Eight hotels with a total of more than 850 rooms are in the pipeline for Newcastle as the city centre attracts a growing number of visitors and outside investors.
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Seven of the eight projects, which range from three- to five-star, are being funded by outsiders, including five developers and investors from Sydney.
The new chairman of Newcastle Tourism Industry Group, Kent Warren, said healthy occupancy rates and growing tourism and corporate trade had made the city more attractive to investors.
“There’s plenty of chat now about Newcastle being a much better city to come to,” he said.
“Occupancy will run at about 80 per cent, some about 86, 87 per cent. Sydney's running at 87 per cent, but the cost of capital is cheaper in Newcastle.”
The latest hotel proposal to reach Newcastle City Council is for 42 rooms next door to the Albion Hotel in Hannell Street, Wickham. The four-storey hotel is the only one on the list backed by local money.
Sydney boutique investment firm Pro-invest Group is behind the 170-room Holiday Inn Express on the corner of King Street and Stewart Avenue, which will open to guests in late March.
Canberra developer Doma has started site works on its 149-room Little National Hotel in Honeysuckle Drive after announcing last month that it would convert 52 residential units above the hotel into serviced apartments.
Syrian billionaire Ghassan Aboud became an unexpected player in Newcastle’s tourism scene when his Crystalbrook Collection chain bought the council “Roundhouse” last month.
Mr Aboud hopes to lodge plans early this year to convert the building into the city’s first five-star hotel, the 136-room Kingsley, which will join his stable of luxury hotels in Far North Queensland and Sydney.
Sydney developer Bass Elhashem hopes to reopen the Great Northern Hotel’s 88 rooms this year after resurrecting the art deco building’s downstairs bars in November.
Another Sydney hotelier with a growing Hunter portfolio, plastic surgeon Jerry Schwartz, said last week that he would revisit previously approved plans for a 170-room hotel in Wharf Road after planning authorities rejected his proposal for a nine-storey student boarding house on the site.
Sydney firm Iris Capital’s chief executive, Sam Arnaout, is searching for an operator to run a boutique hotel out of the former David Jones building as part of Iris’s EastEnd mall redevelopment.
And yet another Sydney investor, John Markovic, has lodged plans for an architecturally bold building with 32 serviced apartments in Darby Street, opposite Newcastle Regional Art Gallery.
Lord mayor Nuatali Nelmes, speaking at the unveiling of the Kingsley plans last month, said the city had found it hard to attract big events due to a “dearth of accommodation”.
“When you’re looking at occupancy rates that hit up in the 80 and 90 per cent consistently, there’s always a demand for rooms.”
She said the yields on investment had started to favour hotel accommodation over residential development.
Mr Warren agreed that investors were “definitely getting better yields” on hotels.
“That’s why we’re seeing developers contact us to switch their sites from residential or B-grade office accommodation into a hotel.”
A Destination NSW report shows the Hunter received almost 3.8 million overnight visitors in the 2017-18 financial year, up about 12.8 per cent on the previous year and 32 per cent over four years.
About 40 per cent of visitors arrived for a holiday, a similar number to see friends and family, and about 17 per cent on business.
About 11 per cent stayed in a four- or five-star hotel.
Sydney (45.5 per cent) was the largest source of visitors.
The Merewether-based chief executive officer of Crystalbrook Collection, Mark Davie, said Newcastle had the potential to grow its visitor numbers.
“One of the attractions of this is that it’s not just a tourist town,” he said. “You’ve got a mix of both tourism and commercial business, and that’s what I like about Newcastle.”
Former Tourism Hunter boss and now executive manager of hotel management firm Alloggio, Will Creedon, said Newcastle was at the beginning of a “step change” as a destination.
Mr Warren, who runs the Novotel Newcastle Beach, said Supercars exposure and the changing face of the city had started to alter outsiders’ perceptions.
“I think the number of outsiders investing is significant, because they’ve done their due-diligence work and things stack up,” he said.
Domestic visitors spent more than $1.7 billion in the Hunter in 2017-18, up 12 per cent on the year before, according to the Destination NSW report.
Mr Warren “fundamentally disagreed” with doubters who questioned the viability of Crystalbrook’s luxury hotel.
“Newcastle is ready for a five-star hotel, without a doubt,” he said.
“I think that’s old-school thinking, purely because of what was the demographic of people that were coming to Newcastle before.
“The clientele has shifted. There’s now a fair demand out there for the corporate market.
“We’re definitely attracting people with money. You can see that in the type of businesses coming to Newcastle.
“You’ve got well known brands now, in the last five to ten years. You’ve got your KPMGs, your Ord Minnetts, that sort of high-end level of professional services that are seeing Newcastle as a viable option.
“Our corporate business now is stronger than it’s ever been, and we’re not Robinson Crusoe.”
He said the opening of the Quest apartments in Hunter Street west had added about six per cent to the stock of hotel rooms in the city but occupancy rates had not changed.
“We’re still hoping the cruise terminal will come on board, and once international flights really start to kick off in Newcastle, which is just a matter of time, there will be some demand there to drive.
“The Supercars and major events coming to Newcastle, there’s a belief from developers we speak to, and as operators ourselves, there’s more of those sort of events to come.
“From Novotel’s perspective, more hotels are needed for us to get more events. If you don’t have hotels, you don’t get events.
“I don’t think we can put a number on the positive effect that Supercars is having on the Newcastle market.
“We’re definitely having people saying, ‘We saw it on TV, we may as well come and try out Newcastle.’”
Correction: An earlier version of this story incorrectly attributed the Holiday Inn Express to Newcastle firm Core Project Group.