$1000 a night: Sydney hotels post record New Year highs

Sydney hotels have posted record high room rates, with New Year’s Eve punching above $775 per room and occupancies in December above their highest on record.

Hotel Capella, Sydney.

Sydney hotels have posted record high room rates, with New Year’s Eve punching above $775 per room and occupancies in December above their highest on record.

JLL Hotels managing director Peter Harper said that given there are now several Sydney hotels that can command more than $1000 per room per night, such as the newly opened W and the Capella Hotel, he expects more investors will buy city office blocks for conversion into hotels.

Helped by New Year’s Eve, Sydney’s hotel industry recorded its highest monthly average daily rate on record in December according to preliminary data from CoStar released on Monday.

The newly opened W hotel at Sydney’s Darling Harbour.

The Washington-based data house found that Sydney’s December hotel occupancy was 77.1 per cent, which was up 9.9 per cent on the previous year, while the average daily rate was $313.27, up 4.8 per cent on 12 months ago. The revenue per available room was $241.66, up 15.3 per cent on the previous year.

“According to the daily data, Sydney hotels achieved their highest occupancy level on New Year’s Eve at 94 per cent, followed by Saturday, December 2 at 93.8 per cent. The market’s daily occupancy levels remained above the 60 per cent mark throughout the month except for two days,” CoStar noted, adding that New Year’s Eve pushed the average daily rate to $776.69.

Meanwhile Mr Harper said the exceptionally strong hotel trading figures reveal Sydney has firmly entrenched itself as the global place to be on New Year’s Eve.

“Driving the high average daily rates has been the reset we have seen since post-Covid, with a number of new hotels driving a higher rate ceiling such as Crown, the Capella and most recently the W.

“It wasn’t that long ago there was only one hotel, Sydney’s Park Hyatt, that could command rates above $1000 a night, now we have several,” Mr Harper said.

Inside Sydney’s new W hotel.

However, Mr Harper believed there would not be more hotels built in the short term due to challenges over financing and high construction costs, but one trend that will be gathering momentum will be the purchase of office buildings in key locations throughout the CBD for hotel conversions, which will not be as hard as starting from scratch.

“For instance Invictus recently purchased a building in York Street for a hotel conversion,” he said.

Mr Harper reckons the post-pandemic revival of the travel sector has boosted the demand for new Sydney city hotels.

Singapore-based Invictus Developments, the property division of the cashed-up Indonesian Karim family recently forked out $52.5m for the 15-level York Street building to convert into a hotel. The former Bank of China office tower in York Street has been earmarked to be converted into luxury accommodation. It is expected around $30m will be spent on the conversion.