Occupancy to rise despite new hotel projects

Occupancy to rise despite new hotel projects
By admin

A growing appetite to develop hotels in Australia will do nothing to dampen occupancy rates over the next three years, with rates and revenues also set to rise.

A market outlook report by consultancy firm Deloitte Access Economics found 66 hotel projects are underway across the country as developers begin to see value in the sector.

But many are long term projects meaning hotels will continue to benefit as demand outstrips supply, particularly in state capital cities.

National occupancy rates hit 66% for the year ending December, a figure Deloitte expects to rise to more than 68% by the end of 2015.

Room rates are projected to rise 3.7% each year, reaching $167 by December 2015 while average revenue per room, (revPAR), will rise from $99 to $114.

"While the capital city hotel investment pipeline is showing signs of improvement, many of the larger developments recently announced are not expected to be completed until 2015 or later so will have a limited impact on supply over the next three years," Deloitte said in its quarterly report. "Growth in demand is expected to continue to exceed supply."

Despite an easing of occupancy in Sydney over the last year as a result of a 15% decline in business traffic, it will creep up to almost 87% within three years, according to the analysis.

Rates will rise to $218 and revPAR to $190, up from $165 recorded in December.

Melbourne hotels will be almost 84% full by the end of 2015, up from the current 81%, Brisbane occupancies will hover around 80% and Adelaide around 75%.

Turning to WA, the report said Perth will "continue to lead the nation" in terms of occupancy despite the capacity squeeze easing slightly in the second half of last year.

"While the peak mining boom is predicted to have passed by the end of 2013 with demand for travel to WA expected to soften accordingly, occupancy rates in Perth are forecast to gradually increase over the forecast period to 86.3% by the year ending December 2015," the Deloitte study said.

In Darwin, occupancy has "risen dramatically" over the past year, climbing from 71% to 77% in 2012, but that rate of growth will slow as new capacity enters the market and will level off at 76.3% by the end of 2015.

"However, if key developments are delayed there is potential for occupancy rates in Darwin to grow further," the report said.

Elsewhere, Gold Coast occupancies, while still below levels prior to the Global Financial Crisis, will continue to slowly improve, particularly given that few new properties are expected to be built.

The increasing number of direct flights into Cairns from China, and a resurgent Japanese market should help Tropical North Queensland claw back lost ground.

Deloitte predicted occupancy will hit 64.4% in 2015, a solid improvement on the 54.6% recorded in the year ending December 2010.

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