Fragrance Group Leads Hobart's Hotel Building Boom But Something Doesn't Smell Right

Ibis Styles Hobart facade, due to open July 2017.
Ibis Styles Hobart, due to open in July.

Hobart's long-dormant hotel scene is bursting into life with last week's launch of the 114-room MACq 01 and confirmation today that the Ibis Styles Hobart – at 296 rooms the city's largest hotel – will open in July.

Owned by Fragrance Group, this is the first of three hotel developments the Singaporean company has planned for the Tasmanian capital.

The other two are 120m and 83m towers near the waterfront including a conference centre and up to 900 rooms. They will be Hobart's tallest buildings by far and have created an uproar.

This the leading edge of a hotel building boom that could see up to 1500 new hotel rooms in Hobart by 2025, according to Dransfield Hotels and Resorts, which warns that the development proposals make no sense.

"There is a large disconnect between current market needs and development activity in this small scale seasonal market," the company said in its annual market report.

"Any attempt at a forecast is a high-risk proposition with the current proposal activity not matching typical investment criteria."

In other words the numbers don't add up and complicating this scenario is the fact that the Hobart "accommodation market is sensitive to price compared with subsitutable destinations.

"Despite the current high occupancy, which is skewed significantly through the high season, there remains a ceiling on what guests are willing to pay.

"This appears to be manifesting through the short-term with the first half of financial year 2017 only recording minor rate growth despite high occupancy levels."

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