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Australian hospitality group TPG Hotels has acquired 4-star Pacific Hotel Cairns for an undisclosed sum following a quiet off-market expression of interest process for the longstanding asset.
The 11-storey hotel features 207 rooms and a range of guest facilities, including a restaurant, lounge, an outdoor swimming pool and parking. Four retail tenancies, which are occupied by two long-standing tenants Destination Cairns Marketing and Flamingos Tiki Bar, also form part of the asset.
The hotel opened in 1982 and has since undergone numerous refurbishments and upgrades. In 2018, 31 new rooms were added and over FY23 the guest rooms and hallways from levels four to nine were revamped.
Three years following the renovation, a fire impacted levels 10 and 11, affecting 44 rooms and making them unavailable for bookings. The hotel is positioned on a 3,570sqm CBD site.
The acquisition was negotiated by CBRE Hotels’ Wayne Bunz and Hayley Manvell on behalf of Pacific Hotels Group.
“The sale was negotiated by CBRE Hotels following our client's approach in mid-January, allowing us to target select investors capable of completing the transaction prior to the commencement of the client's proposed refurbishment program,” Bunz said.
“This delivers another result for our client, Pacific Hotels, following the sales of the Pacific Hotel Brisbane and Coral Cay Mackay,”
Before the sale, the hotel was owner-operated under the Pacific Hotel brand, however vacant possession was available upon completion allowing future operational flexibility.
“The sale represents an initial yield of 4.3 per cent and a stabilised yield on a three-year basis of 7.25 per cent. This demonstrates the demand for Cairns’ accommodation assets with genuine upside,” Bunz added.
“Infrastructure improvements and a lack of new hotel supply is underpinning investors in Cairns, with the supply constraints expected to support the continued recovery of the city’s limited pool of assets
“This has already been reflected in increased room rates and revenue, with average daily rate (ADR) and revenue generated per available room (RevPAR) 41 per cent and 24 per cent above pre-pandemic levels in 2023.”
The next test of the market will be the sale of Pullman Cairns International and the adjoining Village Lane retail and commercial arcade, which are being offered for sale via a CBRE Hotels’ expressions of interest campaign.
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