Independent lifestyle hotel brand Ovolo is on an expansion path across the country to capitalise on the long-term growth of the travel and property investment sectors.
The brand having tripled its room count in the last five years, including adding two assets during the pandemic, market conditions are now ripe to seek value-add and conversion opportunities to take advantage of the recovery.
After building its foundations as an owner-operator, Ovolo is now looking to more than double its network, and will ramp up growth efforts via acquisitions, hotel management agreements (HMA), joint ventures and investment partnerships.
Ovolo Hotels chief executive Dave Baswal said the time is ripe to embark on its next chapter. Ovolo is looking to expand further in Australia, New Zealand, and selected Asia Pacific target markets where it can leverage its strong brand value.
“The market is definitely headed in the right direction. We’re seeing the recovery at a much faster pace than anyone anticipated, especially fuelled by the domestic ledger trouble. And now we’re seeing the corporates returning at a much faster pace,” Baswal said.
“We are already seeing some good outcomes and the average daily rate currently is much higher than what we were getting in 2019, and that’s a very positive sign.”
After opening its first hotel in Indonesia late last year, Ovolo is also keen to grow in major urban and leisure destinations in Asia including Tokyo, Singapore, Bangkok, and Phuket. In addition, the group is eyeing key source markets in Europe and beyond.
In Australia, Ovolo has hotels in Sydney’s Woolloomooloo Wharf, Ovolo The Valley in Brisbane, Ovolo Laneways and Ovolo South Yarra in Melbourne, and the Ovolo Nishi in Canberra. There is also the Ovolo Collective Hotels down the Australian eastern seaboard and Hong Kong, and the Mamaka by Ovolo in Kuta Beach, Bali.
Baswal said the group will also look at satellite areas that are within a two-hour radius of a capital city, such as Geelong, south-west of Melbourne, and Parramatta in Sydney’s west.
Research house STR said in its recent report for May that Sydney’s hotel industry reported steady occupancy of 65.1 per cent, while room rates fell slightly from the prior month to an average $233.96. That will rise in the June numbers backed by the success of Vivid.
“This is the perfect time to expand the Ovolo brand, and we are open to discussions with strategic partners who would like to be part of our growth journey,” Girish Jhunjhnuwala, Ovolo Hotels founder and executive chairman said.
“After 20 years of building the Ovolo brand, we want to share our expertise and build long-term partnerships that can unlock an asset’s full potential and drive higher returns.”
Interest and capital in hotel real estate is currently booming, with the first quarter of 2022 seeing the highest quarterly transaction volume in Australia and New Zealand on record, and quarterly volumes across Asia Pacific exceeding full-year 2020 levels.
Head of real estate research Asia Pacific at MSCI Real Capital Analytics, David Green-Morgan, said recently that overseas investors have long been attracted to trophy assets in the hotel space in Australia, and after a Covid-induced hiatus, they have returned in 2022 with some sizeable acquisitions.
“Overseas investors were involved in $4.7 billion of commercial property transactions in the first quarter, which translates to 40 per cent of all acquisitions,” Green-Morgan said in recent research.
Baswal said developers, family offices which operate in Asia, high-net-worth individuals and institutional investors are looking at the hotel sector with renewed interest as they diversify from retail and office space due to shifting consumption and work patterns.
“Lifestyle hotels are set to lead the market out of the pandemic, with demand for this sector more than doubling from 2014 to 2019 and set to double again by 2023,” Baswal said.