Latest News
HomeAustralia & N.ZealandAustralia`s key hotel markets poised to withstand a short lived Iraq conflict

Australia`s key hotel markets poised to withstand a short lived Iraq conflict

The latest Australian Bureau of Statistics tourist accommodation performance results point to a…

The latest Australian Bureau of Statistics tourist accommodation performance results point to a recovery in December quarter 2002, according to Jones Lang LaSalle Hotels. These results, coupled with limited new room supply over the medium term, indicate Australia`s key hotel markets are currently positioned to withstand a downturn caused by a brief period of conflict in Iraq.

Recovery during the quarter was broad based, with all accommodation markets except Darwin experiencing growth in demand, occupancy and revenue per available room (RevPAR).

In particular, strong demand recovery was witnessed in the markets most affected by the collapse of Ansett Airlines: Hobart (14.3%), Adelaide (14.2%), Perth (10.8%) and Cairns (10.0%), thanks in part to improved air capacity supplied mainly by Virgin Blue and Australian Airlines. However, there is still room for improvement on the air capacity front said Mr Troy Craig, Senior Vice President, Jones Lang LaSalle Hotels.

Recovery of international demand was also a key factor improving accommodation performance during the quarter, a period in which international arrivals recorded a 9.5% increase compared to the three months following September 11, 2001. International arrivals remain 3.2% below the post Olympic peak recorded in December quarter 2000.

As Australia`s international gateway, Sydney hotels felt the effect of increased international arrivals, recording a 7.8% increase in room night demand during the quarter. This, coupled with room supply declines boosted RevPAR 16.8% to $96, making the result Sydney`s strongest since December quarter 2000 said Mr Craig. This result also occurred at a national level, with the hotel sector posting its first RevPAR growth since fourth quarter 2000.

Improved performance was recorded across all tourism accommodation sectors as a result of room supply reductions in Brisbane and Canberra, as well as stable supply in Perth.

Despite these positive trends, the outlook for 2003 is obviously clouded by the war in Iraq. Demand is expected to be soft for the duration of the conflict, however anecdotal evidence suggests travellers are rescheduling rather than cancelling travel plans with the anticipation the conflict will be short-lived.

Should international arrivals suffer a downturn, domestic visitors provide a solid base for the industry, comprising 71.0% of total visitor nights across the nation. Further, in light of the limited room supply additions over the short to medium term (excluding Melbourne and Adelaide) Australia`s key hotel markets are currently poised to withstand the impact of a brief period of conflict in Iraq said Mr Craig.

The resilience of the Australian hotel market was demonstrated during the last Gulf War in 1991, when demand for the March quarter of that year grew in eight of the ten major markets. Seven of these markets achieved significant room rate growth, despite the conflict and onset of the recession.

Co-Founder & Managing Editor - TravelDailyNews Media Network | + Articles

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.