An iconic hotel in one of Melbourne’s best-known retail and hospitality precincts has been sold in a deal brokered by Benson Zhou, Rob Williamson, Julian Heatherich and Nick Lower from Savills Australia and New Zealand.
Lygon Lodge, situated at 220-228 Lygon Street in Carlton, had been family owned and operated for over 25 years ahead of the recent sale, which saw the property acquired by a hotel operator for $17,380,000.
The serviced apartment building, comprising of 60 guest rooms and two large, licensed ground floor restaurants over a 1,019sq m site, is just 500m north of Melbourne Central, with the University and Medical Precinct in immediate proximity.
Benson 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,” Mr 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.”
Nick Lower, State Director – Hotel (NSW & VIC) at Savills said, “Lygon Lodge is one of Carlton’s most recognised accommodation assets and following this sale, will continue that theme in the hands of its new owners.
“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. “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,” Mr Lower concluded.
Recent data shows Melbourne’s hotel industry has recovered steadily following government mandated lockdowns during the COVID-19 pandemic. A recent Savills Hotel Market Overview report shows hotel occupancy in the Victorian capital has been slowly ramping up, with properties in Melbourne, like all major Australian cities, exceeding December 2019 REVPAR levels in the month of December 2022.
Total tourism expenditure in Victoria hit $31.5 billion (according to Business Victoria) in the year ending December 2022, with overall total tourism spend back to 97% of the pre-pandemic level (year ending December 2019).