Is demand for Melbourne damaging tourism?

New data is showing that the demand for travel into Melbourne is growing so fast it’s sending airfares and hotel rates through the roof.

And while that can also be considered a good thing, until airlines and hotels can meet the demand with more services and products, it’s making for a more expensive trip to Melbourne.

CWT Solutions Group, the consulting division of Carlson Wagonlit Travel, and CAPA – Centre for Aviation have found that the number of travelers into Melbourne is growing at a faster rate than the available seats offered by airlines.

This is driving up airfares on certain routes, as well as causing hotel occupancy and room rates in the city to rise.

These findings are published in Business Travel Pulse, a new report with a special focus on the Australian city of Melbourne. The report brings together key aviation and hotel data from both organisations to deliver informed opinions and in-depth analysis.

The Business Travel Pulse report reveals that hotel occupancy rates in Melbourne for the year ending March 2017 have topped 84 per cent and average daily room rates have risen to AU$192.

“Melbourne is increasingly well-connected, which cements its position as a world city,” said CAPA Executive Chairman, Peter Harbison.

“Melbourne is one of Australia’s top business travel destinations, and with its attractiveness as a tourist destination and assortment of marquee sporting events, the combined demand keeps occupancy high,” added Richard Johnson, Director, Asia Pacific, CWT Solutions Group.

“Passenger numbers into Melbourne airport are increasing year-on-year, requiring more new accommodation options to satisfy demand.

“At present, the supply-demand dynamics give hotels the opportunity to charge higher prices as the occupancy rate is so high.”

The report also reveals that over the past year, economy airfares on the Melbourne-Sydney route saw a rise in Average Ticket Price (ATP) of more than five per cent. Economy airfares on other domestic routes remained largely unchanged in the last year, while both economy and business class airfares on various international routes fell slightly.

Flight Centre Managing Director Graham ‘Skroo’ Turner recently shared results of a corporate traveller report, with Skroo claiming airfares currently are quite reasonable in Australia, despite another report showing Aussie travel was one of the world’s highest.

Air China, Japan Airlines, SriLankan Airlines and Air Canada are all launching new routes into Melbourne in 2017.

“Melbourne offers a viable alternative to Sydney as a point of origin and destination for international travel,” Johnson said.

“However, with more choice and the ability for more people to fly direct into Melbourne, there is potential for further pressure on accommodation availability.

“Corporate travelers need to be smart in how they book in advance. It is possible that 14 days out won’t be good enough anymore.”

“Any additional service to a city opens up new opportunities for travelers, stimulates tourism and trade, and spurs economic growth.

“It also adds greater competition, resulting in more competitive pricing and better products,” Harbison said.

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