09/08/2005 - 22:00

Acacia owner eyes resort business

09/08/2005 - 22:00


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A shift in focus to resort-style developments was a major factor behind the decision to sell the Acacia Hotel in Robinson Avenue, Northbridge, announced last week.

Acacia owner eyes resort business

A shift in focus to resort-style developments was a major factor behind the decision to sell the Acacia Hotel in Robinson Avenue, Northbridge, announced last week.

Minority shareholder and hotel general manager, Karthigaesu Nair, told WA Business News he purchased the hotel in 2001 with his Maldives-based business partner, who owns nine other hotels.

“This was his first CBD hotel and he wants to focus more on the resort-style business, which is promoted a lot through tour operators, so has chosen to sell,” Mr Nair said.

The Acacia is one of only two residential hotels in Northbridge, and is on the market for $13.5 million through business brokers Goodwin Mitchell O’Hehir.

Goodwin Mitchell O’Hehir’s Kerry O’Hehir said the hotel was based on a 3112 square metre block, including a vacant area to the back of the hotel, which could be developed.

“The city centre will really shift with the sinking of the rail line and put Northbridge much more at the centre of things,” he said.

Among the parties to have expressed interest in the hotel were a developer, who wished to convert the hotel into residential apartments, according to Mr O’Hehir.

Mr Nair estimated that 65 per cent of hotel occupancy came from business travellers, with the rest coming from tourism.

“We have heavily marketed the hotel since purchasing it, and experienced a 5 to 7 per cent growth each year,” Mr Nair said.

“I would recommend to any new owner that any further growth needs to come from being part of a larger hotel group, because I think we have gone as far as we can under our own badging.  Any extra growth will have to come from the marketing strength of a bigger group.”

The Acacia Hotel has 94 rooms, a fully licensed restaurant, al fresco cafe, gymnasium, conference and function venues which can cater for up to 300 people, and on-site security parking.

Hotel consultant and manager of Transocean Consulting Services, Alan Boys, said the hotel market in Perth had been trading well overall, and that there was a shortage of stock for sale.

“There have been very few transactions in Perth the last few years and a reasonable degree of interest in the market, and with construction costs the way they are, it is difficult to justify new construction,” Mr Boys said.

“The hotel market has been trading pretty well recently – occupancy is solid and room rates are rising, particularly for hotels focusing on the corporate sector.”

He said that, while plans had been mooted for new hotels in the Northbridge area, market conditions were not suitable to trigger further development.

“There has been some concern by operators over the general Northbridge area, but certainly if it keeps being cleaned up it will be more suitable for accommodation,” Mr Boys said.

And with apartment developments generally yielding higher than hotels, Mr Boys said he was not surprised that a prospective purchaser was considering converting the hotel.

“There is a good degree of merit in doing that. Hotels traditionally don’t yield as much as through other uses, and although it hasn’t happened in Perth yet, places like Sydney have already been doing it,” he said.


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