Market Insights
HOTEL UPSURGE TIPPED DESPITE REVENGE TOURISM PETERING OUT
A render of the 28-38 Pearl River Road, Docklands project, which will include a 200-key Collection by TFE Hotel and premium 105-room A by Adina hotel.
Author: Clare Burnet Urban Developer
International visitors are due to return in droves to Australia this year but is our hotel industry ready for it?
“Subsequently, [revenue per available room] levels across Australia have grown significantly and have continued to outpace inflation, providing a positive outlook for the sector in 2024.” CHANGING DEMOGRAPHICS One of the factors potentially softening ADRs in the coming year will be a move away from “revenge tourism”—making trips that were cancelled or rescheduled during the global pandemic, although that should be offset by the return of Asian tourists. “The softening of DRs represents the market segmentation switch from Leisure FIT (free independent traveller) and the so-called revenge tourism boom after the pandemic back to corporate business and international leisure,” Zographou says. The main driver back to pre-pandemic traveller levels is the return of tourists from China, which overtook New Zealand as Australia’s most important tourism market after the Global Financial Crisis. • TFE Hotels also launched plans for a $150-million Southbank hotel alongside MaxCap and Time & Place. It is set to open in 2025. “In 2019, China ranked first for inbound travel to Australia, however, in 2023 they are sixth,” Zographou says. “Visa approval was granted to short-term groups in August, 2023 but Australia is now awaiting the return of the higher spending Chinese free independent travellers.” With the average length of stay for a Chinese tourist averaging 40 days, coupled with high spending, this return could mean an impressive uptick for Australian tourism. Clearly, there is major headroom for growth, especially with Chinese tourism returning, and on-the-ground hotel developers such as Capital Alliance, which has 500 rooms in operation in Melbourne, have noticed the same. “Specifically speaking about Australia, we’ve not really seen the
Reliant on international tourism, and to a lesser degree immigration, Australian hotels took a big hit during Covid and have only just started to bounce back in the past 12 months. But we should expect a boom this year as international traveller numbers ramp up, with expectations from Tourism Research Australia that by 2028 Australia will have 1.9 million visitors from China alone—that’s one in six international arrivals. TFE Hotels and Capital Alliance are major players in the space, recently teaming for a $340-million Docklands hotel development, which was greenlit in mid-2023 with construction set to begin this year. TFE Hotels director of development John Sutcliffe says that their hotels portfolio continued to exceed expectations. “Much of this was buoyed by the ongoing return of international visitors, as well as increased events including concerts and the Women’s World Cup,” Sutcliffe says. “And although domestic leisure demand is expected to soften to some extent after the excitement of post-Covid, we continue to experience increasing visitation from overseas. “And once Asian markets pick up, we hope to see occupancies continue to improve.” Experts at CBRE are expecting further growth after occupancy levels grew across all major markets in 2023. “Sydney, Brisbane and Melbourne all increased by more 12 per cent compared to the previous corresponding period,” says CBRE director, Capital Markets – Hotels, Vasso Zographou. “Annual daily rates (ADR) materially outperformed 2019 rates across all major markets. Brisbane has been the largest beneficiary of ADR growth, up 31 per cent when compared to 2019 levels.
14 – February /March 2024
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