29 November 2012: Continued growth in domestic visitor nights, particularly for business travellers, saw further improvements in national hotel occupancy rates in the year to June 2012.
Occupancy rates nationwide reached 65.9% in the year to June 2012, up from 64.8% over the year prior.
Releasing Deloitte’s Q4 Tourism and Hotel Outlook, Deloitte Access Economics’ Lachlan Smirl said occupancies were forecast to continue to grow over the medium term as demand continued to outstrip supply in the capital cities.
“Our forecast is for national occupancy rates to remain relatively stable over the next year, as supply increases in some key markets, before climbing to 67.1% by 2015,” he said.
“Several major capital city developments will come on line over the outlook period, and we are also seeing supply growth in the mining regions, with new accommodation planned for Karratha, Port Headland and Darwin.
“Notwithstanding this, the overarching trend is one of demand outstripping supply, with room rates being driven up on the back of this.
“Growth in the average room rate of 3.7% per year will underpin average annual revenue per available room growth of 4.3% over the next three years.
“Capital city occupancy rates continue to push into unchartered territory and room rates continue to grow at rates faster than their historical average.”
Other key points from the Outlook include:
Room nights sold are forecast to grow by an average 1.7% p.a. over the next three years
Growth in room nights available is forecast to average 1.1% p.a over the same period
Average room rates are forecast to grow by 3.7% p.a., reaching $164 in the year to June 2015
Projected average yield per room (RevPAR) is forecast to increase by 4.3% p.a. over the next three years, from $97 per room in the year to June 2012 to $110 per room in the year to June 2015
Consistent with the forecast for room rates, the outlook for yields has eased over the second half of 2012.
Key points by city/region:
Trend occupancy rates in Sydney remained solid in the year to June at 85.1% – down slightly on the 85.4% recorded for the year to March, suggesting the city is close to capacity at peak times
Occupancy rates are forecast to moderate slightly in 2013 (reflecting the recent opening of the 200-room QT Sydney in the CBD) before increasing to 87.7% in the year to June 2015
RevPAR is expected to grow by 4.5% over the next three years from $162 for the year to June 2012 to $185 for the year to June 2015.
Trend occupancy rates in Melbourne were similar to last quarter – falling from 80.6% to 80.5% in the year to June 2012 – but are forecast to improve considerably in coming years, reaching 85.5% in 2015
Room rates are forecast to grow at an annual average rate of 4.1% over the next three years, rising from $178 in the year to June 2012 to $201 in the year to June 2015
RevPAR is forecast to grow by 6.2% p.a. over the next three years, up from 5.6% last quarter as a result of the increase in forecast occupancy rates.
After a significant jump in the March quarter, occupancy rates eased by 0.2% to 80.8% in the year to June 2012
As noted last quarter, Brisbane occupancy rates now exceed those in Melbourne and are forecast to reach 81.9% in the year to June 2015
Aside from the Mosaic Grand Chifley, there is a limited definite supply pipeline for Brisbane, although plans have been announced to put new hotels in the Southpoint Tower and Brisbane Technology Park
Room rates are forecast to grow by an average of 5.7% p.a. over the next three years, while growth in yields is expected to be 6.2% p.a.
Perth’s occupancy rates continue to lead the nation – 86% for the year to June 2012 – and suggest very little spare capacity, especially during the week when business travel is at its peak
While the opening of the 236-room Fraser Suites in October will help ease capacity constraints, the outlook for occupancy rates remains strong, forecast to rise to 88.2% in the year to June 2015
With the peak of mining-related construction activity predicted for 2014, there will be added pressure on room rates, forecast to increase by an average of 10.3% p.a. over the next three years
Yields are forecast to grow by 11.3% p.a. over the same period, rising from $165 in the year to June 2012 to $257 in the year to June 2015.
Occupancy rates in Adelaide eased from the 75.5% recorded in the year to March to 74.5% in the year to June 2012 and are forecast to remain relatively flat over the next three years
The proposed opening of the Mayfair and Ibis properties should see demand broadly matching supply
Room rates remained flat in the June quarter, but are forecast to grow by 3.0% p.a. over the three years to June 2015
Yields are forecast to grow by 3.2% p.a. over the three years to June 2015.
Despite an increase in domestic visitors, occupancy rates fell for the year to June 2012, to 72.9% compared to 74.0% last quarter, and have contributed to a weaker outlook, now forecast to increase to 75% in the June quarter of 2015
Much of this increase will occur toward the end of the forecast period, as government budget tightening restrains travel to Canberra
Room rates are forecast to grow relatively moderately over the forecast period, increasing from $164 in the year to June 2012 to $184 in the year to June 2015, representing an average annual growth of 3.7%. Yields are forecast to grow by 4.7%.
Occupancy rates in Darwin grew at the fastest rate nationwide for the second consecutive quarter, and reaching 74.6% in the year to June 2012
The outlook for occupancy rate growth still remains modest. Additional supply will come onto the market to accommodate increasing demand from the Inpex development, and Ausco has announced plans to build a 270-room short stay accommodation facility to address likely oil and gas sector demand
This additional supply should moderate anticipated room rate growth, which is now forecast to increase 3.7% p.a. over the next three years
Reflecting occupancy growth, yields are forecast to grow by an average 4.2% p.a over the outlook period.
Occupancy rates improved in the June quarter, rising to 68% in the year to June 2012 from 66.9% in the year to March, but have tended to fluctuate between 65% and 68% over the last five years. This is forecast to continue in the short term, rising 68.8% by the year to June 2015
Room rates are forecast to grow at an average annual rate of 3.3% over the next three years, projected to increase from $135 in the year to June 2012 to $149 by the year to June 2015
Yields are forecast to grow by 3.7% p.a. over the next three years.
Tropical North Queensland
Occupancy rates continue to recover from the decline in the Japanese market and the impact of natural disasters, rising to 58.8% in the year to June 2012, up from the 58.1% recorded for the year to March
Occupancy rates remain well off the levels experienced prior to the GFC but are still forecast to reach 66% by the year to June 2015
Average annual room rate growth of 3.9% is forecast over the next three years, reaching $131 by the end of the forecast period, up from $117 for the year to June 2012
Combined with the forecast improvement in occupancy rates, this will lead to RevPAR growth of 8% p.a. over the period to June 2015.
Deloitte’s quarterly Tourism and Hotel 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.
Digital disruption: Short fuse, big bang?, the newest paper in Deloitte's Building the Lucky Country series, considers the magnitude of digital transformation within Australian business and government – the size of the 'bang' – as well as how quickly 18 industry sectors will be affected – the length of the 'fuse'.
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.