Global hotel players GIC Real Estate and Host Hotels and Resorts have entered Perth's hotel market by buying the four-star Citigate Perth Hotel for $61 million.
The deal between the global joint venture partners also marks the return to Perth of leading hotel and leisure company Starwood Hotels and Resorts, which will manage the 277-room hotel under its new mid-market brand, Four Points by Sheraton.
The transaction was signed in March in a deal brokered by Jones Lang LaSalle Hotel specialists Mark Durran, managing director investment sales and Aaron Desange, vice-president investment sales.
The purchase by GIC Real Estate, the real estate investment arm of the Government of Singapore Investment Corporation, and global hotel owner Host Hotels and Resorts will also include a comprehensive refurbishment.
While the renovation schedule is expected to be ongoing, the rebranded hotel will open on June 1.
Starwood's Perth presence ended 18 months ago when its management contract at Perth's Sheraton Hotel expired and the hotel was renamed Pan Pacific Perth.
The Wellington Street Hotel was sold by fund management group Australian Property Growth Fund.
It opened in 1995 as Orchard Hotel and later became Hotel Grand Chancellor before its name was changed to Citigate Perth Hotel.
Starwood's Australian portfolio now consists of 10 hotels under a number of brands and the company said its growth strategy in established markets was primarily being driven by conversions.
"Perth is an especially attractive location for travellers from within Australia and abroad, as it has become a premier destination for business, entertainment, culture and the arts," said Sean Hunt, Starwood Pacific Hotels and Resorts' regional vice-president.
"We are responding to the growing demand for lifestyle brands in the hospitality industry. In this case, our target is the mid-market value-for-money segment."
The eight-storey hotel is across the road from the Perth Arena and the planned Perth City Link development.
WA Tourism Council chief executive Evan Hall said the sale shows room rates are skyrocketing and it is still very difficult to build a hotel in Perth, where there is a serious accommodation shortage.
"There's a lot of investor interest in existing hotels but what we really need to see is investor interest in building new hotels," Mr Hall said.
"Room rates are up 16 per cent in the past 12 months, it's a great time to own a hotel.
"Clearly, you would make this investment on the expectation that room rates will go up, if you thought 10 new hotels were going to be built, you wouldn't buy an existing hotel."
Perth's hotel occupancy peaked at 92 per cent in November.
Mr Hall said the industry needed incentives as well as the release of Crown land through the Metropolitan Redevelopment Authority to ensure new hotels were built.
Matthew Fry, Starwood Asia Pacific Hotels senior vice-president for acquisition and development said conversion to the Four Points by Sheraton brand benefited from the Sheraton Brand halo effect.
"Four Points by Sheraton heralds a new generation of sleek and modern mid-market hotels in Western Australia, reinforcing the brand's commitment to honest, uncomplicated comfort and can-do guest services," Mr Fry said.