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Hotel Demand Solid, International Visits Increase

Most of Australia’s hotel markets are in good shape due to consistent underlying demand across the nation – except for Western Australia - resulting in an average occupancy rate of 76% and an increase in Revenue Per Available Room (RevPAR) of 2.9% for the year to June 30, according to the latest Accommodation Industry Monitor from STR. 

Sydney, Melbourne and Brisbane all absorbed significant supply increases to record modest increases in RevPAR. Darwin and Adelaide posted the greatest performance improvement over the previous year due to demand significantly outstripping supply.

The Tasmanian tourism boom continued with Hobart experiencing the biggest increase in demand at 7.5%, however several new hotel openings hurt occupancy, which was down -4.4% while RevPAR fell -3.1%.

In contrast, the Western Australia tourist market continued to struggle with international and domestic visitor numbers in decline, which unfortunately coincided with a boost in supply resulting in a RevPAR decline of -6.5%.

Matthew Burke, Regional Manager Pacific – STR, says that “underlying demand is there for Australian accommodation” and over time he expects that to flow through to major regional markets, especially those with good marketing.

He says events are playing an increasing role in all markets, and emphasised their importance for regional destinations seeking demand drivers.

“Just look at the impact the Cadel Evans Great Ocean Road Race has had on occupancy in that region,” says Burke.

STR Cadel Evans Great Ocean Road Race case study graph

“Before it started in 2015 hotel occupancies along the Great Ocean Road in late January were in the 70s. 

“They are now in the 90s and there has also been a significant increase in rates.”

Meanwhile, the latest edition of ‘International Visitors in Australia’ from Tourism Research Australia, which also covers the 2017/18 financial year, contains two big takeaways for hoteliers.

The first is that while international visitor numbers to Australia are up, there is a strong trend toward shorter stays, which anecdotal evidence suggests is also happening with domestic travellers.

The second takeaway is that 42% of trip spend occurs before international travellers leave home.

In other words, if hotels want international business, they need to find a way to connect with travellers before they leave home.

Other TRA findings include:

  • China continued to underpin the growth in visitation and spend with a 13% increase in visitor arrivals to a record 1.3 million. 
  • Visits were up but spend was down for the key US, Zealand and UK (because of shorter trips?).
  • India is the fastest-growing market in percentage terms with visitor numbers increasing 21% to 314,000 though they are spending less per head (why? See above).
  • Asian markets are growing fastest and now contribute 57% of international tourism spend.
  • 30% of international traveller spend is on accommodation, food and drink.
  • 14% of international visitors used only credit cards to pay during their whole trip.

In conclusion most states and territories saw strong growth in both international visitor numbers and spend for the year. Tasmania and the ACT led the way, both with an increase in spend of 21%.

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