The luxury Shangri-La hotel overlooking Carlton Gardens is set to be shelved with the developer applying to turn what was going to be a five-star hotel into apartments.
What should be 500 rooms in the gleaming tower remain dusty concrete shells without fittings or fixtures even though it was first supposed to open in 2024, with the opening then pushed out to 2026.
There has been no progress in four years at the 61-level hotel with the entrance blocked by temporary fencing and piles of dead leaves beside the shuttered doors.
The Shangri-La is one half of a $600 million twin-tower structure at 308 Exhibition Street that was completed by builder Multiplex in August 2023.
Its neighbour, a 59-level residential tower called Sapphire by the Gardens, is connected to the empty Shangri-La tower by an arching bridge on level 46.
Billionaire Adrian Portelli owns the $39 million penthouse in Sapphire by the Gardens into which he famously craned his McLaren Sena GTR sports car.
However, Portelli is unlikely to have to share his view with Shangri-La guests after the hotel’s developer, Setia (Melbourne) Development Company, a subsidiary of Malaysian conglomerate Setia SP, filed an application with the government seeking a planning permit to convert the hotel shell into 393 residential apartments.
A spokesperson for the Department of Transport and Planning said the proposal would be considered in accordance with the relevant planning scheme.
“Any proposal will be considered on its merits – as this application is currently under assessment it would be inappropriate to comment further,” he said.
Setia (Melbourne)’s financial report filed last week recorded a $14.4 million loss for the financial year.
“Construction for the hotel tower has not started and the company continues to assess strategies in relation to the completion of the development,” the report states.
Green Street News, which writes on commercial real estate, has reported that disagreement over construction costs scuppered the hotel deal, with Shangri-La wanting Setia to deliver the fitout for the cost that was quoted pre-COVID.
The twin gleaming glass towers cover half a city block at the northern end of Melbourne’s CBD opposite the gardens that house the historic Royal Exhibition Building, the site of Australia’s first parliament.
Setia sold the management rights for the hotel complex to the global luxury brand Shangri-La in 2017, and in 2022 the incomplete hotel was unsuccessfully offered for sale for $500 million for the empty building – effectively $1 million for each room key.
The plans for the hotel include a grand ballroom with a 2500-person capacity, function rooms and event spaces, a health club, spa and wellness centre, as well as restaurants and bars.
The Age has previously reported the cost of the hotel fitout before the COVID-19 pandemic had been budgeted at about $60 million, but inflation and cost increases for materials and labour have since inflated that estimate to $80 million.
That puts a $580 million price tag on the fully furnished and fitted-out hotel.
Wentao Zhang lives in the adjoining Sapphire by the Gardens tower and said in his three years as a resident, there had been no progress on the fit-out of the Shangri-La.
“It’s completely empty inside and neglected, some of the windows are broken,” he said. “I’ve heard they’ve run into financial difficulties.”
Zhang said residents of Sapphire by the Gardens have no access to the sky-bridge floor on level 46 which is supposed to connect the apartments to the hotel.
Cancelling Shangri-La’s Melbourne hotel means that the luxury brand will only have two sites in Australia: the Shangri-La Sydney and the Shangri-La the Marina in Cairns.
André Jacques, regional director of marketing at Langham Hospitality Group and director of the Victorian Tourism Industry Council, said it would be disappointing if Shangri-La’s Melbourne hotel was abandoned and turned into apartments.
“It would be a shame, considering how many apartments there are already in Melbourne,” he said. “From an international hotel brand standpoint, and a luxury hotel brand, it’s very positive to have another brand like Shangri-La in the market.”
Jacques said 6500 new hotel rooms had opened in Melbourne in the last six years, but occupancy rates were strong and there was still demand for luxury hotels.
Setia SP, Setia (Melbourne) and Shangri-La declined to comment on whether plans for the hotel have been permanently shelved.
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Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: www.smh.com.au
