18 July 2013: In a clear sign that travel associated with resource sector activity is slowing, hotel occupancy rates in the key mining corporate centres of Brisbane and Perth have softened.
However Deloitte’s latest Tourism and Hotel Market Outlook finds that growth in domestic holiday travel has been good news for destinations such as the Gold Coast where occupancy rates continue to improve, while Tropical North Queensland has benefitted from strong growth in international visitor nights.
Deloitte Access Economics’ Lachlan Smirl said a softer domestic economic outlook was moderating growth forecasts for the hotel sector in several capital cities, especially those with strong links to the resources sector, while areas with high exposure to fast-growing international visitor markets remained well positioned for growth.
“While the overall national picture is a relatively stable one, there is a significant divergence in performance across the country’s hotel accommodation markets,” he said.
“Growth in occupancies and room rates in markets associated with mining-related corporate travel, such as Brisbane and Perth, is forecast to be more subdued than in recent years, as the resource-related construction boom reaches its peak.
“At the same time, the weakening of the Australian dollar is forecast to provide further support for room rates and occupancies in leisure-oriented markets.
“Nationally, and despite a strengthening hotel and serviced apartment investment pipeline, demand remains forecast to outstrip supply, placing upward pressure on occupancies and room rates, accordingly.”
Key points from the Outlook include:
National occupancy rates averaged 66 per cent for the year to May 2013 and room rates grew 2.6 per cent over the same period
Occupancy rates improved on the Gold Coast and in Melbourne as a result of increased domestic holiday visitor nights, and grew in Tropical North Queensland on the back of increased international visitor arrivals
Occupancy rates fell by 2 per cent in Brisbane and 2.3 per cent in Perth over the year to May 2013
National room rates grew modestly over the last year, increasing 2.6 per cent over the year to May 2013 to $150
Average yield per room (Revenue Per Available Room – RevPAR) was $99 per room in the year to May 2013
“At a macro level, the demand outlook remains broadly unchanged, with the softer outlook for corporate travel largely counterbalanced by the positive impact of the weakening Australian dollar,” Mr Smirl said. “However, several individual markets are amid a marked change of pace.”
National occupancy rates growing 1.9 per cent to 67.9 per cent by the year to December 2015
National room rates growing by 3.5 per cent per annum over the three year period to December 2015, to $165
RevPAR growing by 4.6 per cent per year to $112
Mr Smirl said that demand continued to grow at close to twice the pace of supply, despite increasing levels of interest in hotel investment.
“The hotel accommodation investment pipeline remains considerably stronger than 18 months ago,” he said.
“Indeed, 65 projects have been identified in various development stages of the national supply pipeline, a significant expansion on the 45 developments recorded at the beginning of last year.
“Much of this forecast development is three and four star hotels and serviced apartments, with the cost of five star hotel developments remaining more difficult to justify for developers.”
Occupancy rates improved marginally to 84.8 per cent over the year to May 2013, but remain softer than two years ago. They are forecast to improve – to 86.4 per cent – by the year to December 2015
Room rates have continued to grow steadily, improving 3.5 per cent to $196 over the year to May 2013, and are forecast to average 3.6 per cent per year over the three years to December 2015, growing to $216
RevPAR grew 3.1 per cent over the year to May and is forecast to grow by 4.4 per cent per year over the three-year period to December 2015, reaching $187.
Occupancy rates grew to 81.9 per cent over the year to May 2013 and are forecast to climb steadily to 84.1 per cent by the end of December 2015
Room rates averaged $181 over the year to May 2013 and are forecast to grow at an average rate of 4 per cent per annum over the three-year period to December 2015, reaching $201
From the current $147, RevPAR is forecast to grow by 5.4 per cent per year to $169 by December 2015.
After sustaining an average rate of 81 per cent over the year to March 2012, a decline in business travel saw average occupancies ease to just below 79 per cent over the year to May. Occupancy rates are expected to remain relatively stable over the next two years, edging up only marginally – to 80.1 per cent – in the year to December 2015
Over the three-year period to December 2015, room rates are forecast to grow by 4.1 per cent per year to reach $198
RevPAR is expected to grow by 4 per cent per year, climbing to $159 by the year to December 2015.
A decline in domestic corporate travel saw Perth’s occupancy rates for the year to March 2013 fall to 83.8 per cent, the lowest level since the year to June 2011. Local occupancy rates are expected to remain relatively stable over the next two years, before easing slightly to 83.5 per cent over the year to December 2015
Over the three years to December 2015, room rates are forecast to grow at 6.2 per cent per annum, still the nation’s fastest, but considerably slower than the pace of recent years, rising from $200 currently to $239
RevPAR is forecast to grow by 5.6 per cent to December 2015, reaching $199.
Occupancy rates have remained steady over the last two years at approximately 75 per cent and are forecast to edge up marginally to 75.3 per cent in the year to December 2015
Relatively flat since the GFC, room rates are expected to grow moderately over the three years to December 2015, averaging 2.4 per cent per year over the three-year period to December 2015, from the current $143 to $155
The combination of flat occupancy rates and modest room rate growth has resulted in projected average annual RevPAR growth rate of 2.3 per cent per year over the three-year period to December 2015, from the current $107 to $117.
Occupancy rates have fallen over the last two years, to 69.2 per cent for the year to May 2013 and are forecast to remain relatively steady in the short term before growing to reach 72.1 per cent for the year to December 2015
Room rates were relatively steady over the first five months of the year, reaching $163 in May 2013, and are projected to grow by 2.9 per cent per annum over the three-year period to December 2015 to $179
RevPAR growth of 3.8 per cent is forecast per year to December 2015, to $129.
The average occupancy rate in Darwin has been growing steadily since September 2011, reaching 78.5 per cent in the year to May 2013. While projected to continue to grow for the remainder of 2013, they will then moderate to 78.1 per cent to the end of 2015
Room rates have grown by 10.7 per cent, to $159, for the year to May 2013 and are forecast to grow by 4.2 per cent per year over the three-year period to December 2015 to reach $177
RevPAR reached $125 for the year to May 2013 and is expected to grow at 4.3 per cent per year over the three-year period to December 2015 to $138.
Occupancy rates for the year to March 2013 reached 71 per cent and are forecast to continue to grow through 2013 before stabilising at around 72 per cent by the end of 2015
Reflecting the significant capacity that remains in the market, room rates have grown relatively slowly over the past two years to $141 for the 12 months to May 2013, and forecast to average 3.5 per cent year growth over the three-year period to December 2015 to $155
RevPAR is forecast to grow at an average rate of 4.5 per cent per year over the same period to $112.
Tropical North Queensland
The average occupancy rate has been improving steadily since the end of 2010, reaching 61.2 per cent in the year to March 2013 before falling to an average 60.9 per cent over the year to May 2013. It is forecast to increase to 65.6 per cent by the end of December 2015
Room rates have been relatively steady over the past two years, averaging $121 for the year to May 2013, and are forecast to trend upwards at an average annual rate of 4.2 per cent per year to $136 by December 2015
RevPAR is expected to grow at an average annual rate of 7 per cent, to $89 over the three years to December 2015.
Deloitte’s Tourism and Hotel Market Outlook utilises the forecasting, modelling and analytical expertise of Deloitte Access Economics, one of Australia’s leading economics advisory practices. The Outlook also draws on Deloitte’s real estate industry experience and insights, and a range of other sources, including hotel data generated by STR Global Limited.
A separate Tourism & Hotel Outlook media release covers the tourism sector.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.