Demand for tourism accommodation recorded its largest increase since before the Olympics, according to the latest…
Demand for tourism accommodation recorded its largest increase since before the Olympics, according to the latest Hotel Property Digest update from
The result is evidence of the success of Federal and State Government support packages and tourism marketing initiatives directed towards the domestic market post September 11 said Mr David Gibson, CEO & Managing Director, Jones Lang LaSalle Hotels Asia Pacific.
COGOM boosts tourist accommodation demand sky high
Of all major Australian tourist accommodation markets, demand growth was strongest in the Sunshine Coast region. Demand recorded a 23.0% increase in March quarter 2002, attributed to activity surrounding the Commonwealth Heads of Government Meeting (COGOM) held on the Sunshine Coast in March.
Looking at the key performance indicator for accommodation – revenue per available room (RevPAR) – the Sunshine Coast region experienced growth of 19.5% over the same previous period.
The Queensland markets of Brisbane and the Gold Coast came in second and third places, achieving demand and occupancy growth of 5% or more during March quarter 2002.
Brisbane and the Gold Coast are continuing their strong growth of the previous year, which had temporarily stalled in the fourth quarter of 2001 as a result of the tougher operating environment said Mr David Gibson, CEO & Managing Director, Jones Lang LaSalle Hotels Asia Pacific.
Brisbane was the only market to achieve room rate growth in a national market characterised by operators offering discounts to fill their rooms.
Strong growth in Brisbane is attributed to the rapid growth of Virgin Airlines and the strength of the south east Queensland economy. The hosting of COGOM on the Sunshine Coast is also likely to have had a positive impact on the Brisbane hotel market.
As there is no new supply on the horizon, we expect the market to continue this strong growth for several years said Mr Gibson.
In the Gold Coast, demand from the domestic market drove occupancy growth. In March quarter 2002, occupancy increased 5.9% to record 71.4%, the highest of all Australia`s major hotel markets.
The domestic traveller`s preference for mid -priced accommodation is evidenced by a decline in average room rates explained Mr Michael Clarke, Senior Vice President, Jones Lang LaSalle Hotels.
Looking forward, there is no new construction planned. Rather, the conversion of the Shangri La Gold Coast will see 110 rooms removed from the supply pool said Mr Clarke.
Construction of the Gold Coast Convention Centre is likely to lead to mid to long term growth upon completion in late 2003.
Sydney`s Rate Premium Over Melbourne Falters
Tourist accommodation performance in Melbourne has surpassed Sydney during March quarter 2002.
Sydney has traditionally held a price premium over Melbourne, however during March quarter 2002, Melbourne surpassed Sydney in terms of occupancy and average daily rates (ADR). said Mr Geordie Clark, Executive Vice President, Jones Lang LaSalle Hotels. Unfortunately for Melbourne, this was due to heavy room rate discounting in both markets rather than rate growth.
Melbourne and Sydney`s ADRs dropped 5.0% to $134 and 5.6% to $131 respectively.
Mr Clark says this is due to the lag time in pricing decisions. Lower daily rates are due to the lead time with which hotels are required to quote their rates, a function of decisions made late last year in an uncertain climate. The good news is that trends in ADR follow trends in occupancy. As such, we expect to see Sydney`s ADR improve in the fourth quarter of 2002 and far stronger growth in 2003.
Occupancy growth for Sydney`s tourist accommodation is likely to continue as there remains no new room supply on the horizon. There is only the likelihood of further conversions of older hotel properties to residential apartments, confirming that Sydney is at the end of its latest development cycle.
Supply pool reductions rescued Sydney hotel occupancy levels during the first quarter 2002. A 3.0% reduction in Sydney room supply allowed the market to absorb a decrease in demand to record a 1.9% growth in room occupancy during the 12 months to March 2002.
Conversely, the Melbourne market is set to witness an 8.1% increase in room supply over the next 18 months. We estimate it will take about three years before the market will absorb this amount of new supply.
Exhibitions create domestic demand for Canberra
Canberra also recorded demand growth of 9.6% over the same previous period. Traditionally a busy festival season in Canberra, the first quarter of 2002 also boasted a number of major exhibitions that attracted strong domestic interest. Increases in room supply translated this result to a 4.9% growth in room occupancy.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.