Deloitte Hotel Tourism Outlook Q1 2012

Tourism and Hotel Market Outlook

Q12012

2

1 Background

1.1 The macroeconomic context

Economic uncertaintyWeakness in the global economy is expected to continue in 2012, with ongoing challenges facing the Eurozone. The recent downgrading of France’s credit rating is symptomatic of the continuing difficulties confronting the region over the coming year. While Asian economies continue to perform well overall, the easing in exports to the West is seeing a moderation in growth in these countries. World Gross Domestic Product (GDP) is forecast to grow 2.9% in 2012, before rebounding to 3.7% from 2013.

Australia’s economic performance remains tied to the fortunes of other nations, with growth expectations heavily contingent on the performance of European economies. If Europe averts a major economic downturn, and China and India continue to grow, the economic outlook for Australia is robust. Indeed, it may even outstrip expectations. If the situation in Europe unravels, the economic reverberations will significantly dent the growth prospects of the global economy, with negative implications for Australia’s economic outlook.

These risks noted, Australia’s economic growth is forecast to be modest over 2012 before returning to longer term norms. The nation’s GDP is projected to expand by 3.6% in 2012, before moderating back to 3% in 2013 over the years thereafter. Inflation is forecast to remain broadly within the RBA’s 2 – 3% target range throughout the forecast period, with interest rates also expected to be relatively steady, provided a major downturn in Europe is averted.

The domestic economy is expected to grow more strongly than many of Australia’s traditional tourism source markets. The Eurozone is expected to contract by 0.4% over 2012, and both the UK and Japan are expected to expand only marginally. China, on the other hand, is forecast to continue growing at a rapid pace – exceeding 8% growth annually, over the next five year outlook period – as will India and north east Asia (excluding Japan).

Exchange ratesThe recent strength of the Australian dollar, which has seen it reach its highest level since the floating of the currency in 1983, has been largely driven by demand for Australian commodities in expanding Asian economies. While this has led to strong growth in the nation’s terms of trade and export earnings in directly affected sectors, it has presented challenges for other export (and import-competing) industries, such as tourism. While a 2011 analysis by Deloitte Access Economics found the exchange rate had only a limited effect on international visitation to Australia – with growth in incomes the more significant long term driver – a stronger relationship was found between the exchange rate and outbound travel by Australians.1

The resilience of the Australian economy together with the strength of the Australian currency have seen Australians making overseas trips at unprecedented rates, with a corresponding stagnation in the growth of domestic trips in Australia. Expectations are for the Australian dollar to remain strong over the short term – Deloitte Access Economics forecasts the AUD/USD exchange rate remaining close to parity until 2013 – and hence for the associated economic opportunities and challenges to remain. Over the longer term, the Australian dollar is forecast to moderate as global economic conditions adjust.

Deloitte Access Economics’ Tourism and Hotel Market Outlook – Q1 2012 reports on the performance of Australia’s tourism and hotel accommodation sector, based on data published by the Australian Bureau of Statistics (ABS) and extrapolated through information from Tourism Research Australia and other sources.

Forecasts to year-end 2014 are presented, based on projections generated from Deloitte Access Economics’ in-house tourism forecasting model and hotel accommodation sector model. These projections draw on Deloitte Access Economics’ macroeconomic forecasts, as reported in our quarterly Business Outlook publication.

The methodology used in this edition of the Outlook has changed since the last publication. Consequently the forecasts presented in these two issues of the publications may not be directly comparable.

1 For an overview of the findings of this research, see www.tourism.australia.com

3

Tourism and Hotel Market Outlook Q1/2012

Exceptional events2011 was a year of one-off events impacting on the Australian economy – the tourism sector included. In particular, the industry was dealt several blows in Queensland, with the floods in the south east of the state and Cyclone Yasi effectively shutting parts of the industry down for a period of time. Conversely, the hosting of the Commonwealth Head of Government Meeting (CHOGM) in Perth led to a boost for the industry in Western Australia, with very high demand for hotel accommodation in the lead up to and throughout the conference.

If unique events such as the floods and cyclone in Queensland were not challenging enough for hoteliers and tourism operators, events in source markets provided additional difficulty. Both Japan and New Zealand were struck by major natural disasters (earthquake and tsunami, and earthquake, respectively) which dented both economic performance of these countries and the appetite of their citizens for international travel. The pace at which these regions recover and travel patterns return to their norms will determine the outlook for these tourism markets.

Labour market conditions The tourism industry is a labour-intensive one and, as a result, its fortunes are highly sensitive to labour availability and wages. Over recent years, labour force challenges facing the tourism sector have been heightened by the strength of Australia’s mining sector which has placed upward pressure on wages and drawn workers from tourism-related sectors. Deloitte Access Economics forecasts steady growth in wages over the Outlook period, with nominal earnings forecast to increase 4.4% in 2011 – 12, before more moderate growth over the period 2012 – 13 through 2014 – 15.

Labour force challenges in the Australian tourism sector Skill and labour force shortages are among the most significant challenges facing the Australian economy (and are issues discussed in detail in the first report in Deloitte’s Building the Lucky Country series, Where is your next worker?)2

With the resources boom driving demand for workers, a moderation in migrant numbers and an increasing share of the population reaching retirement age, constraints in the labour market are becoming increasingly apparent. Within the tourism sector specifically, labour and skills challenges have long been identified as a concern and, moreover, as a factor increasingly affecting the industry’s performance. Not only do workforce issues impact on the quality of the tourism product, they also impact business profitability with potential flow-ons for tourism investment and output.

In a 2011 study for the Federal Department of Resources, Energy and Tourism, Deloitte Access Economics undertook a survey of tourism employers to review the nature and severity of labour force shortages.3 Around half of surveyed employers indicated they were experiencing recruitment difficulties; skills deficiencies and/or retention difficulties, with these challenges most pronounced in the Northern Territory and Western Australia. Furthermore, the industry reported that 9% of advertised jobs went unfilled, compared to a whole-of-economy rate of 2%. This is equivalent to a shortage of 35,800 workers Australia-wide.

Labour force forecasts developed by Deloitte Access Economics indicate that, without policy change, the shortage in tourism workers will increase to 56,000 by 2015. Around half of these positions are likely to be skilled occupations, with demand highest for kitchenhands, waiters, cafe and restaurant managers and chefs.

Based on the findings of this research, the Tourism 2020 Labour and Skills Working Group is implementing a range of initiatives to help address the labour force challenges facing the sector.4

The performance of Australia’s tourism and hotel accommodation industry remains tied to the strength of the business sector and the emergent Asian economies

2 For more information on this report, visit: www.deloitte.com.au

3 For more information on this report, visit: www.ret.gov.au/tourism

4 For more information on Labour and Skills Working Group initiatives, visit: www.tourism.gov.au/labour

4

Of course, labour force issues vary markedly across sectors. Given the significance of wages to the tourism sector and the importance of high calibre workers to the quality of the tourism experience, labour market conditions are integral to the prospects of the tourism and hotel accommodation sectors. The significance of labour and skills to the fortunes of the Australian tourism industry is highlighted by the emphasis placed on it in the Tourism 2020 strategy. A recent study by Deloitte Access Economics highlights the nature and magnitude of the current and future labour force challenges facing the tourism sector (see blue box on page 3).

2 The outlook for Australia’s tourism sector

As the weakness in the global economy threatens to turn into a potentially protracted recession in Europe, forecast visitor numbers to Australia and expenditure have generally been downgraded. Nonetheless, strong income growth in emerging Asian economies, and particularly China and India, is expected to drive growth in international visitor arrivals over the outlook period.

On the domestic visitor front, visitor numbers have somewhat stabilised, despite the natural disasters early in the year that had operators, especially in Queensland, concerned about a fall in demand.

The improvement follows several years of declining domestic visitation as increasing numbers of Australian holiday makers took advantage of the high Australian dollar and strong growth in incomes and ventured overseas.

The changing composition between international and domestic tourism presents both challenges and opportunities for the sector. The rapid emergence of source markets such as China is benefiting regions and offerings that appeal to Chinese preferences. At the same time, the decline in domestic visitation presents challenges for regional operators. Unlike domestic travellers, who often holiday in regional areas, international visitors tend to spend the majority of their time in capital cities. As the tourist mix shifts toward international visitors, therefore, tourism expenditure becomes increasingly concentrated in capital cities.

Domestic visitorsThe number of domestic tourists recovered marginally in 2011 following several years of declines. However, total domestic visitor nights has not experienced a similar uplift, suggesting that travellers are tending to take shorter breaks than has historically been the case. The downward trend in domestic visitors over much over the past decade is reflective of a growing numbers of Australians opting to spend their holidays overseas rather than holiday locally. The high exchange rate is an important driver in this increased preference for international travel, but cheaper and more frequent international flights, rising incomes, and the price competitiveness of international destinations compared to domestic travel have also contributed to the increasing appeal of overseas holiday destinations.

Looking forward, Deloitte Access Economics forecasts domestic visitor nights edging up marginally over the period to end-2014 – at an annual rate of growth of less than 1% – and domestic tourism expenditure increasing similarly.

At the same time, outbound travel by Australians is forecast to continue to grow solidly, considering outpacing growth in international arrivals.

While the economic challenges will remain, the outlook for the tourism and hotel accommodation industry is an encouraging one

5


80

85

90

95

100

105

1999 2002 2005 2008 2011 2014

Index

Business Holiday

100

150

200

250

270

290

2000 2002 2004 2006 2008 2010 2012 2014

International

DomesticM

M

Chart 2.1: Domestic and international visitor nights

* Year to September quarter. Source: DAE, TRA

The number of nights spent in paid accommodation by domestic visitors declined by over 10% between 2007 and 2010. Holiday travel – which accounts for around half of total domestic visitor nights – fell further in 2011 and is forecast to remain depressed in coming years, although business travel – around one-third of total visitor nights rebounded in 2011 and is expected to regain its 2007 peak by end-2014 (Chart 2.2).

Chart 2.2: Domestic visitor nights in paid accommodation, Index, 1999=100

* Includes hotels, motels, guesthouses, and serviced apartments. Source: TFC, DAE

International visitorsIn contrast to the outlook for domestic visitor numbers, international visitor nights are expected to continue to grow solidly through to 2014, albeit at a slower pace than witnessed over recent years. Visitor nights are forecast to increase at an average annual rate of 3.5%, which is below the 4.1% average annual growth experienced over the previous decade.

Over recent years, growth in international visitors has been underpinned by a strong increases in tourists from emerging Asian countries, particularly China and India, which is more than offsetting slower growth in Australia’s traditional inbound tourists such as New Zealand and United States, and a decline in visitors from the United Kingdom and Japan (Chart 2.1).

Chart 2.3: International visitors by country


Indeed, China has overtaken Japan to be Australia’s third largest inbound visitor market behind New Zealand and the UK, with annual growth averaging 13% over the past decade. Even more significantly, with average length of stay and average daily spend both high relative to Australia’s other major source markets, China has surpassed the UK as Australia’s largest market in terms of visitor nights and expenditure (Chart 2.1). By 2014, expenditure from the China source market is expected to exceed the UK and NZ markets combined.

Chart 2.4: International visitor expenditure by country


0

200

400

600

800

1000

1200

2000 2002 2004 2006 2008 2010 2012 2014

New Zealand Japan China India United Kingdom

'000

New Zealand Japan China India United Kingdom

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2000 2002 2004 2006 2008 2010 2012 2014

$m

6

Chart 2.5: Average expenditure per day and length of stay by country

* Source: DAE, TRA

Looking ahead, arrivals from China are expected to continue to grow strongly in coming years, accounting for over one third of the forecast growth in international visitor nights over the period to 2014.

Meanwhile, the number of international visitors from Australia’s traditional inbound tourist markets, including the UK, Japan, US and Europe, is expected to remain subdued amid ongoing global economic uncertainties and the high Australian dollar. New Zealand is the exception, where visitor numbers are expected to continue to trend higher.

3 The hotel market outlook

Australia

Chart 3.1: Hotel outlook, Australia

Driven in large part by the forecast growth in international visitors and the domestic business segment, room occupancy rates are projected to increase solidly over the forecast period, increasing from 65% into 68% by 2014. This expected improvement in 2011 would see occupancy rates reach their highest level in recent decades.

However the overall strength in occupancy rates masks a divergence between demand for CBD rooms, where the market is expected to be tight, and softer conditions in urban and generally regional Australia (reflecting, among other things, the changing composition of the tourism market).

Room rates are also expected to rebound further, reaching an average $150 by year’s end and $160 by end-2014. Average yield per room (RevPAR) for 2012 also forecast to grow solidly and is projected to reach $100 by the end of the year – a 5.5% increase on 2011 – and $110 by end 2014.

Sydney

Chart 3.2: Hotel outlook, Sydney

Occupancy rates in Sydney are the nation’s highest and are forecast to increase further over the projection period, with average occupancy rates of 85% in 2012 growing to 88% by 2014. These forecasts suggest that the market faces periods of operating at or above capacity during peak times over coming years.

The Park Hyatt in Sydney reopened on 13 February 2012, returning additional capacity (and a small number of additional rooms) to the top end of the market. The hotel has undergone extensive renovations, and its reopening will bring 155 harbourside rooms back online.

Such high room occupancy rates may act as a stimulus to further investment, as yields increase. Our projections see RevPAR in Sydney growing to $165 by end 2012 and reaching $185 by 2014. In addition to higher occupancy rates, the growth in projected yields is also driven forecast growth in room rates of 4% p.a.

Room Occ% trend (LHS) Room Rate trend (RHS) RevPAR trend (RHS)

$0

$40

$80

$120

$160

$200

$240

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

95.0%

Mar

-98

Sep-

98M

ar-9

9Se

p-99

Mar

-00

Sep-

00M

ar-0

1Se

p-01

Mar

-02

Sep-

02M

ar-0

3Se

p-03

Mar

-04

Sep-

04M

ar-0

5Se

p-05

Mar

-06

Sep-

06M

ar-0

7Se

p -07

Mar

-08

Sep-

08M

ar-0

9Se

p-09

Mar

-10

Sep-

10M

ar-1

1Se

p-11

Mar

-12

Sep-

12M

ar-1

3Se

p-13

Mar

-14

Sep-

14

0

20

40

60

80

100

120

140

160

India UnitedKingdom

Korea Japan NewZealand

China Singapore

Expenditure ($/day) Length of stay (nights)

$0

$35

$70

$105

$140

$175

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

Mar

-98

Sep-

98M

ar-9

9Se

p-99

Mar

-00

Sep-

00M

ar-0

1Se

p-01

Mar

-02

Sep-

02M

ar-0

3Se

p-03

Mar

-04

Sep-

04M

ar-0

5Se

p-05

Mar

-06

Sep-

06M

ar-0

7Se

p-07

Mar

- 08

Sep-

08M

ar-0

9Se

p-09

Mar

-10

Sep-

10M

ar-1

1Se

p-11

Mar

-12

Sep-

12M

ar-1

3Se

p-13

Mar

-14

Sep-

14


7


Melbourne

Chart 3.3: Hotel outlook, Melbourne

The Melbourne market is expected to level out over 2012, with room occupancy rates forecast to be broadly stable over 2012 with associated slow growth in both room rates and yields. Weakening economic conditions mean that the previously forecast growth in yields per room of near 10% for 2012 will not be realised, with revised forecasts indicating that growth in 2012 will be a more moderate 4%.

We forecast some recovery in room occupancy rates from mid-2013, in line with the forecast increase in economic growth. Increased capacity from the opening of the new Sheraton Hotel in 2013 is expected to be sufficient to meet growth in demand in the short-term, but occupancy rates are expected to regain their 2008 peak by the end of the forecast horizon. Growth in room rates and yields is expected to be relatively restrained; yields are forecast to grow by 15% between 2011 and 2014 (4.7% p.a.).

Brisbane

Chart 3.4: Hotel outlook, Brisbane

The outlook for the Brisbane market is characterised by a relatively high volume of new hotel projects that are due for completion over the next two to four years. This increase in supply is expected to weigh on occupancy rates during the forecast horizon, which are expected to ease by around one percentage point over 2012.

Nonetheless, increased room rates – growing from $170 at the end of 2011 to $201 by end 2014 – are expected to underpin solid growth in yields over the period, with RevPAR growing by 5.2% p.a.

Perth

Chart 3.5: Hotel outlook, Perth

As the hub of mining boom, the Perth hotel sector has benefited for some time from relatively high occupancy rates. Resilient business travellers continue to have visit Perth, with occupancy rates hitting 85% in late 2011.

Looking forward, the market is expected to remain tight throughout the forecast period, with occupancy rates steadying in 2012, before reaching the previous peak of 87% by the end of the forecast horizon. Over the longer term, a range of initiatives aimed at stimulating investment in the sector – including the removal of residential caps on mixed use developments and the release and provision of crown land for tourism investment – mean that occupancy rates have the potential to moderate.

Room rates and yields are also expected to grow strongly over the forecast period, with room rates jumping 14% in 2012 and 5.3% p.a. over the following two years, reaching $220 in 2014.

$0

$30

$60

$90

$120

$150

$180

$210

$240

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

95.0%

Mar

-98

Sep-

98M

ar-9

9Se

p-99

Mar

-00

Sep-

00M

ar-0

1Se

p-01

Mar

-02

Sep-

02M

ar-0

3Se

p-03

Mar

-04

Sep-

04M

ar-0

5Se

p-05

Mar

-06

Sep-

06M

ar-0

7Se

p-07

Mar

-08

Sep-

08M

ar-0

9Se

p-09

Mar

-10

Sep-

10M

ar-1

1Se

p-11

Mar

-12

Sep-

12M

ar-1

3Se

p-13

Mar

-14

Sep-

14



$0

$50

$100

$150

$200

$250

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

Mar

-98

Sep-

98M

ar-9

9Se

p-99

Mar

-00

Sep-

00M

ar-0

1Se

p-01

Mar

-02

Sep-

02M

ar-0

3Se

p-03

Mar

-04

Sep-

04M

ar-0

5Se

p-05

Mar

-06

Sep-

06M

ar-0

7Se

p-07

Mar

-08

Sep-

08M

ar-0

9Se

p-09

Mar

-10

Sep-

10M

ar-1

1Se

p-11

Mar

-12

Sep-

12M

ar-1

3Se

p-13

Mar

-14

Sep-

14

$0

$40

$80

$120

$160

$200

$240

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

Mar

-98

Sep-

98M

ar-9

9Se

p-99

Mar

-00

Sep-

00M

ar-0

1Se

p-01

Mar

-02

Sep-

02M

ar-0

3Se

p-03

Mar

-04

Sep-

04M

ar-0

5Se

p-05

Mar

-06

Sep-

06M

ar-0

7Se

p-07

Mar

-08

Sep-

08M

ar-0

9Se

p-09

Mar

-10

Sep-

10M

ar-1

1Se

p-11

Mar

-12

Sep-

12M

ar-1

3Se

p-13

Mar

-14

Sep-

14


8

Adelaide

Chart 3.6: Hotel outlook, Adelaide

Forecasts suggest that the occupancy rate in Adelaide will trough in 2012, before growing modestly in the latter two years of the forecast. Occupancy rates are forecast to end the next three years one percentage point higher than end-2011 rates, at 76%.

Following several years of stagnant growth, room rates are expected to increase modestly over the forecast horizon, growing by around 10% between 2011 and 2014. This growth in room rates is more akin to the expectations for regional Australia than the CBDs, and would make Adelaide the cheapest mainland capital by some margin. RevPAR is forecast to grow from $107 at the end of 2011 to $120 by the end of the forecast horizon.

Canberra

Chart 3.7: Hotel outlook, Canberra

The Canberra market faces some softening in 2012, with occupancy rates declining from 73% at the end of 2011 to 70% mid 2012. However, the relatively high share of business travellers in total visitors to Canberra provides the market with some resilience over the longer term.

After the return to growth, Canberra occupancy rates are expected to rebound, rising almost five percentage points to 75% in 2014. Limited expectations of future growth in capacity – and indeed the loss of some capacity as some older hotels are demolished to make way for mixed use or fully residential developments – are contributing to this. Growth in room occupancy rates combined with an increase in room rates mean that yields are forecast to grow moderately in Canberra over the forecast period, by 16% over three years.

Darwin

Chart 3.8: Hotel outlook, Darwin

The highly seasonal nature of the tourism industry in Darwin makes it a notoriously difficult investment destination for hotel developments. Effectively only earning returns on investment six months of every year, it is difficult to make the case for investment in a hotel-only development.

Abstracting from the seasonality, Darwin’s hotels have the lowest average occupancy rates of any capital city, at 70% at the end of 2011. Occupancy rates are forecast to stagnate throughout 2012 before increasing steadily over 2013 – 14. Combined with an increase in room rates of 18% over the next three years, RevPAR in Darwin is forecast to grow strongly, overtaking Adelaide to reach $128 by the end of 2014.

$0

$40

$80

$120

$160

$200

$240

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Mar

-98

Sep-

98M

ar-9

9Se

p-99

Mar

-00

Sep-

00M

ar-0

1Se

p-01

Mar

-02

Sep-

02M

ar-0

3Se

p-03

Mar

-04

Sep-

04M

ar-0

5Se

p-05

Mar

-06

Sep-

06M

ar-0

7Se

p-07

Mar

-08

Sep-

08M

ar-0

9Se

p-09

Mar

-10

Sep-

10M

ar-1

1Se

p-11

Mar

-12

Sep-

12M

ar-1

3Se

p-13

Mar

-14

Sep-

14


$0

$30

$60

$90

$120

$150

$180

$210

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

Mar

-98

Sep-

98M

ar-9

9Se

p-99

Mar

-00

Sep-

00M

ar-0

1Se

p-01

Mar

-02

Sep-

02M

ar-0

3Se

p-03

Mar

-04

Sep-

04M

ar-0

5Se

p-05

Mar

-06

Sep-

06M

ar-0

7Se

p-07

Mar

-08

Sep-

08M

ar-0

9Se

p-09

Mar

-10

Sep-

10M

ar-1

1Se

p-11

Mar

-12

Sep-

12M

ar-1

3Se

p-13

Mar

-14

Sep-

14


$0

$25

$50

$75

$100

$125

$150

$175

$200

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%M

ar-9

8Se

p-98

Mar

-99

Sep-

99M

ar-0

0Se

p-00

Mar

-01

Sep-

01M

ar-0

2Se

p-02

Mar

-03

Sep-

03M

ar-0

4Se

p-04

Mar

-05

Sep-

05M

ar-0

6Se

p-06

Mar

-07

Sep-

07M

ar-0

8Se

p-08

Mar

-09

Sep-

09M

ar-1

0Se

p-10

Mar

-11

Sep-

11M

ar-1

2Se

p-12

Mar

-13

Sep-

13M

ar-1

4Se

p-14


9


$0

$35

$70

$105

$140

$175

$210

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

Mar

-98

Sep-

98M

ar-9

9Se

p-99

Mar

-00

Sep-

00M

ar-0

1Se

p-01

Mar

-02

Sep-

02M

ar-0

3Se

p-03

Mar

-04

Sep-

04M

ar-0

5Se

p-05

Mar

-06

Sep-

06M

ar-0

7Se

p-07

Mar

-08

Sep-

08M

ar-0

9Se

p-09

Mar

-10

Sep-

10M

ar-1

1Se

p-11

Mar

-12

Sep-

12M

ar-1

3Se

p-13

Mar

-14

Sep-

14


$0

$25

$50

$75

$100

$125

$150

$175

$200

40.0%

45.0%

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

Mar

-98

Sep-

98M

ar-9

9Se

p-99

Mar

-00

Sep-

00M

ar-0

1Se

p-01

Mar

-02

Sep-

02M

ar-0

3Se

p-03

Mar

-04

Sep-

04M

ar-0

5Se

p-05

Mar

-06

Sep-

06M

ar-0

7Se

p-07

Mar

-08

Sep-

08M

ar-0

9Se

p-09

Mar

-10

Sep-

10M

ar-1

1Se

p-11

Mar

-12

Sep-

12M

ar-1

3Se

p-13

Mar

-14

Sep-

14


Gold Coast

Chart 3.9: Hotel outlook, Gold Coast

Hotel performance on the Gold Coast has been weaker than other destinations covered in this report for some time, with new capacity coming online even as room occupancy rates lag behind those of other destinations. However over the coming years the Gold Coast is forecast to experience some improvement in conditions, albeit at a slow pace and off a low base. Longer term, several new existing projects look set to rejuvenate this important leisure destination.

Room occupancy rates are expected to grow steadily over the next three years, increasing from 65% in 2011 to 68% by the end of 2014. This improvement in occupancy rates is largely due to fairly flat performance in room rates, which are expected to only grow broadly in line with inflation over the next three years.

Yields are forecast to grow moderately over the projection period, increasing by 13% over the next three years to a RevPAR of $100. This is lower than the capital cities, but broadly in line with the overall experience in Australia where non-capital destinations have lower occupancy rates and yields than the major cities.

Tropical North Queensland

Chart 3.10: Hotel outlook, Tropical North Queensland

The Tropical North Queensland (TNQ) region has faced challenging conditions in recent times, losing market share, particularly as the Japanese source market has declined. Occupancy rates and RevPAR have fallen sharply since the onset of the GFC.

However, our forecasts suggest a turnaround in performance for the TNQ hotel market, with occupancy rates to be flat in the first half of 2012, before increasing six percentage points – from 57% to 63% – by end-2014.

RevPAR is forecast to increase by 27% over the period 2011 – 14, however, again, this is off a relatively low base. Indeed, by the end of 2014 RevPAR for TNQ region is forecast at just $86, which is the lowest yield among the regions reported here.

10

Limitation of our work

General use restrictionThis report is not intended to and should not be used or relied upon by anyone else and we accept no duty of care to any other person or entity. The report has been prepared for the purpose of providing an outlook on hotel industry performance in Australia. You should not refer to or use our name or the advice for any other purpose.

Deloitte is recognised as one of the leading global advisors to the Tourism, Hospitality & Leisure industry, with a practice of more than 2000 professionals. In Australia, our multidisciplinary group of industry specialists have a deep knowledge of the market issues and business challenges faced by the industry.

Your industry, our expertiseOur dedicated practice provides a wide range of services to financiers, property owners, investment fund managers, private investors, developers, operators, government departments, professional and business groups and tourism intermediaries.

We offer a full range of services to address key industry issues associated with economic conditions, regulatory change, competition, emerging market sectors, technological advancements, mergers & acquisitions, and changing needs of investors.

Deloitte Access Economics specialises in providing economic modelling and public policy advice to the tourism industry, with extensive experience in forecasting and projections, econometric analysis, economic impact studies across both government and the private sector.

To subscribe to Deloitte Access Economics publications visit www.deloitte.com.au/economics

Deloitte is recognised as one of the leading global advisors to the Tourism, Hospitality & Leisure industry, with a practice of more than 2000 professionals

11


Contact us

For further information on how we can support your business needs, please contact one of our Tourism, Hospitality & Leisure specialists:

Australia/NSW Ian Breedon+61 (0) 2 9322 [email protected] Northern Territory Mark Rowberry+61 (0) 8 8980 [email protected] Queensland Martin Leech+61 (0) 7 3308 [email protected]

Co-contributor (Hotels) Rutger Smits, AHS Advisory+61 (0) 414 414 [email protected]

South Australia Alyson Trottman+61 (0) 8 8407 [email protected]

Victoria Andrew Bethune+61 (0) 3 9671 [email protected]

Western Australia Gary Doran+61 (0) 8 9365 [email protected]

Assurance & Advisory Stephen Holdstock+61 (0) 2 9322 [email protected]

Consulting Steve Hussenet+61 (0) 8 8407 [email protected]

Corporate Finance Andrew Jones+61 (0) 2 9322 [email protected] Corporate Reorganisation John Greig+61 (0) 7 3308 [email protected]

Deloitte Access Economics Lachlan Smirl+61 (0) 2 6175 [email protected]

Deloitte Private Weng Ching+61 (0) 2 9322 [email protected]

Tax Max Persson+61 (0) 2 9322 [email protected] Sustainability Shauna Coffey+61 (0) 2 9322 [email protected]

www.deloitte.com/au/economicsThis publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively the “Deloitte Network”) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication.

Deloitte Access Economics is Australia’s pre-eminent economics advisory practice and a member of Deloitte’s global economics group. The Directors and staff of Access Economics joined Deloitte in early 2011.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

About Deloitte Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte’s approximately 170,000 professionals are committed to becoming the standard of excellence.

About Deloitte Australia In Australia, the member firm is the Australian partnership of Deloitte Touche Tohmatsu. As one of Australia’s leading professional services firms. Deloitte Touche Tohmatsu and its affiliates provide audit, tax, consulting, and financial advisory services through approximately 5,400 people across the country. Focused on the creation of value and growth, and known as an employer of choice for innovative human resources programs, we are dedicated to helping our clients and our people excel. For more information, please visit our web site at www.deloitte.com.au.

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Touche Tohmatsu Limited

© 2012 Deloitte Access Economics Pty Ltd AM_MEL_02/12_046454

Date post:	29-Nov-2014
Category:	Documents
Upload:	rutgersmits
View:	1,089 times
Download:	0 times

Deloitte Hotel Tourism Outlook Q1 2012

Documents