Tourism and Hotel Market Outlook July 2014
Deloitte Access Economics
Deloitte Access Economics’ Tourism and Hotel Market Outlook is released twice a year, providing in-depth analysis of recent trends and their underlying drivers across the domestic and international tourism sectors, and ten of the country’s major hotel markets (including all capital cities).
Against the backdrop of Deloitte Access Economics’ latest economic forecasts, projections are provided for domestic and international tourism over the next three years. Building on projected travel demand and utilising our registry of short stay accommodation projects, and our in-house hotel market model, detailed three-year forecasts are provided for hotel market performance against room rates, RevPAR and occupancy.
Key developments covered in the July 2014 issue include
- After picking up pace over 2013, international visitor arrivals surged over the last 12 months as improved economic conditions in the US and UK saw two of Australia’s most important traditional source markets join the Asian growth juggernaut
- Overall, international visitation grew 8.2% in the year to May – their fastest pace in nearly a decade
- Domestically, growth continued to outpace its post-2000 average, but the momentum shifted from leisure to corporate travel as economic conditions in the east improved, the Australian dollar strengthened and the effects of the mining construction boom lingered
- Against expectations, domestic tourism grew most rapidly in Western Australia, as corporate visitation stabilised and leisure trips accelerated. On the international front, it was Victoria, South Australia and New South Wales that led the way, as low cost carrier capacity provided a fillip to Asia’s buoyant underlying growth
- International arrivals are forecast to grow by 5.1% and international visitor nights by 5.2% over the next three years, as the Australia dollar eases and economic growth among key source markets continues at pace
- Domestic visitor trips expected to grow by an average of 2% per annum over the next three years, with leisure travel assuming an increasing share.
- It has been an exceptional year for the Australian hotel market, with national trend occupancy rates reaching 68%, up two points from last year, while room rates have risen 3.2% over the same period
- Hotel occupancy in Sydney and Melbourne closed in on 90%, with the cities’ hotels at or near capacity several nights a week, and room rates and RevPAR growing at twice their decade average
- Elsewhere, conditions are mixed, with strong growth in Adelaide and Hobart offset by softer conditions in Perth and Brisbane, as the demand momentum from resources investment activity tapers
- The national supply pipeline remains steady, with 70 near-term projects identified, and forecast demand continues to outpace projected supply growth nationally and across all markets except Perth and Darwin
- RevPAR performance is forecast to be led by Sydney and Melbourne, while yilelds in Perth are expected to be steady and slip back marginally in Darwin as resources investment demand slows and new supply comes online.
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