A hotel in Melbourne’s inner north suburb of Carlton has traded hands for $17.38 million, as hotel occupancy in the Victorian capital city slowly ramps up.
The Lygon Lodge hotel at 20-228 Lygon Street comprised 60 guest rooms and two large, licensed ground floor restaurants over a 1,019sq m site.
The serviced apartment building had been family owned and operated for more than 25 years ahead of its sale to a hotel operator.
The hotel was just 500 metres north of Melbourne Central, with the University and Medical Precinct in immediate proximity.
Recent data has shown Melbourne’s hotel industry has recovered steadily following government mandated lockdowns during the COVID-19 pandemic.
Recent Savills research showed hotel occupancy in the Victorian capital had been slowly ramping up, with properties in Melbourne, like all major Australian cities, exceeding December 2019 REVPAR levels in the month of December 2022.
According to Business Victoria, total tourism expenditure in Victoria hit $31.5 billion in the year ending December 2022, with overall total tourism spend back to 97% of the pre-pandemic level.
Savills’ Benson Zhou, Rob Williamson, Julian Heatherich and Nick Lower brokered the deal.
Zhou, Director – CBD and Metropolitan Sales at Savills, said the location of the hotel, along with its 50-year history operating in the vibrant hospitality precinct, was no doubt the drawcard for this purchaser.
“Lygon Lodge was an outstanding opportunity for any hotel operator, investor or developer looking to make their own mark on this Lygon Street icon,” Zhou said.
“Given its location in a favourable Commercial 1 zone, any purchaser of this property had a wealth of options available to them, be that leaving the hotel as it is, changing the floor plates, refurbishing throughout or adding further to the existing structure.”
Lower, State Director – Hotel (NSW & VIC) at Savills said, Lygon Lodge was one of Carlton’s most recognised accommodation assets.
“While the depth of interest in such a high-quality offering was not surprising, it was surprising to see the number of new market entrants, including new local capital as well as offshore, who indicated their intention to buy the property,” Lower said.
“This sale simply indicates the hotel market in Victoria is incredibly strong, particularly for boutique offerings that are well located, and offer buyers operational control.
“With supply of accommodation across Victoria being relatively low, particularly for existing hotel assets, the demand to purchase is at record highs, with investors understanding the opportunity hotel assets offer to hedge against rising interest rates and inflationary pressure.”