Hotel upgrades aimed at rising domestic demand

Although overseas visitor numbers are flat, the number of new hotels in all capital cities has declined as a consequence of the global financial crisis.

As a result, many hotel operators are putting cash into upgraded existing premises to meet the demands of business guests as well as searching out older office towers than could be converted more cheaply than building new hotels afresh.

Starwood Inc, the operators of the Four Points by Sheraton in Darling Harbour, is to start a $15 million refurbishment of the country's biggest hotel in April.

Brian McGuinness, the senior vice president of specialty select brands for Starwood Hotels & Resorts Worldwide, said on a visit to Sydney that the city was a target market for the group given its gateway position in Australia.

But he said cities such as Melbourne, Perth and Brisbane would be scoured for sites as demand rises within the travel industry.

Mr McGuinness said the Four Points by Sheraton was to be the benchmark for the 4.5-star hotel sector with what he termed the "select service space".

Starwood operate the hotel under a licence with the owner, Michael Klum, a private investor in Singapore who bought the property from GPT for $185 million in late 2009.

"Sydney is the gateway, and now is a great opportunity to refurbish the hotel," Mr McGuinness said.

"We are seeing a rise in demand for rooms at a time when the Australian market is under-supplied and much of the properties need a revamp."

He said Starwood was also investigating the launch of its latest Aloft brand hotel - a boutique style of hotel of about 150 rooms, located in fringe areas of capital cities.

Starwood recently opened an Aloft in Bangkok and will use it as a litmus test for the Pacific region.

Andrew Taylor, Starwood's Sydney-based director of acquisitions and development for the Pacific region, said he was travelling the country to source properties in suburbs to convert them to the Aloft brand.