Increasing construction and labour costs have failed to dampen the prospects of one of Western Australia’s major hotel developers, Seashells Hospitality Group, which recently opened its fourth resort and is preparing to expand one of its existing resorts.
Increasing construction and labour costs have failed to dampen the prospects of one of Western Australia’s major hotel developers, Seashells Hospitality Group, which recently opened its fourth resort and is preparing to expand one of its existing resorts.
The group established the Sandcastles Holiday Apartments in Scarborough in 1989, which was re-branded in 1994 as the first Seashells Resort Apartments, and managing director Paul King says demand for corporate accommodation shows no sign of waning.
Since its inception, Seashells has focused on the four-and-a-half star, self-catered apartment-style accommodation end of the tourism market.
Initially intending to focus on hospitality management and marketing, the group has evolved into a hotel developer, constructing resorts and selling apartments through strata titling.
“We’ve kind of become the accidental developer, we’re a hospitality group that got into construction,” Mr King told Business Class.
After opening its first property in Scarborough, Seashells sought out other prospective sites, buying a one-hectare parcel of land in Broome with the view to developing a low rise, Asian-inspired bungalow apartment resort.
That resort, the award-winning Seashells Resort Broome, opened in July 1998 with 50 apartments located 300 metres from Cable Beach.
Its third resort, the Seashells Resort Mandurah, opened its first stage in the summer of 2005-06 with 79 apartments located on the beach at Comet Bay next door to the Mandurah Ocean Marina.
The final stage of the Mandurah development will take it to 130 apartments and will eventually incorporate supporting commercial uses, such as a beachfront restaurant, day spa, gourmet deli and retail stores.
The group opened its fourth resort, the Seashells Yallingup Resort, in December 2007, adjacent to the heritage-listed Caves House.
After extensive renovations of the hotel and pub, Caves House was re-launched in January 2006, with the newly constructed 40-apartment complex officially opening almost two years later.
Stage two of the project, on track to start in June, will add a further 17 apartments.
Mr King said the group was looking at a potential stage two at the Broome resort, as well as a number of new sites in WA and interstate.
But while increased hotel rack rates in WA are gradually improving potential returns on new tourism developments, the proposition is still seen as risky when put up against other commercial developments.
“It’s getting to the stage where the costs of developing a project of a four, 4.5 to five-star quality tourism product and trying to sell into an uncertain market is a bit risky,” Mr King said.
“But the huge increase in demand has seen rack rates improve, and I don’t see that demand diminishing.”
The group is also eyeing a second Scarborough property by redeveloping a site on the corner of Scarborough Beach Road and Filburn Street, which currently houses its head office, into a potential eight-storey serviced apartment operation.
Mr King is a passionate believer in the re-invigoration of Scarborough, and the vital role the recent planning amendments to remove certain height restrictions on coastal developments passed by council will play in the area’s revival.
“Scarborough, as an area, should be the jewel in the crown on the west coast, but it’s an ugly duckling. It should be the Bondi of WA,” he said.
The proposed redevelopment of Observation City, which would essentially shut down completely over the duration of construction and re-open with roughly half the number of hotel rooms, reinforced the need to expedite tourism developments in the area.
“How can you market it as an international destination, and do events like the Surf Life Saving Championships, without any accommodation?” Mr King said.
He said the government needed to act fast and work to attract developers to the area by minimising the level of bureaucracy involved and fast-tracking approvals.
He wants the government to make tourism a primary portfolio, and to integrate tourism into the planning process.
“The government are now aware of it, but they aren’t doing much about it,” Mr King said.
In addition to Scarborough, the group is also currently assessing two other potential development sites – the Albany waterfront and the Perth waterfront redevelopment.
Outside WA, Seashells Hospitality Group is in discussions with developers for possible developments in Queensland and New Zealand’s north island.
