Novotel and Ibis earmarked for Melbourne Airport

Melbourne Airport owner Asia Pacific Airports Corporation (APAC) is facilitating a new hotel development on airport land that will see two new operators take up a combined 464 suites.

In documents that are available for public viewing, APAC has identified Novotel and Ibis as likely operators of the 4-4.5-star hotels. If this is indeed the case, it would be the second time that parent company AccorHotels has chosen the dual brand model in Melbourne; the other being the currently under construction 399 Little Lonsdale Street.

Appearing as a single L-shaped building, the prospective hotel, designed by Fender Katsalidis, will effectively be separated into two wings for either AccorHotels brand. Located adjacent to the recently completed Terminal 4 Car Park, the $95 million development would rise 31.3 metres and include rooms generally sized between 20-26 square metres, with some suites at 50 square metres.

Guest facilities expected within the build include a 373 square metre hotel bar and lounge developed around a courtyard, 660 square metre restaurant, 134 square metre sports bar, 225 square metre wellness/spa centre and a 716 square metre health & fitness cente. The majority of the amenities are within the elongated pod design feature.

A 160 square metre café is also proposed, as is limited parking.

Aerial perspective of the selected site. Image: Urbis

The economic case

APAC along with Urbis who acted as town planner cite key metrics as justification for the development of a dual operator hotel.

The application's economic impact statement noted:

  • Demand for tourist accommodation (measured by nights stayed) has risen by 30% between January 2012 and December 2016, whereas supply has risen by 11% over the same period.
  • From 2011 to 2016, an average monthly occupancy rate of 84% has been seen, peaking at 96% in October 2014 and more recently at 94% in November 2016. In fact, occupancy rates in the local Tullamarine area have remained above 80% since January 2015.
  • Taking into account existing and future supply (including the subject development), and applying an occupancy level of 80%, annual room supply is estimated at 486,000.
  • Based on forecast demand, this level of room supply is expected to be met by demand in 2024/25.
  • This additional supply will result in a short-term drop in occupancy to more reasonable levels, short-term, however will not impact the longer-term sustainability of the local commercial accommodation market.

Jobs generated by the project's construction are estimated at 315 directly for the equivalent of one year, and 797 jobs indirectly created elsewhere through the state economy. This equates to approximately $41 million in direct Gross Value Added (GVA) per year during the construction period, and $115 million in indirect GVA annually in constant 2017 dollar terms inclusive of GST.

Ongoing jobs post-construction are estimated at 588 (full-time, part-time and casual) with a further 505 indirect jobs created both within and beyond the municipality as a result of flow-on effects throughout the economy. Urbis has this benefit estimated $125 million per annum in direct and indirect GVA contribution to the Victorian economy.

Off property potential

Another short-term accommodation build is on the agenda in the medium term, albeit a short distance away from airport land.

Chen He Airport Property Pty Ltd holds approval for a six-level serviced apartment complex at 1-3 Freight Road, Tullamarine. The Elevli Plus-designed project encompasses 66 serviced apartments, a cafe, business centre, guests’ gym and shuttle bus to Melbourne Airport, and is valued at $15 million.

The property is listed as being available for short-term lease, suggesting that a possible construction start is some time away.

The approved Freight Road building. Image: Elevli Plus

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