Salter Brothers swoops on Sofitel Adelaide as five-star hotels bounce back

The hotel sale sets a new record price in the South Australian capital, and shows that big investors are backing the luxury hotel boom.

Sofitel Adelaide has been acquired by Salter Brothers.

Funds house Salter Brothers has snapped up the new Sofitel Adelaide in the city’s largest ever hotel deal, with the $154m purchase confirming that the country’s hotel market is locked into its recovery phase.

The French-inspired hotel on Currie St in Adelaide’s west end was sold by Palumbo Group after it received several unsolicited offers.

Operated by the Accor Group, the Sofitel’s 251 rooms are part of a wider 32-storey development that includes the 69 Luminesque apartments, which occupy the top eight floors.

It was the first new five-star hotel to open in Adelaide since the Intercontinental was completed 30 years ago, with its decor borrowing heavily from the Sofitel brand’s French roots.

The hotel also includes French restaurant Garcon Bleu, two bars, an indoor swimming pool, fitness centre and health club, a variety of meeting spaces and an executive lounge, Club Millésime.

Inside the Sofitel Adelaide.

CBRE Hotels’ Michael Simpson and Tom Gibson, and Savills’ Nick Lower and Rob Williamson, ran the sales campaign.

Salter Brothers said the five-star hotel was the first asset acquired in its Core Hospitality Real Estate Fund, which focuses on the acquisition of newer upscale and luxury hotels with minimal to no front-end capital expenditure requirements, and which are well positioned for broad-based demand across corporate, leisure, domestic and international segments.

“We’re excited about Salter Brothers’ first foray into the South Australian market, which has proven to be a premium events, business and tourism destination,” Salter Brothers managing director Paul Salter said.

“Adelaide accommodation has had an incredibly strong 2023, off the back of a series of amazing sporting events and festivals.”

Palumbo listed the Sofitel for sale last May, six months after the hotel’s opening. In keeping with the industry’s recovery, it was expected to attract offers in the $160m price range, or close to $650,000 per room.

Mr Simpson said the deal represented Adelaide’s “most significant single-asset hotel transaction”.

“The developers, who were the vendors in this transaction, literally poured their heart and soul into delivering what is arguably the best internationally branded luxury hotel in Adelaide,” he said.

“The sale of the Sofitel Adelaide has reset the benchmark for the Adelaide luxury hotel market with a record price per key achieved for a CBD asset.”

The Australian revealed in March that Salter Brothers was running the rule over the Sofitel Adelaide, and its latest purchase continues its spree on hospitality assets.

In May, the acquisitive fund manager acquired the landmark Hydro Majestic Hotel as well as Lilianfels Resort in the NSW Blue Mountains tourist township as part of a five hotel portfolio acquisition.

Last year it picked up the luxury accommodation chain Spicers Retreats for about $130m, after earlier teaming up with Singaporean sovereign wealth fund GIC to buy the Travelodge portfolio for $620m in 2021

Despite the tougher economic environment hotel sales are still running strong, with several notable sales in recent months.

Mining magnate Andrew Forrest’s property division Fiveight completed its $520 million acquisition of the Waldorf Astoria Hotel in Sydney earlier this year, while Sofitel Brisbane was picked up by Singapore-listed real estate and hospitality giant CDL in a $178 million deal.