Pelligra buys Holiday Inn Melbourne Airport leasehold from IHG on a manage-back

As part of its manage-back deal with IHG, Pelligra Group will renovate Holiday Inn Melbourne Airport’s rooms.

Acquisitive Melbourne developer and investor Pelligra Group has snapped up its first hotel investment – also one of the country’s highest profile guesthouses.

The leasehold for Holiday Inn Melbourne Airport (pictured, top) was offloaded by Britain’s InterContinental Hotel Group.

Pelligra and IHG in late 2017 formed an alliance to co-develop other Melbourne accommodation venues: one is nearing completion in Werribee with another set to begin in Richmond on a site once owned by The Reject Shop co-founder (details of both hospitality projects near the bottom of this story).

The Holiday Inn Melbourne Airport sale comes on the same day Sydney-based Yeh Hotel Group confirmed it acquired its first Victorian inn – Ibis Little Bourke Street (which the occupier immediately re-branded Melbourne Hotel CBD).

JLL Hotels & Hospitality’s executive vice president, Peter Harper, brokered the off-market sales of both Melbourne Airport and Melbourne CBD assets.

Despite partnership, Pelligra/IHG deal followed invite-only expressions of interest campaign

IHG is selling Holiday Inn Melbourne Airport on a manage-back basis.

The deal is subject to Pelligra undertaking “a significant capital improvement plan”.

Known by the address of 11/14 Centre Road, near a Tullamarine Freeway exit and the arrival/departure drop off and pick up zone, the facility includes 207 suites, five conference rooms, restaurant, bar and large car park.

“Holiday Inn Melbourne Airport has excellent connectivity to all four terminals together with the ever-expanding commercial, logistics and leisure activities in the wider precinct,” Mr Harper said.

“The invitation-only expressions of interest sale process attracted multiple bids with the eventual purchaser being Pelligra, one of the country’s most successful commercial, industrial and residential developers and investors”.

It intends “to leverage their refurbishment capabilities and growing hotel portfolio with the development of IHG branded properties underway”.

Technically, Pelligra entered the hotel game in 2017

Holiday Inn Richmond is proposed to replace a 3025 square metre site Pelligra bought from The Reject Shop co-founder Ron Hall in 2018.

IHG and Pelligra are working on two Melbourne developments:

A 160-room Richmond complex, two kilometres east of the CBD, with partners PrimeLand Group and Diamond Hospitality Singapore, was unveiled five months ago and is earmarked to open in 2023.

Holiday Inn Richmond will rise eight storeys and replace 471-479 Swan Street and 10 Belgravia Street – a 3025 sqm parcel Pelligra snapped up from The Reject Shop co-founder, Ron Hall, for more than $25 million in 2018.

Holiday Inn Werribee at 22-26 Synnot Street is scheduled to open at the end of 2020.

Meanwhile at Werribee, 32 kilometres west of the city, an 11-level 150-room facility with a function room and 352-bay car park was announced in November, 2017 and is due to open at the end of this year.

Involving a third partner, CitiNova, the Synnot Street Holiday Inn Werribee will form part of a site also with offices and retail.

New hotels and a shopping centre coming to Melbourne Airport

Melbourne Airport Corporation has in recent years been generating additional income developing its facility – particularly surplus land at its southern edge.

Opened in 1970, the 2663 hectare complex is gazetted Melbourne Airport with its own postcode, but is considered by many to be in Tullamarine.

It is about 20 kilometres north west of the CBD.

Seven months ago, MAC began constructing a $163 million dual-branded hotel near Terminal 4.

Designed by high-end architect firm Fender Katsalidis, it will contain a total of 464 suites, branded as either a four-star Novotel or three-star ibis Styles (both Accor brands).

Last March, the landlord announced it would add about 15,000 sqm of luxury retail, hospitality and lounge space at its T2 (international) terminal.

In 2018, businessman and philanthropist Paul Little opened Melbourne Jet Base – a $100 million hangar and entrance for private clients.

MAC has also constructed major industrial facilities for logistics occupiers on parcels near its southern edge – one coincidentally leased to Toll, a company which Mr Little directed for 26 years until 2012.

True Value Solar Centre, occupied by Essendon Football Club (which Mr Little was president of between 2013-2015) – and the recently opened URBNSURF wave park, are also on airport land.

Longer term it is expected Melbourne Airport will see a shopping centre developed to lure Victorian, interstate and international visitors to the venue hours before or after flights.

Any retail facility would also attract a local catchment, with suburban Melbourne now sprawling to Gisborne, 54 kilometres from the city in that direction.

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Marc Pallisco

A former property analyst and journalist, Marc is the publisher of realestatesource.com.au.

Marc Pallisco