Demand for hotel rooms bodes well for developers

4/03/13 5:11 AM

Demand for hotel rooms bodes well for developers

PUBLISHED: 28 Feb 2013 PRINT EDITION: 28 Feb 2013 Gift Article: 100

Ainslie Chandler Record high occupancy rates in Australias key central business district hotel markets have sparked interest in accommodation projects after a lull. Deloitte Access Economics first-quarter Tourism and Hotel Market Outlook showed average national occupancy was a record 66.1 per cent in the year to December. In major CBD markets, occupancy was far stronger. Perth, Sydney, Melbourne and Brisbane all posted average rates of more than 80 per cent. Deloitte director Lachlan Smirl said the business case for new hotels had not stacked up until recently. About 60 were now under way. Market conditions have necessitated both commercial creativity by developers and proactive steps by government, and announcements in the last six months suggest the capital city hotel and serviced-apartment investment pipeline is strengthening, Mr Smirl said. The additional rooms are unlikely to hurt existing hotel owners, however, with many not expected to hit the market until at least 2015. Deloitte expects growth in annual revenue per available room (RevPAR, a measure combining room rates and occupancy) of 4.8 per cent during the coming three years. Dransfield Hotels and Resorts director Dean Dransfield said there had been a spike in activity in the past six months as confidence in the market improved. Mr Dransfields company alone is working on 10 hotels projects in their pre-development stage. People are now sufficiently optimistic about the future, he said. Projects planned for Sydney include Crowns 350-room development at Lend Leases Barangaroo South site; 900 rooms in the redevelopment of Sydneys International Convention and Exhibition Centre; and 231 rooms in the expansion of the Four Points by Sheraton at Darling Harbour. In Perth, there is a proposal to transform the former Treasury building into accommodation, as well as the Crown Towers development. Brisbanes Chifley Hotel is adding 150 rooms, while a 246-room Four Points by Sheraton is being built in the CBD. In Melbourne, which has had a higher level of supply than other capital cities in recent years, there are no major developments planned. As CBD markets posted solid 2012 results, Queensland resort locations also showed some improvement during the year, Deloitte reports. On the Gold Coast, hotel occupancy rose from 59.9 per cent to 69.9 per cent during 2012 and is expected to reach 70.4 per cent by December 2015. RevPAR is tipped to lift by 3.2 per cent annually in the same period. In tropical north Queensland, occupancy rose to 59.9 per cent in December and is expected to recover further in coming years, with annual RevPAR growth of 6.7 per cent to the end of 2015. Choice Hotels has 270 franchised hotels in Australia, many of them in regional areas. Vice-president of global strategy and operations, Patrick Pacious, said the Australian market had held up well since the financial crisis compared to other countries. His company runs four brands here, including Comfort Inn and Clarion. From a room rate perspective, weve seen a reasonable growth rate in Queensland and Western Australia, he said. Occupancy has been down a bit [but we have had] strong rate gains in most of the regions. Wyndham Hotels Asia Pacific chief executive Barry Robinson, whose company posted average occupancy of 86 per cent in the region in 2012, said the groups hotels in CBD markets had performed well. However, those in holiday locations like Margaret River and the Sunshine Coast remained patchy.
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Demand for hotel rooms bodes well for developers

4/03/13 5:11 AM

The Australian Financial Review

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