An industry-led study identifying impediments and new opportunities for hotel investment in Australia - New Investment Frontiers - was launched at the Australian Stock Exchange recently.
The study, which was carried out by Jones Lang LaSalle Hotels and sponsored by TTF Australia and Property Council of Australia, was launched before the 80 top players in investment and tourism.
The study is the first of its kind in identifying a way forward for hotel investors to achieve better yields, identifying the need for:
- better alignment of risk and reward;
- a peak industry group;
- better information for the industry to gauge progress (statistics/ data); and
- risk apportionment in management agreements.
Property Council of Australia NSW Tourism Committee Chairman Philip Levinson said the study provided clear and decisive solutions to stimulate new investment in hotels.
“Despite strong tourism growth, institutional investors have largely shied away from investing in hotels,” Mr Levinson said.
“The report is about capturing the attention of professional fund managers.
“Currently, hotel investment accounts for less than 1 per cent of total funds under management, so there are tremendous opportunities to attract institutional investors,” Mr Levinson said.
Jones Lang LaSalle Hotels CEO David Gibson said he believed the study offers meaningful ways to redress the balance of risk and reward in hotel investment.
“For instance, the use of leases rather than management agreements allows the owner to smooth the volatility inherent in the operation of hotels and allows the manager to concentrate on their area of expertise - running hotels,” Mr Gibson said.
“Amongst other recommendations, our research suggests the creation of a planning hierarchy to contain volatile supply growth,” he said.
TTF Australia Managing Director Christopher Brown said the report was a demonstration of the industry helping itself.
“This report is the biggest blueprint prepared by the industry since the TTF-commissioned Macquarie Bank report Perspectives on Tourism Investment (1995) was launched and provides a rational policy platform and industry action plan for going forward,” Mr Brown said.
“We need a mature approach to develop a mature asset class.
“Tourism investors and operators must work together to keep reminding the community that we have made the transition from `white shoe` to `blue chip`,” he said.