term, including a number of luxury hotels which will re-rate the accommodation offering in the Melbourne market.

“In the year ahead, we can also expect to see a lot more suburban hotels proposed as developers look to capitalise on the growing popularity of metro office markets, however the viability and actual development of these projects will continue to be reliant on the funding capabilities of the developers and the strength of the operator in each market."

Mr Wells said the student accommodation sector was also a market to watch in 2018.

“The first wave of major student accommodation openings will take place this year, with around 850 beds coming online in February 2018 in Melbourne” he said. “Scape Swanston Street and Iglu Melbourne (Franklin Street) are both due to open in February, while an additional 2,500 beds will come online through later 2018 and into 2019.

“We will see continued strong demand in the year ahead from developers for more student accommodation sites while another two or three projects are set to open early next year to coincide with the university cycle.

“With new entrants still looking to enter the market in this space, and existing players building scale, it is anticipated that if not this year but next year, we are likely to witness a consolidation of players or acquisitions in this market as major players look to expand their portfolios across Australia.”

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