Is the hospitality sector a ‘future proof’ investment in the face of digital disruption?

By Stronghold

November 14 2019
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Promoted by Stronghold.

Opinion piece by Steve de Nys, Head of Property at Stronghold Investment Services

The global economy is changing. Digital disruption and new technology are interrupting not only the delivery of goods and services but also the investment, planning and development of property.

Manufacturing industries are changing, bricks and mortar shops are disappearing – so how will our commercial spaces be used in the future?

At Stronghold Investment Services, we specialise in commercial property investment and are watching this space very closely. In our view, there is now a clear winner in commercial property, and it is, hospitality and accommodation.

In our view, hospitality and short stay accommodation properties have the potential to not only retain but increase in value in the future and deliver good rental returns for investors.

Recent research and economic indicators show these sectors continue to grow, supported by a global travel boom, experience tourism, growing “foodie” culture and corporate travel.

According to the World Travel and Tourism Council, the travel and tourism sector grew 3.9% in 2018, outpacing the global economy for the eight-consecutive year. In Australia, this sector supports 4.4% of employment and is forecast to contribute 3.1% of GDP in 2028.*

ABS Statistics also show us that cafes, restaurants and takeaway services and food retailing are the leading growth industries in retail trade, growing consistently in the past four quarters and contributing to an increase in retail sector turnover by 2.9% in April 2019 compared with April 2018.**

As people spend more time online, these stats support the strong argument to suggest that the human desire to socialise is maintaining, if not increasing the demand for hospitality services and experiences – quite simply, the more people spend online, the greater the desire for real ‘human to human’ social experiences.

Therefore, unlike the retail property sector that has been negatively impacted by online shopping, digital disruption is less likely to negatively impact the demand for hospitality and leisure services over the medium-long term, especially where these facilities provide a wholistic community-based destination.

Stronghold Investment Services has invested in two very successful commercial hospitality properties. The Bundaberg Sports Club is currently delivering a9.75% per annum cash return.

Similarly, our Quest short stay accommodation hotel at Eight Mile Plains in Brisbane is currently returning 9.4% per annum.

We recently acquired our third hospitality property, The Cardinia Club in metropolitan Melbourne.

The Cardinia Club, located at 71 Racecourse Road, Pakenham is on a 1.665ha parcel of land and includes a Sports Bar, bistro, TAB, gaming and function spaces. The Property is securely leased to the Pakenham Racing Club for 13 years.

TheStronghold Hospitality Property Trust No.15 is currently producing a cash return of 7.5% per annum payable every two months.

Stronghold currently has a limited number of units available in this Trust. For more information about our investment portfolio or for an Information Memorandum please contact Steve de Nys at Stronghold Investment Services This email address is being protected from spambots. You need JavaScript enabled to view it. / 0413 515 808.

Please Note: This opportunity is for Wholesale Investors only. Past performance is not an indicator of future returns. Returns are not guaranteed.

SOURCES:

*World Travel and Tourism Council, Report Australia 2018

https://nationalindustryinsights.aisc.net.au/industries/tourism-travel-and-hospitality/hospitality

https://www.abs.gov.au/AUSSTATS/[email protected]/allprimarymainfeatures/68F880A3CDC44FE6CA25842C0012F5CD?opendocument

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