Qantas Route Cuts A Blip On Buoyant Hotel Horizon

Sydney Morning Herald

Saturday May 31, 2008

Carolyn Cummins

NEWS that Qantas is cutting the number of flights to some parts of Australia, including the Northern Territory, is a blow for hotel operators. Owner-operator GPT's Ayers Rock Resort could suffer as it is already under pressure from falling international visitor numbers and the stronger Australian dollar.

Declines could be offset by a rise in demand for its capital city hotels, with news that the accommodation market in Australia will stay buoyant in the short to medium term.

LandMark White's latest report says the industry will be underpinned by a limited supply entering the market due to high construction costs, combined with continued firm demand in the capital cities.

Occupancy levels for accommodation in Australia rose to 65.61 per cent for the 12 months to December 2007. Occupancy rates are higher than the historical five-year average of 63.03 per cent and have risen steadily from a 10-year low of 57.30 per cent in 2001.

The report says the accommodation market overall improved significantly in 2007, with increases in room nights available, room nights occupied and revenue per available room night for hotels, motels and serviced apartments with 15 or more rooms.

However, LandMark White's analysts say that "supply of new accommodation options, especially hotels, will be in the form of mixed-use developments, which will also contain apartments [but] in the current financing climate such projects are unlikely to proceed without significant pre-commitments.

"In the last five years, the average number of room nights available has increased on average by 1.87 per cent per annum across Australia, with growth of 1.48 per cent recorded in the 2007 calendar year. The number of room nights occupied has increased steadily since 2002 with over 51.7 million nights occupied last year, an increase of 3.48 per cent on the previous year."

The good results can be attributed to a strong economy generating robust business and consumer confidence in the past five years. Also, fewer additions to accommodation stock in key destinations has tilted the demand-supply equilibrium in favour of property managers.

© 2008 Sydney Morning Herald

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