British accommodation giant IHG is confident it can weather the glut of new hotels due to open in Melbourne in the coming years, after announcing that a 252-room upscale voco hotel would open in a new skyscraper being developed by the Brady Group in July 2020.
Voco Melbourne Central will form part of the the under-construction 380 Melbourne skyscraper at 380 Lonsdale Street, a $500 million project featuring two towers rising 52 and 68 levels and more than 700 apartments.
Abhijay Sandilya, IHG’s senior director of development for Australasia, said the company’s strong brands, global distribution power and loyalty program meant it could weather the surge of new hotel rooms coming on to the market in Melbourne better than others.
“There’s a lot of supply coming on, but we believe in the long-term fundamentals of the Melbourne market,” Mr Sandilya told The Australian Financial Review.
Voco, a new upmarket boutique brand, is the second Melbourne hotel announced by IHG in the space of a week, after it said it would open a 164-room Holiday Inn in Ringwood in the city’s eastern suburbs in 2020.
Alongside these two projects, IHG will open a dual-branded 453-room Hotel Indigo and Holiday Inn as part of the $200 million redevelopment of The Walk Arcade in the CBD in 2022.
Also in the works is a 150-room Holiday Inn in Coburg in the northern suburbs, and Holiday Inn Express hotels on Southbank and Little Collins Street being developed by IHG franchise partner Pro-invest Group.
According to the latest Dransfield Hotel Futures 2018 Report Melbourne will add 9400 new hotel rooms between now and 2026 with 45 projects under construction, in development or planning compared with 60 in Sydney.
While new supply will be largely absorbed by demand from strong growth in tourism, Dransfield has cut back its long-term forecasts for revenue per available room (revPAR) growth and warned that “shadow stock” (Airbnb-style accommodation) would “put some pressure on occupancy levels”.
Mr Sandilya said the new voco Melbourne Central would also benefit by being one of the first of the new hotels to open. Hotels in the pipeline includes Ritz Carlton, W and St Regis hotels by rival Marriott.
Tony Brady, managing director at Brady Group, said as its largest project to date, 380 Melbourne needed a distinctive brand like voco to complement its high-end residential and retail offering.
“The Melbourne tourism market continues to have a strong outlook and we think that voco, powered by the global IHG engine, will give business and leisure guests a reliably different way to stay in the heart of the city,” he said.
Voco Melbourne Central will include a sky lobby on level seven as well as a pool, gym, meeting space, all day dining restaurant and bar.