Australia’s serviced apartment industry is basking in a long-awaited rebound much to the relief of investors and operators. Demand is hitting record levels at many properties including those owned by the country’s largest operator, Quest. The group, a member of the largest serviced apartment network in the world The Ascott Limited, has witnessed unprecedented growth this year driven by the resurgence in corporate travel and a booming events scene. Occupancy is back above 80 per cent and room rates have jumped from their pre-pandemic average of $180 to over $200 per night. In the last 12 months, Quest revenue jumped 14 per cent thanks to a 20 per cent rise in holiday makers booking rooms while business travellers were up 10 per cent.
Back in business
The solid rebound follows a protracted downturn for the industry. From 2017 to the start of 2022, the market for serviced apartments declined an average 7.8 per cent per year according to data from global analysts IBISWorld. Last year however the tide turned when Australia’s serviced apartment market grew 12.1 per cent to hit $1 billion in total revenue. The milestone marked the start of a major growth phase, IBISWorld’s most recent report into the country’s serviced apartments industry forecasting rapid expansion in the coming five years fuelled by continued growth in domestic and international tourism.
Quest is taking full advantage of the positive outlook. Earlier this year, managing director David Mansfield announced a fresh direction for the group starting with the ambitious target of rolling out 37 new serviced apartment properties by 2026. The plan is key to Quest’s long-term goal to increase the group’s current network of 157 properties to 200 by the end of the decade and will begin with the opening of eight hotels over the next two years. Located mostly in Sydney and Melbourne, these properties alone will lift the number of rooms managed by Quest close to 9500 and position its accommodation portfolio among Australia’s largest.
Full steam ahead
All new Quest properties are slated for strategic locations such as newly gentrified inner-city suburbs, and those with growing populations and flourishing local economies. This year five Quest hotels are on the drawing board, starting with the recently opened hotel in Melbourne’s chic inner city suburb Collingwood and an 86-room apartment hotel at QIC’s Watergardens Shopping Centre in the city’s north-west.
Just last week, the newly built Quest Woolooware Bay in Sydney’s south was placed on the market by Property group Novm. The property is an integral part of the $1 billion Woolooware Bay Town Centre, a mixed-use development designed to become the focal point of the densely populated Sutherland Shire. The town centre will eventually be home to 2500 people living in around 900 residential apartments, while the hotel is located directly next door Pointsbet Stadium, home to the Cronulla Sharks.
CBRE’s Michael Simpson who is managing the sale (via Expression of Interest closing Friday 2 June 2023) said the hotel is perfectly placed to cater to NRL fans as well as visitors to the Shire who want to be close to local beaches, the Royal National Park as well as commercial centres, Sutherland Hospital.
“We’re expecting this campaign to generate interest from both domestic and international buyers,” Mr Simpson said. “The lease to Quest will provide a stable and secure income stream backed by a quality operator.”
Changes within Australia’s serviced apartment industry are mirroring the industry’s renewed popularity overseas. Larger hotel chains are investing into extended stay brands as travel trends shift, guests now after longer stays as they blend working remotely with adding a few extra days for a vacation.
off the back of renewed interest in the which started with travellers wanting extra space for flexibility and work. In June last year, the Global Serviced Apartment Industry Report revealed 60% of operators and agents reported increased usage of their accommodations for the purposes of relocation and assignment work. Serviced apartments are also proving popular with younger people: 34 per cent of Generation Z and Millennials planning to take longer trips than pre-pandemic compared to 15 per cent of older generations.