McGrath: The Year Ahead Comment

By admin


2012 starts in much the same way as 2011 – with the tourism industry facing uncertainty in the wake of international and domestic economic conditions that are, frankly, beyond prediction. Clearly for Accor, our focus will be the integration of the Mirvac hotels into the Accor group. While the agreement may have been signed, there is a long way to go before settlement and our focus over the next six months will be to meet with all the individual owners of the Mirvac hotels and discuss how we can overlay our management services to improve their business.
Nothing has been finalised about branding of the hotels and in many cases the existing entity will be retained in some form. Our key objective is to provide the resources for each individual Mirvac hotel to achieve above-market performance through improved distribution and operation.
Mirvac hotels have been very successful in the domestic market and the brand names are well known, but our industry is changing rapidly and we believe that being part of the Accor network can provide the Mirvac hotels with a suite of opportunities that only come through being part of a global network.
For instance, the inbound figures for 2012 highlight quite clearly that Asia – and principally countries such as China, India and Indonesia – offer the greatest growth opportunities. Accor is prominent in all these markets and we have an established distribution base that can provide immediate benefits for the Mirvac hotels.
Equally, in the domestic Australian market, Accor has an unparalleled infrastructure to deliver additional corporate, leisure and conference business for much lower costs – which is the obvious benefit of economies of scale – and the same applies to loyalty programmes. For many of the Mirvac hotels, incorporating Accor branding will dramatically increase the business potential of specific hotels and provide them a significant competitive advantage.
Acquisition of hotels through management and franchise contracts will be the principal means of growth for Accor through 2012. There is some activity taking place in the hotel development sector, but it will remain limited. We see potential for new-build hotels in the midscale and economy sectors, particularly our Ibis brand, and this could see new developments in city and suburban areas as well as regional areas benefiting from the mining boom. Development costs at the top-end of the market are still too high to justify additional stock, despite the fact that the upscale sector had its best performing year in 2011 since the GFC. However, our economy brands have shown their ability to perform at above-market levels in both buoyant and challenging market conditions, and that makes them particularly attractive for investors.
Cities such as Sydney, Melbourne, Brisbane, Perth and Darwin will continue to see rises in rates, particularly during the mid-week, as our initial forecasts show sustained growth in the corporate and business events sectors. Cities are also performing well in the leisure sector, despite the general perception of weakness in domestic leisure travel. Longer holidays to resort areas on the east coast may have been affected by the growth in outbound travel on the back of Australia's high dollar, but short-breaks are at record highs. For instance, Sydney's weekends used to be relatively quiet for hotels compared to weekdays, but today Saturday night is – for many of our hotels – the strongest night of the week, largely due to the local market coming into the city for a concert, function or some other event.
Interstate short-break travel is also at peak levels thanks to relatively low airfares. People may travel interstate up to six times a year, when just a decade or so ago they may have travelled only once or twice, restricted very much to "special occasions".
The changing travel patterns require innovations in the way we market destinations and hotels. There can't be a "one size fits all" approach, and that particularly applies to revitalising many of the east coast resort markets. Traditional travel patterns have changed, but I'm not sure that our industry has fully adapted to the new landscape.
It has been pleasing to see the strengthening of various tourism bodies during 2011, and Accor believes that all components of the industry – hotels, airlines, ground operators – need to work even closer together if we are to cope with the volatility that is now inherent in our business.
I wish all my travel industry colleagues the best for 2012 and beyond.

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