October 19, 2016: Action Hotels, the leading owner, developer and asset manager of branded three and four-star hotels in the Middle East and Australia, is pleased to announce that it has secured a long-term, 92-year lease on a plot of land at Melbourne Convention and Exhibition Centre for the development of a new four-star hotel.
The new hotel, which is expected to open in Q1 2018, will comprise 317 rooms and 14 apartments, making it the second largest hotel in Action's portfolio. The hotel will be Action's fourth property in Australia and third in Melbourne. The approximate total project cost is $69m1, which Action will fund partially through a new debt facility for the project and partially through existing resources.
The Melbourne Convention and Exhibition Centre is the largest convention centre in the Southern hemisphere and currently accommodates over 5,500 delegates, last year hosting 1,030 events and attracting over 680,000 attendees.2
Centrally located, the hotel will also benefit from its proximity to the growing Docklands precinct, Etihad Stadium, Melbourne Central Business District and Melbourne South Wharf, a highly sought-after leisure destination.
Hotel demand in Melbourne continues to outperform supply, underpinned by increases in both international and domestic tourism. Demand has increased by an average of 5.6% per annum and has contributed to a 4% growth per annum in RevPAR between 2009 and 2015. Hotel accommodation in the city is predominantly made up of upscale and upper upscale hotels, which make up 62% of the current supply1 and Action Hotels has identified an opportunity in the market for the creation of midscale hotels to meet this increasing demand. 2
Sheikh Mubarak AM Al Sabah, founder and Chairman of Action Hotels stated,
"I am delighted to announce the latest addition to our Australian portfolio, with a plot of land in a highly sought-after area of Melbourne. The hotel is ideally positioned in an attractive market with extremely positive fundamentals and rising demand, in a location that is currently underserved by midscale hotels."
1Conversion rate used: 1 AUD$ / 0.74 USD$
2Source: JLL Report, July 2016