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Sydney hotels flat, Perth hot and Cairns in trouble


BY JAMES WILKINSON

The latest STR Global statistics for the six months to June 2011 reveal that Sydney remains flat, Perth is the hot market and Cairns is in trouble as a strong Australian Dollar continues to significantly affect the hotel industry.


Sydney’s hotels remain flat in the current market

Revealed at the 11th annual Australia, New Zealand and Pacific Hotel Industry Conference (ANZPHIC) at Hilton Sydney this morning (July 18), the STR statistics show Sydney’s occupancy for the year to date at June 2011 is down 0.1% to 82.2%.

Sydney’s Average Daily Rate (ADR) is up 3.0% to AUD$180, while Revenue Per Available Room (RevPAR) is up 2.9% to AUD$148.

Melbourne and Brisbane also showed slightly positive numbers, while Perth has proven to be the hot market, particularly on the RevPAR front, seeing gains of 9.6%.

As a result, a number of Hoteliers on the ‘When, where and how to catch the next wave’ panel chaired by Horwath HTL Australia’s Vasso Zographou, were quite bullish.

“They were bullish in respect to Australian CBD markets which are experiencing strong corporate activity, however, the resort markets represent a challenge due to the combined impacts of a high Australian dollar making inbound tourism more expensive, whilst also encouraging a higher number of Australians to travel overseas,” Zographou said.

The Gold Coast and Cairns remain the biggest concerns for Hoteliers, particularly with a drop in Japanese visitors and a high Australian Dollar.

In respect to Sydney, where supply is flat, Accor’s Vice President – Australia, Simon McGrath said: “We have seen fairly strong growth during the first half of this year and last year… winter has been very good for us.”

Mantra Group CEO Bob East said the biggest opportunity for growth in the Sydney market was mid-week business.

“Rate growth potential is quite significant,” he said. “Occupancy for weekends has been fantastic.”

The flat market in Sydney is expected to improve, however, particularly with little supply coming into the market over the next 12 months – the only project due for completion over the next 12 months is the 171-room ‘The Darling’ at The Star (formerly Star City) – and a strong return of the MICE market.

Given the lack of new supply, four of the five Hoteliers on Zographou’s panel were expecting 10% RevPAR gains in 2011/2012.

Melbourne’s statistics also saw Hoteliers confident for the remainder of 2011. Melbourne’s occupancy is up 2.3% to 74%, while ADR is up 1.9% to AUD$176. RevPAR improved 4.2%.

The Victorian capital’s positive start to the year is welcome news, particularly on the back of extensive new supply entering the market over the last 18 months, including Crown Metropol, Travelodge Docklands and three Art Series properties.

“Melbourne has a history of absorbing new supply quickly and this year has shown that again,” said InterContinental Hotels Group Chief Operating Officer – Australasia, Bruce McKenzie. “(As a result), I’m very bullish about Melbourne for the next year.”

Choice Hotels Australasia Chief Executive Officer David Bayes said he was generally optimistic about his group’s properties in Melbourne.

“I feel quite good about Melbourne, but I still think there is a little way to go to overcome the new supply,” Bayes said.

The latest statistics from Queensland’s three key markets – Brisbane, the Gold Coast and Far North Queensland – showed the capital slightly up, but both regional markets hurting.

Brisbane’s occupancy is sitting at 79.3% (up 2.7%), ADR at AUD$175 (up 5.9%) and RevPAR at AUD$138 (up 8.7%).

“The corporate market is very strong in Brisbane,” said Hilton Worldwide’s Vice President – Operations for Australasia, Ashley Spencer. “Where Brisbane is weak is weekends and leisure.”

Bayes added: “I feel very good about Brisbane – there is very strong corporate business because there is a huge amount of infrastructure work to be done.”

Down the freeway, Gold Coast properties are averaging 63% occupancy (down 6.2%), ADR is on AUD$149 (up 4.1%) and RevPAR is down 2.4% to AUD$94.

“There’s no doubt the Gold Coast is a challenging market in some respects,” Mantra’s East said, adding the lack of international visitors remained the biggest concern. “But, it’s not that bad overall.

East said Mantra was finding an increase in more localised drive traffic to the Gold Coast – people travelling up to 3.5 hours from home.

“We are getting very good rate at our new Peppers product (and overall) we are up for a better season in terms of rate,” he said.

Hilton’s Spencer said the Middle East market was holding up at the group’s brand new Hilton Surfers Paradise hotel, but overall, the Gold Coast was certainly a tough market.

“It’s a more challenging market than when we did the deal, that’s for sure,” he said.

Spencer said hotels that were not aligned with major brands in the Gold Coast would be in for a tough year ahead.

“In that market, without a strong brand you are going to struggle,” he said.

In Far North Queensland, occupancy across Cairns, Palm Cove and Port Douglas combined  is down 2.8% to 53.1%, ADR is down 4.1% to AUD$120 and RevPAR is down 6.8% to just AUD$64.

“It’s a huge challenge,” McGrath said. “While Cairns Airport is seeing good numbers, what’s missing is the holiday market.

McGrath said the 5-7 day leisure market in Cairns, Palm Cove and Port Douglas “was completely gone at the moment”.

“We expect it to be tough for another 18 months,” he said.

Bayes added: “It’s proving tough for Cairns and Port Douglas and it’s going to be difficult come back.”

There was better news in Perth, with the city’s occupancy up 1.9% to 81.6%, ADR up 7.6% to AUD$189 and RevPAR up 9.6% to AUD$154.

In a bid to get hotels chains to ‘ride the wave’, the Western Australian Planning Commission was showcasing the proposed Perth Waterfront project at ANZPHIC in a big to attract hotel investment.

The project has been drawing significant interest of late considering the state’s seemingly never-ending mining boom.

Until that project is built, Hoteliers are expecting Perth to continue strong gains in the coming years across occupancy rates, ADR and RevPAR.

In Darwin, the mood was less upbeat, with Northern Territory hotels reporting an average occupancy of 69.5% (down 0.8%), an ADR of AUD$139 (up 1.4%) and RevPAR at AUD$97 (up 0.6%).

“Darwin had a slow start to the year… Kakadu is down and the backpacker market has gone,” IHG’s McKenzie said, adding that Darwin is relying heavily on domestic travellers at present.

However, with high season just around the corner, McKenzie was positive on the outlook for the rest of the year.

“All the indications are that it will be a good season,” he said.

Across the Tasman, Auckland’s hotels have been showing some gains, with occupancy up 2.2% to 75.9%, ADR up 1.2% to NZD$134 and importantly, RevPAR up 3.3% to NZD$102.

Hilton’s Spencer was bullish about the effect of the upcoming Rugby World Cup.

“The Rugby World Cup will do extraordinarily well… we think so anyway,” he said.

Down south in earthquake-ravaged Christchurch, Zographou presented STR Global’s statistics for the city for the month of May 2011 which showed hotels that are fortunate enough to be open – currently just nine of the city’s 35 properties pre-both earthquakes – have been busy.

The May 2011 showed an average occupancy at 62.5% (up 12.3%), ADR at NZD$149 (up 29.9%) and RevPAR at NZD$93 (up 45.9%).

With many of the city’s hotels closed indefinitely due to damage and access issues hotels currently open are expecting to be close to full for the remainder of 2011.

“This is an absolute disaster for everyone involved… Christchurch was set to have a really good year,” said IHG’s McKenzie.

“The whole process is taking so much time and we don’t really know what the future of our hotels looks like.”

The upcoming Rugby World Cup would have given the city a huge lift, particularly on the back of a disappointing 2010 – a down year that wasn’t helped whatsoever by the September earthquake.

Christchurch hotels finished 2010 on an average occupancy of 67.2% (down 0.1%), an ADR of NZD$106 (down 3.7%) and RevPAR of NZD$71 (down 3.8%).