Deloitte’s latest Tourism and Hotel Market Outlook shows record hotel occupancy rates for cities like Sydney, Melbourne and Hobart as demand from both international and domestic tourism continues to grow.
These record highs are reportedly based on the back of shifting patterns of demand and a slightly strengthened near-term supply pipeline.
“Strong demand growth, coupled with an investment pipeline which has strengthened but remains modest in the near term, is seeing hotel occupancies push further into record territory nationally and across several individual markets,” says Deloitte Access Economics’ Lachlan Smirl.
The Outlook specifies that this growth has been particularly visible in the south east.
“As the Australian economy transitions from a growth phase underpinned by resource sector construction to a more diversified one, travel patterns are gradually shifting away from the big mining states,” says Smirl.
“These trends have been mirrored across our hotel markets, with Brisbane and Perth receding from their resource boom highs, and Sydney and Melbourne recording their highest occupancy rates in more than two decades."
In 2013, Australian hotels saw average room rates and the key indicator of revenue per available room (RevPAR) grow faster than long term averages for Sydney, Melbourne, tropical north Queensland, Darwin and Hobart. Average occupancy rates are projected to climb from 66.8% to 68.9% to the end of 2016, while room rates and RevPAR are forecast to grow at above trend rates – 3.4% and 4.5% per year to December 2016.
“At the national level, with demand growing at nearly twice the pace of supply over the next three years, occupancy rates will be propelled further into record territory,” adds Smirl.
The Deloitte report states that the longer term investment pipeline is considerably stronger than two years ago, and remains broadly stable in net terms over the last 12 months, with 66 projects identified.
Tourism is also expected to underwrite robust demand growth across several regions, with international arrivals to accelerate due to global economic recovery and the strong Australian dollar.
Deloitte predicts international visitor nights will grow at 4.8% per year, and domestic visitor nights by an upwardly revised 2% per year through to 2017, with Asia remaining the long term growth driver, along with the re-emergence of the US and UK. Australians are also increasingly opting to holiday at home, as last year domestic holiday travel grew at its fastest pace in seven years.
Deloitte’s Tourism and Hotel Market Outlook was drawn from Deloitte Access Economics combined with hotel data generated by STR Global Limited. Donwload the full report here.