The Mercure Townsville has sold in a sale conducted by JLL Hotels & Hospitality Group’s Gareth Closter, Tom Gleeson & Gus Moors.
The Mercure Townsville offered a rare opportunity of scale in Townsville, a regional market with strong underlying demand fundamentals and limited quality hotel supply.
“Given the extreme rarity of 150+ hotel opportunities available for sale in Queensland, the Mercure Townsville was extremely well received by the market,” Mr Closter commented. “The considerable upside the property presented also made it particularly compelling to investors,” he continued.
The property comprises 174 rooms and suites across 4.33 hectares. It features resort style amenities, including lagoon pool & spa, conference facilities, gym, tennis & basketball courts, and bars and dining areas.
The sale represents a strong result which continues the trend of sustained growth in the Queensland hotel investment market over recent years. The sale process yielded in excess of 100 enquiries, with 11 inspections and multiple bids received at the close of the EOI process.
“The extremely tight initial yield, sub 7%, is reflective of the demand we are seeing for quality regional hotels,” Mr Gleeson advised. “We are seeing more and more investor mandates for Queensland hotel investment as capital continues to seek quality Queensland hotel opportunities” he continued.
The Townsville hotel market has limited branded hotel supply, which is unlikely to change given the constraints around development and construction of new hotel stock.
“Regional hotel investment markets are almost all benefiting from the lack of new supply additions over the past 10+ years,” Mr Moors said. “Given the high cost of construction, and long-term timelines for any development, this is unlikely to change in the short to medium-term” he continued.
The hotel is the only Accor branded property in the Townsville market, which creates high demand for the hotel through loyalty, including visiting NRL teams who stay at the hotel. The incoming owners have retained the Mercure brand under a long-term agreement with Accor.
“We have an excellent relationship with Accor and, given the strong distribution they deliver to the hotel, we worked with the purchaser during the sale process to retain the brand,” Mr Moors said.
The Townsville market has performed extremely well post pandemic with continued improvements in all hotel trading metrics.
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