The value of Sydney hotels continue to rise and are at their highest point in two years, according to the latest Property Council of Australia Hotel Valuation Index.
According to the Index, the latest quarter results show that for a typical 4-star Sydney hotel, the average annual income return was 9.57%, up from 9.33% in September 2005.
The average capital return was 7.72%, up from 5.96% in the previous quarter.
According to the Index, these figures combined deliver an annual total return of 17.3%.
The total return index, benchmarked against a typical Sydney CBD hotel in 1995 shows an increase of 240% above this value. This represents a substantial increase from the benchmark index figure of 177% in 2003 and 143% in 2000.
Property Council of New South Wales’s executive director Ken Morrison said the HVI shows that hotel values continue to rise, which is underpinning a strong hotel sector.
“Sydney hotel values – measuring income and capital return – performed strongly in the December 2005 quarter and this augurs well for the whole tourism and leisure sector.
“In recent years, the sector’s performance has been driven by annual income returns of over 9%, whereas capital returns have averaged between 5 and 7% per year,” he added.
However, Morrison said in order for the strong income returns to continue, Sydney needs to do more to attract the tourism dollar.
He added that six years on from the Olympics, Sydney needs a greater focus by government on how to boost tourism demand and drive the growth of Sydney’s tourism assets.
“We can’t afford to be complacent and rest on our laurels.
“More attention needs to be given to attracting major events, growing convention and exhibition business and driving tourism demand into new and existing markets,” Morrison concluded.
The HVI provides a uniform approach to hotel asset valuation. It has benchmarked the quarterly performance of a generic 4 star, 250 room hotel located in Sydney’s CBD since 1995, producing a likely selling price of the hypothetical generic hotel.
The quarterly index is an initiative of the Property Council of Australia and is assessed by a specialist group of leading hotel and leisure valuers representing Colliers International, Knight Frank, Landmark White, CB Richard Ellis, Jones Lang LaSalle Hotels and HVS International.
By Kathryn O’Meara
