Novotel sale is Melbourne's largest hotel transaction in six years

A subsidiary of Singaporean multinational Worldwide Hotels Group has purchased the Novotel & ibis Melbourne Central Hotel for $170 million in an off-market deal brokered by CBRE Hotels' Wayne Bunz and Scott Callow.

CBRE Hotels brokered the sale on behalf of Well Smart Investment Holdings as part of the group’s capital recycling strategy, which has already seen the company acquire Lindeman Island in Queensland.

The 472-room hotel on Little Lonsdale in the Melbourne CBD was sold to Worldwide Hotels Group subsidiary Legend Land Melbourne, representing the city's largest hotel transaction in more than six years.

The deal is the latest CBRE Hotels transaction with Worldwide Hotels Group, following the ibis Styles Brisbane and Holiday Inn Perth.

Built in 2018 as Australia’s first dual-branded high-rise hotel, the Novotel & ibis Melbourne Central Hotel comprises a 259 lower-level ibis room component and a 213 Novotel room component, with guest amenities including two restaurants, a bar, conference and meeting spaces, recreation facilities and undercover car parking.

CBRE Hotels’ National Director Wayne Bunz said the latest Melbourne deal evidenced the confidence international capital sources had in Australia’s hotel market, given its safe-haven status and ability to provide a strong inflationary hedge.

"We have strong confidence in the Melbourne hotel market and its rapid recovery, given it is Australia's most populated city and the nation’s events capital, which has consistently demonstrated its ability to absorb new supply," Bunz said.

"The market benefits from robust corporate visitation and tourist demand and boasts the country’s best cultural and sports events calendar.

"The acquisition of the Novotel & ibis Melbourne Central is the latest 2023 Australian deal brokered by CBRE Hotels, following Australia’s record single transaction of the Waldorf Astoria Sydney hotel development at 1 Circular Quay and the Sofitel Brisbane Central Hotel."

He highlighted a bounce back for the hotel sector with strong absorption of the 10 hotels that have come online since the start of 2022 in Melbourne, largely supported by a continued recovery in domestic and international tourism.

"While the city’s elevated, high-quality supply pipeline dampened investment levels over 2021 and 2022, Melbourne is now showing its ability to absorb this new room supply, which is expected to underpin growing investor interest in the market as the year progresses," Bunz said.