Hong Kongs Far East Consortium puts 2 Ritz-Carlton hotels in Australia on sale as it looks to
The company’s decision to sell the Ritz-Carlton hotels in Melbourne and Perth, which opened this March and in 2021, respectively, comes amid a revival in the tourism industry Down Under, after three years of Covid-19 pandemic had left the sector in tatters.
“Ritz-Carlton is a fantastic brand,” Hoong said. With the recovery in the tourism industry, “we feel that it is actually a good market [and] there will be trophy hunters out there,” he added. “At the end of the day, this is an exercise to basically recycle capital. We are a developer and we have our own Dorsett brand and that is more strategic to us.”
The hotel occupancy rate in Australia rose to 67.8 per cent in the first half of the year, from 61 per cent a year earlier, according to hotel industry data provider CoStar, which has been rebranded from STR.
Far East had HK$21.4 billion (US$2.74 billion) of debt, including bank loans and bonds, due in 12 months as of March 31, 2023, up from HK$11.4 billion a year earlier, according to its latest annual report. About 86 per cent of the company’s debt carries a floating interest rate.
On Thursday, the Hong Kong Monetary Authority, the city’s de facto bank raised its base rate to 5.75 per cent, the highest since 2007, as it mirrored the 25 basis point rate increase by the Federal Reserve to a 22-year high.Hong Kong hotel buying spree looms as investors bet on tourism rebound
While Hoong did not say how much Far East expected from the sale, Australian media reported earlier this month that the company was seeking about A$500 million (US$340 million) for the two hotels.
Ritz-Carlton is one of the brands under Marriott International. The luxury brand operates nearly 100 hotels and 50 residential properties in more than 30 countries and territories, according to Marriott’s website.Far East Consortium founded Dorsett Hospitality in 2007 in Hong Kong. It operates 53 properties across 23 major cities in countries such as China, United Kingdom, Germany, Malaysia and Japan. Besides Dorsett, it also owns the Silka, d. Collection and Dao by Dorsett brands that mainly cater to the non-luxury travel segments.
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Total investment in the Asia-Pacific hotel property sector fell by half to US$3.13 billion in the first six months of the year, but funds into Australia and New Zealand surged 189 per cent to US$820 million, according to a report by JLL.
The property consultancy expects total investment in Australia’s hotel segment to hit US$1.5 billion this year, the second-highest in Asia-Pacific after the US$2.9 billion investment forecast for Japan, citing their popularity as travel destinations.“Japan and Australia have historically been two well sought-after markets and are performing in terms of liquidity in the region, given the level of transparency which promotes inbound capital flows, and low exchange rates for Japan,” said Calvin Li, head of transaction advisory for Asia-Pacific at JLL.
“Despite some other challenges in Australia such as high interest rates that might set bumps in some deals, we expect these two countries to lead the podium in total hotel transaction volumes for the full year 2023,” he said.
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