Australian hotels enter new era of refurbishment to adapt to changing market: Colliers

Australia’s hotel sector is entering the era of refurbishment and repositioning as owners identify the need to stay competitive in a changing market. 

According to Colliers International, maintaining facilities to the standards expected by discerning guests and determining how and when to upgrade those facilities is one of the biggest challenges faced by hotel owners. 

“Money never sleeps, and neither do hotels,” Karen Wales, Colliers International Director of Hotels, said.  

“It is a simple fact that eventually every property will need an upgrade but with the opening of more than 15,000 new rooms over the past three years, existing owners will need to consider expediting the renovation cycle to compete with significant new supply. 

“The majority of Australia’s accommodation rooms were built in the 1980s, 1990s and 2000s. The owners of these properties will need to give greater regard to major capital refurbishment plans, particularly if ongoing repairs and maintenance have not been maintained.”

Source: Colliers International 

Nigel Greenaway, Colliers International National Director of Hotels, said.  said owners who carefully considered guests’ needs and used any property upgrade as an opportunity to reposition the asset would ultimately be the ones to get the most out of their renovation and improve the value of their hotel asset in the long-term.

“Capital expenditure can be initiated for many different reasons such as commercial business opportunity, compliance with current legislation (WHS/NCC/DDA), end of life replacement or meeting consumer trends,” Greenaway said. 

“But it should ultimately have the common objectives of maintaining market position and/ or upgrading the hotel business, increasing owners’ return in this highly competitive market with the future long-term goal to increase the real estate value of the property.” 

Greenaway said while a successful hotel refurbishment or renovation came with significant challenges, a major property refresh presented a hotel with the unique opportunity to reposition itself in the market and ultimately support its longer-term revenue goals. 

“Owners that take a considered approach, determining the right time to relaunch renovated rooms while also having the right pricing strategies in place, will ultimately get the most out of their renovation,” he said.

“Refurbishments can include both soft and hard elements, as well as a Return on Investment component.”

Ian Pert, Colliers International National Director of Project Management, said first impressions were of vital importance to helping guests distinguish between hotels or brands.

“The design of a hotel, both interior and exterior, is often the most effective way to make an exceptional first impression,” Pert said.

“Product offerings are also changing as hotels look to satisfy new ways of living and working.

“Current trends include a greater focus on the lobby as a central meeting point and the development of new food and beverage concepts which showcase local produce and meet a growing awareness of health a wellbeing. 

“The hotel sector is also under increasing pressure to reduce its environmental footprint and develop truly sustainable operations. Hotel buildings have significant opportunities to reduce their energy, water consumption and greenhouse gas emissions and we will see this become a key focus as a growing number of owners look to refurbish.”

Pert said refurbishment programs rolled out in the near future would also have a greater focus on technology and distribution.

“Guests have a high expectation when it comes to technology capability, particularly of a high-end hotel,” he said.

“Most guests are self-sufficient, tech-savvy travellers who expect seamless connectivity across platforms and devices. 

“New developments include service automation, mobile device as door key and on-demand technology in relation to smart televisions.”