CBD residents face off with investors over push to turn homes into hotel

Residents of a city apartment tower are fighting moves to convert most of their building into serviced apartments, fearing the attempted takeover would turn their home into a hotel and force scores of tenants to leave.

The proposal by WA-based Panache Hotel Group to convert most of the Exhibition Street building’s 144 apartments into short-stay accommodation has pitted residents against owner-investors, with one group fearing their recently purchased homes will be less liveable and the other hoping to increase their retirement nest eggs.

As the hotel group seeks to convince as many owner-investors as possible to sign up to its venture, the dispute has turned toxic. Sceptical residents have been banished from a Facebook page for owners, while an anonymous website has been launched to urge owners to reject the proposal.

Tenants who live in the building have largely been left in the dark about the proposal, despite the prospect of many having to find new homes during a rental crisis. Melbourne’s rental vacancy rate was just 1.56 per cent last month. The Age spoke to multiple tenants of the building, none of whom knew about the plan.

The building, at 333 Exhibition Street, is on the edge of the CBD, facing the Carlton Gardens. Many of the apartments have glorious views of the dome of the world-heritage-listed Royal Exhibition Building.

Global hotel giant Accor previously ran the building as serviced apartments, but abandoned the business during the pandemic. It has since become home to a mix of owner-occupiers and renters, who have sought to create a homely atmosphere in the 35-year-old building. There is a shared library in the lobby and a worm farm on the communal terrace.

“I’ve lived in lots of apartment buildings before, and I haven’t lived in one that has been quite so friendly,” said Kirsten Cameron, who bought an apartment about a year ago after a lengthy search.

Cameron has multiple disabilities, including nervous system disorder POTS and connective tissue disorder hEDS. These conditions forced her to search widely for a place that met her needs.

“I’m kind of allergic to sunshine and heat, so having a building that is oriented for passive design, that is well built so I can block hot weather out, has a nice area to sit and wait for transport, and has an IGA at the bottom are weird things that are fundamental for me,” she said.

Cameron worries that living in a building scattered with hotel rooms would increase noise, reduce lift access and affect her mental health.

“This community of residents is really what’s at risk,” she said.

Rosemary Forde bought her apartment in 2022. Single and aged 46, she said it was the first home she was able to buy after 20 years of renting and that she worked three part-time jobs to pay for a deposit.

“At the moment, I know everyone who lives on my floor, and we all help each other out,” Forde said. “A lot of them are long-term tenants, but what would happen to them, and what would my neighbourly experience be, if it’s just a continually rotating cast of tourists or business travellers?

“For many reasons, it’s a terrible outcome for me, not to mention the value of my unit dropping considerably.”

The push to return to serviced apartments has been led by investor Peter Messer, an art gallery owner based in NSW who has an apartment in the building.

Messer said that he was like any other investor funding his retirement.

“I’m 76 years old, and I’m not there to make the most money I can possibly make – I’m trying to get an income from my superannuation, which now supports me,” Messer said.

Many investors had bought into the building years ago when it was run by Accor and sought a return to that arrangement, he said. He likened the proposal to a building in which some owners lease their units as an Airbnb.

“It’s an existing mixed-use building that was built for serviced apartment hotels, and because of COVID, there was a disruption,” Messer said.

Panache Hotels Group chief executive Wilson Bao said the company had been approached by a group of owner-investors seeking to return the building to its former function. The company estimates that more than 60 per cent of investors are already in favour of the proposal.

“A lot of them are retirees and they just wanted to see if there is any better commercial offer on the table,” Bao said.

“They’re depending on this rental income to pay for their retirement life. We obviously have a pretty strong case to offer them.”

Bao said the anonymous author of a website about the proposal was engaging in unfair “scare tactics”. He said no tenants would have to leave before their lease expired, and that the business would assist any tenant whose landlord joined the serviced apartment venture by helping them find a new place to live.

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