Building on the growth of its Asian footprint, Salter Brothers has now opened an office in central Tokyo, Japan, complementing its existing office in Singapore.

The Japan office has both investment and asset management team members and will be led by Rahul Ghai, Managing Director for Asia.

The office will be situated at Roppongi Hills Mori Tower.

Salter Brothers recently announced a strategic partnership with TC Hotels & Resorts Beppu Corporation, a wholly owned subsidiary of Tokyo Century Corporation, to pursue hotel and hospitality opportunities in Japan. The partnership covers both existing and new assets, allowing Salter Brothers to apply its experience to the Japanese market in refurbishing, rebranding and repositioning existing assets with international operators. Salter Brothers has subsequently assumed asset management of ANA InterContinental Beppu Resort & Spa.

Paul Salter, Managing Director of Salter Brothers, stated “We are fully committed to Japan and Asia. This is the right time to open an office in Japan and Rahul’s firsthand experience on the ground and network throughout Japan will play a pivotal role to Salter Brothers’ shape and future in the region.”

Rahul joined Salter Brothers in November 2023 and has been leading the company’s Asian operations. He said that “setting up a local office in Tokyo will better service Salter Brothers’ growing operations and expand our presence in Asia, which is necessary when pursuing value add type strategies.”

View Announcement as seen in HM Magazine online

As seen in the Australian Financial Review

Larry Schlesinger   |  September 23, 2024

Sydney will surge further ahead of all other capital cities as the country’s priciest hotel market over the next decade, as rising demand for accommodation in Australia’s biggest city outstrips only a moderate increase in new supply.

By 2027, the average price for a night’s stay in a Sydney hotel will hit almost $350 and then reach $426 by 2033, according to the Hotel Futures 2025 report by analysts Dransfield.

With occupancy to peak at 86.4 per cent by 2033, Dransfield said Sydney was “returning to the past” – referring to the very strong pre-COVID operating period for hotels – and was “expected to again be effectively ‘full’ within the next two tothree years”.

This strong outlook follows Sydney ranking as the top-performing capital city over FY24, as it delivered 14 per cent growth in revenue per available room (revPAR) of$254. RevPAR is the key industry performance metric calculated by multiplying occupancy by average room rate.

Sydney was the only capital city to record an 80 per cent occupancy rate over FY24 while its average room rate rose 3.8 per cent to $317.

“Sydney is the standout performer, with its absolute [revPAR] position more than $100 higher than any other city at the end of the forecast period. The continued lack of material supply in this gateway city drives very high occupancy,” the Dransfield report noted.

“We expect the elevated post-COVID room rates will persist in these [supply constrained] conditions, with the market coming to accept that you will need to pay up to stay in Sydney.”

Next best performer – on a revPAR growth basis – was Perth (10 per cent growth to $190) followed by Cairns and Port Douglas (4.1 per cent to $158), Brisbane (3.4 percent to $175) and Melbourne (2.5 per cent to $168).

Looking at future supply, Sydney is set to add just under 1400 new hotel rooms over the next three years – an increase of just over 5 per cent – compared with a 10 percent increase between 2019 and 2024, a period in which a number of projects that were delayed by the pandemic were completed including W Sydney at Darling Harbour.

The Dransfield report notes that Sydney is expected to remain “supply constrained over the long term” with “site availability and highest and best-use contests the primary impediments to supply growth”.

“At the simplest level, well-located residential is still selling for up to three times the [per] square metre rate of hotels,” the report said.

Melbourne will add just over 2000 rooms (6.6 per cent growth) over the next three years (a marked downturn from the near 5000 new rooms delivered between 2019 and 2024) with Brisbane growing by 10.2 per cent or almost 1600 rooms as it bumps up accommodation capacity for the 2032 Olympics.

Hotel mogul Jerry Schwartz, whose family owns properties like the five-star Sofitel Sydney Darling Harbour as well as more affordable offerings like the Mercure Sydney and ibis Sydney World Square said his three and four-star hotels were the strongest performers in his portfolio.

“These hotels are performing really well. Last month our Rydges Sydney Central had a 94 per cent occupancy rate,” Dr Schwartz told The Australian Financial Review.

But he said room rates were down about 10 per cent at his flagship Sofitel Sydney Darling Harbour due to lower occupancy levels, something he attributed to the cost-of-living crisis.

“People are choosing cheaper holidays. The opposite occurred during COVID, when everyone splurged a little bit and paid a bit more to stay in a nice hotel,” he said.

Dr Schwartz said it was really good to hear that new development of hotels was being restrained, as this would push Sydney back to being full.

Paul Salter, managing director of Salter Brothers, which owns and operates 41 hotels including Sydney’s Crowne Plaza Coogee, the Intercontinental Rialto in Melbourne and voco Gold Coast, said the fund manager was “very positive” on the Sydney market where demand is outpacing supply.

“The opening of the new international airport in Western Sydney in 2026 should mean Sydney generally is stronger,” he said.

“The Gold Coast and Melbourne are good, but not great markets. Melbourne is absorbing a lot of supply, which is what Melbourne does. On the Gold Coast the leisure spend is strong.”

Mr Salter said its luxury hotels were performing pretty well as were its suburban hotels and regional resorts driven by the “road warrior market”.

Overall, the outlook for the hotel sector is buoyant on the back of strong growth in domestic and international tourism and increasingly busier events and conference calendars, supported by lower interest rates, according to Dransfield.

The advisory firm is forecasting average annual demand growth of 3.3 per cent to fiscal 2033, but only 2.2 per cent annual supply growth over the same period as new projects are driven by “market responses” (actual need for new hotel rooms) compared with a more speculative approach before the pandemic.

In Melbourne, which has absorbed more new hotel stock than other markets, Dransfield said there were several years in its recovery arc before occupancy levels reach 80 per cent and rates can start climbing. Brisbane is expected to reach an 82 per cent occupancy rate by 2033, according to Dransfield.

Among the emerging development trends, Dransfield said were a “general shift to quality” as the cost of land and construction making entry-level products in core CBD locations less feasible.

Hotels are also set to get smaller as guests look for a “more tailored and authentic experience, and the availability of land reduces”.

“Hotel developments in excess of 250 rooms is reducing,” the report notes.

Dransfield said hotel operators were focusing more on their food and beverage offering and seeing less value in buffets and “basic dinner offerings”.

“A destination restaurant or bar is now considered a way to help position the whole hotel and drive both room and F&B revenue advantages,” Dransfield said.

By Lisa Allen    |    12 September 2024

As featured in The Australian Business Review

Multibillionaire Harry Triguboff has emerged as Australia’s number-one hotel owner followed by Melbourne’s Salter Brothers, and more than half of the owners and operators in the top-10 list expanded their portfolios in the past year.

With more than 6200 hotel rooms spread across 23 properties, Mr Triguboff’s Meriton Apartments is the standout hotel owner followed by Salter Brothers with 35 properties encompassing 4921 rooms.

Dr Jerry Schwartz’s 15 properties, including resorts and city hotels on the eastern seaboard, have about 4300 rooms, according to CBRE’s first Australian and New Zealand 40 top owners and operators report, obtained by The Australian.

Dr Schwartz’s holding expanded 2.2 per cent over the past year with the acquisition of the 92-room Leura Gardens in the NSW Blue Mountains, given it synergies with his existing resorts in that area including the Fairmont Resort Blue Mountains and the Leura Golf Club.

Jockeying for position in the mid-range ownership of hotels resulted in EVT recording a strong expansion rate of 10 per cent and a jump from fifth to fourth position on the list with 26 hotels and 3577 rooms.

However CapitaLand Ascott Trust was this year’s major mover, recording the highest expansion rate of 12 per cent and rising from seventh to fifth position on the hotel owner list with 18 hotels and 3443 rooms.

CapitaLand Ascott Trust’s expansion included the completion of the Citadines North Sydney. Further expansion is planned for later this year with the co-living brand Lyf, with nearly 200 rooms planned for the Sydney suburb of Bondi Junction.

Another major mover was Pro-invest which jumped from eighth to sixth position on the top-10 list with 15 hotels and 3,196 rooms.

Meanwhile, as its competitors expanded, Crown dropped from flfth to seventh position, while Millennium and Copthorne moved from sixth to eighth position on the top-10 hotels owners list.

French giant Accor is still a major hotel operator in the region with more than 63,000 rooms under its control spread across 401 properties. It has maintained that position for more than 20 years, managing just over 16 per cent of total room supply across Australia and New Zealand.

The second highest operator is the British-owned IHG with 63 properties and 13,305 rooms.

American group Marriott is the flfth largest hotel operator in the region with 34 hotels and 9042 rooms. It recorded strong growth over the past year, according to CBRE, with a 9 per cent year on year expansion increasing total rooms under management by 766 rooms in two hotels.

The Thai-controlled Minor hotels is in seventh position with 63 rooms and 7385 rooms.

Hilton came in as tenth largest hotel operator with 25 properties and 5546 rooms.

Salter Brothers is embarking upon a Japan investment strategy. As part of our commitment to communicating with our investors, Salter Brothers Research shares highlights from their market study.

An Active Market

The 4^th largest commercial real estate market in the world, and the 5^th largest recipient of global cross-border investment in 2023, Japan offers an active and accommodating environment for foreign investors.

A Diverse Opportunity

Average quarterly volume over the last five years has exceeded US$1 billion in all sectors. Long-term returns have also been strong, exceeding 5% per annum on average across all sectors over the last 15 years.

An Ideal Moment?

Abundant investment has been supported by a favourable macroeconomic environment, with low interest rates and an historically weak yen providing an ideal opportunity. Conditions should continue to remain favourable in the near term despite changes in Japan’s monetary policy.

Oncoming Headwinds

Japan’s population is aging and in decline, forecast to fall 20 million by 2050. Urban centres should remain attractive, with the burden of decline expected to be more keenly felt in the regions.

Sector Spotlight: Hotels

Hotels have delivered the best returns of any sector since 2021, attracting record investment in 2023Q3 and 2024Q2. Despite opening its borders relatively late, Japan is on track to break its 2019 tourist record in 2024.

By Christopher Caillavet    |   Aug 22, 2024

Read full article at Mingtiandi online

A partnership formed by Melbourne-based Salter Brothers and a Japanese property firm has seen the Australian fund manager take over asset management for a five-star resort in the southern island of Kyushu.

Hospitality-focused Salter Brothers joined forces with Tokyo Century Group, the developer of ANA InterContinental Beppu Resort and Spa, on the newly launched strategic partnership, according to a Wednesday announcement.

The Aussie firm has assumed asset management duties for the 89-room luxury resort, which opened in 2019 and has been managed by Tokyo Century and IHG ANA Hotels Group Japan since that time. Salter Brothers said it aims to bring to the Japanese market its experience in refurbishing, rebranding and repositioning existing assets with international operators.

“Salter Brothers is proud to be working with Tokyo Century in this new and exciting venture, partnering on hospitality opportunities in the Japanese market,” said managing director Paul Salter. “In Japan, we are strongly focused on working with best-in-class ownership and management to unlock operational value-add, leveraging our pan-Asia hospitality investment experience and relationships with operating partners.”

Global Platform

Salter Brothers previously made headlines when it teamed up with Singapore sovereign fund GIC and Swiss private equity firm Partners Group to acquire a portfolio of 11 Travelodge hotels in Australia with a gross asset value of A$620 million ($457 million).

That 2021 deal, said to be the largest of its kind ever transacted in Australia, involved more than 2,000 rooms in key cities like Sydney, Melbourne and Brisbane. The sellers were real estate group Mirvac and travel association NRMA.

Salter Brothers formed in 2015 and now owns and manages a portfolio of more than 5,000 rooms across 41 hotels in Australia, Asia and the US. Tokyo Century is the platform’s first Japanese partner in an asset management agreement.

“Partnering with Salter Brothers brings together exceptional capital, reach and operational capability, providing our partnership a competitive advantage in this market,” said Tokyo Century deputy president and executive officer Yoichiro Nakai.

Tall Order at Torch Tower

TSE-listed Tokyo Century’s biggest shareholders include conglomerate Itochu Corp, real estate firm Chuo-Nittochi and telecom giant NTT.

The group has managed Hotel Indigo Karuizawa in Nagano since 2022 with IHG Japan Management and is co-developing a luxury hotel within Torch Tower — the skyscraper under construction near Tokyo Station that is set to become the tallest building in Japan — alongside property giant Mitsubishi Estate.

Located on the upper floors of the 63-storey Torch Tower, the hotel will open in 2028 as the first in Asia Pacific to be operated by Brunei-owned luxury brand Dorchester Collection, Tokyo Century said Wednesday in a separate announcement.

Best known as an equipment leaser, Tokyo Century joined Mitsubishi Estate in a venture to build data centres in the Washington DC area and has also invested in NTT’s India data centre business.