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Deloitte Hotel Tourism Outlook Q1 2012

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Significant inbound growth from the emerging economies of India and, in particular, China, and domestic demand stabilising after a prolonged period of decline, have emerged as positives for Australian …

Significant inbound growth from the emerging economies of India and, in particular, China, and domestic demand stabilising after a prolonged period of decline, have emerged as positives for Australian tourism, according to Deloitte Access Economics’ Tourism and Hotel Market Outlook for Q1 2012.

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  • 1. Q1 2012Tourism and HotelMarket Outlook
  • 2. 1 Background 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 Deloitte Access Economics’ Tourism and Hotel expand by 3.6% in 2012, before moderating back Market Outlook – Q1 2012 reports on the to 3% in 2013 over the years thereafter. Inflation is performance of Australia’s tourism and hotel forecast to remain broadly within the RBA’s 2 – 3% accommodation sector, based on data published target range throughout the forecast period, with by the Australian Bureau of Statistics (ABS) and interest rates also expected to be relatively steady, extrapolated through information from Tourism provided a major downturn in Europe is averted. Research Australia and other sources. The domestic economy is expected to grow more Forecasts to year-end 2014 are presented, strongly than many of Australia’s traditional tourism based on projections generated from Deloitte source markets. The Eurozone is expected to contract Access Economics’ in-house tourism forecasting by 0.4% over 2012, and both the UK and Japan are model and hotel accommodation sector model. expected to expand only marginally. China, on the These projections draw on Deloitte Access other hand, is forecast to continue growing at a rapid Economics’ macroeconomic forecasts, as reported pace – exceeding 8% growth annually, over the next in our quarterly Business Outlook publication. five year outlook period – as will India and north east The methodology used in this edition of the Outlook Asia (excluding Japan). has changed since the last publication. Consequently the forecasts presented in these two issues of the Exchange rates publications may not be directly comparable. The 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 1.1 The macroeconomic context driven by demand for Australian commodities in expanding Asian economies. While this has led to Economic uncertainty strong growth in the nation’s terms of trade and Weakness in the global economy is expected to export earnings in directly affected sectors, it has continue in 2012, with ongoing challenges facing presented challenges for other export (and import- the Eurozone. The recent downgrading of France’s competing) industries, such as tourism. While a credit rating is symptomatic of the continuing 2011 analysis by Deloitte Access Economics found difficulties confronting the region over the coming the exchange rate had only a limited effect on year. While Asian economies continue to perform international visitation to Australia – with growth well overall, the easing in exports to the West is in incomes the more significant long term driver seeing a moderation in growth in these countries. – a stronger relationship was found between the World Gross Domestic Product (GDP) is forecast to exchange rate and outbound travel by Australians.1 grow 2.9% in 2012, before rebounding to 3.7% The resilience of the Australian economy together from 2013. with the strength of the Australian currency have seen Australia’s economic performance remains tied to the Australians making overseas trips at unprecedented fortunes of other nations, with growth expectations rates, with a corresponding stagnation in the growth heavily contingent on the performance of European of domestic trips in Australia. Expectations are for the economies. If Europe averts a major economic Australian dollar to remain strong over the short term downturn, and China and India continue to grow, – Deloitte Access Economics forecasts the AUD/USD the economic outlook for Australia is robust. Indeed, exchange rate remaining close to parity until 2013 – it may even outstrip expectations. If the situation in and hence for the associated economic opportunities Europe unravels, the economic reverberations will and challenges to remain. Over the longer term, the significantly dent the growth prospects of the global Australian dollar is forecast to moderate as global economy, with negative implications for Australia’s economic conditions adjust. economic outlook.1 For an overview of the findings of this research, see www.tourism.australia.com2
  • 3. Tourism and Hotel Market Outlook Q1/2012 Labour force challenges in the AustralianThe performance of Australia’s tourism sector Skill and labour force shortages are among thetourism and hotel accommodation most significant challenges facing the Australian economy (and are issues discussed in detail inindustry remains tied to the the first report in Deloitte’s Building the Lucky Country series, Where is your next worker?)2strength of the business sector and With the resources boom driving demand for workers, a moderation in migrant numbers andthe emergent Asian economies an increasing share of the population reaching retirement age, constraints in the labour market are becoming increasingly apparent. Within the tourism sector specifically, labour Exceptional events and skills challenges have long been identified as 2011 was a year of one-off events impacting on the a concern and, moreover, as a factor increasingly Australian economy – the tourism sector included. affecting the industry’s performance. Not only In particular, the industry was dealt several blows in do workforce issues impact on the quality of Queensland, with the floods in the south east of the the tourism product, they also impact business state and Cyclone Yasi effectively shutting parts of profitability with potential flow-ons for tourism the industry down for a period of time. Conversely, investment and output. the hosting of the Commonwealth Head of Government In a 2011 study for the Federal Department of Meeting (CHOGM) in Perth led to a boost for the Resources, Energy and Tourism, Deloitte Access industry in Western Australia, with very high demand Economics undertook a survey of tourism for hotel accommodation in the lead up to and employers to review the nature and severity of throughout the conference. labour force shortages.3 Around half of surveyed If unique events such as the floods and cyclone employers indicated they were experiencing in Queensland were not challenging enough for recruitment difficulties; skills deficiencies and/ hoteliers and tourism operators, events in source or retention difficulties, with these challenges markets provided additional difficulty. Both Japan most pronounced in the Northern Territory and and New Zealand were struck by major natural Western Australia. Furthermore, the industry disasters (earthquake and tsunami, and earthquake, reported that 9% of advertised jobs went unfilled, respectively) which dented both economic performance compared to a whole-of-economy rate of 2%. of these countries and the appetite of their citizens for This is equivalent to a shortage of 35,800 workers international travel. The pace at which these regions Australia-wide. recover and travel patterns return to their norms will Labour force forecasts developed by Deloitte determine the outlook for these tourism markets. Access Economics indicate that, without policy change, the shortage in tourism workers will Labour market conditions increase to 56,000 by 2015. Around half of these The tourism industry is a labour-intensive one and, positions are likely to be skilled occupations, with as a result, its fortunes are highly sensitive to labour demand highest for kitchenhands, waiters, cafe availability and wages. Over recent years, labour and restaurant managers and chefs. force challenges facing the tourism sector have been Based on the findings of this research,2 For more information heightened by the strength of Australia’s mining the Tourism 2020 Labour and Skills Working on this report, visit: sector which has placed upward pressure on wages www.deloitte.com.au Group is implementing a range of initiatives to and drawn workers from tourism-related sectors. help address the labour force challenges facing3 For more information Deloitte Access Economics forecasts steady growth in on this report, visit: the sector.4 www.ret.gov.au/tourism wages over the Outlook period, with nominal earnings forecast to increase 4.4% in 2011 – 12, before more4 For more information on Labour and Skills Working moderate growth over the period 2012 – 13 through Group initiatives, visit: 2014 – 15. www.tourism.gov.au/labour 3
  • 4. The improvement follows several years of declining While the economic challenges domestic visitation as increasing numbers of Australian holiday makers took advantage of the high Australian dollar and strong growth in incomes and ventured will remain, the outlook overseas. for the tourism and hotel The changing composition between international and domestic tourism presents both challenges and accommodation industry is an opportunities for the sector. The rapid emergence of source markets such as China is benefiting regions and encouraging one 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 Of course, labour force issues vary markedly time in capital cities. As the tourist mix shifts toward across sectors. Given the significance of wages to international visitors, therefore, tourism expenditure the tourism sector and the importance of high calibre becomes increasingly concentrated in capital cities. workers to the quality of the tourism experience, labour market conditions are integral to the prospects Domestic visitors of the tourism and hotel accommodation sectors. The number of domestic tourists recovered marginally The significance of labour and skills to the fortunes of in 2011 following several years of declines. However, the Australian tourism industry is highlighted by the total domestic visitor nights has not experienced a emphasis placed on it in the Tourism 2020 strategy. similar uplift, suggesting that travellers are tending to A recent study by Deloitte Access Economics highlights take shorter breaks than has historically been the case. the nature and magnitude of the current and future The downward trend in domestic visitors over much labour force challenges facing the tourism sector over the past decade is reflective of a growing numbers (see blue box on page 3). of Australians opting to spend their holidays overseas 2 The outlook for Australia’s tourism sector rather than holiday locally. The high exchange rate is an important driver in this increased preference for As the weakness in the global economy threatens to international travel, but cheaper and more frequent turn into a potentially protracted recession in Europe, international flights, rising incomes, and the price forecast visitor numbers to Australia and expenditure competitiveness of international destinations compared have generally been downgraded. Nonetheless, to domestic travel have also contributed to the strong income growth in emerging Asian economies, increasing appeal of overseas holiday destinations. and particularly China and India, is expected to drive growth in international visitor arrivals over the Looking forward, Deloitte Access Economics forecasts outlook period. domestic visitor nights edging up marginally over the period to end-2014 – at an annual rate of growth of On the domestic visitor front, visitor numbers less than 1% – and domestic tourism expenditure have somewhat stabilised, despite the natural increasing similarly. disasters early in the year that had operators, especially in Queensland, concerned about a At the same time, outbound travel by Australians fall in demand. is forecast to continue to grow solidly, considering outpacing growth in international arrivals.4
  • 5. Tourism and Hotel Market Outlook Q1/2012 Chart 2.1: Domestic and international visitor nights Over recent years, growth in international visitors has been underpinned by a strong increases in tourists M from emerging Asian countries, particularly China and Domestic India, which is more than offsetting slower growth in290 Australia’s traditional inbound tourists such as New270 Zealand and United States, and a decline in visitors from250 M the United Kingdom and Japan (Chart 2.1). International 200 Chart 2.3: International visitors by country 150 100 000 2000 2002 2004 2006 2008 2010 2012 2014 1200 1000 * ear to September quarter. Source: DAE, TRA Y 800 The number of nights spent in paid accommodation by 600 domestic visitors declined by over 10% between 2007 400 and 2010. Holiday travel – which accounts for around 200 half of total domestic visitor nights – fell further in 2011 0 2000 2002 2004 2006 2008 2010 2012 2014 and is forecast to remain depressed in coming years, New Zealand Japan China India United Kingdom 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). * ear to September quarter. Source: DAE, TRA Y Indeed, China has overtaken Japan to be Australia’s hart 2.2: Domestic visitor nights in paid C third largest inbound visitor market behind New Zealand accommodation, Index, 1999=100 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 relativeIndex to Australia’s other major source markets, China has 105 surpassed the UK as Australia’s largest market in terms 100 of visitor nights and expenditure (Chart 2.1). By 2014, 95 expenditure from the China source market is expected to exceed the UK and NZ markets combined. 90 85 Chart 2.4: International visitor expenditure by country 80 1999 2002 2005 2008 2011 2014 $m Business Holiday 4.0 3.5 *ncludes hotels, motels, guesthouses, and serviced apartments. I 3.0 Source: TFC, DAE 2.5 2.0 1.5 International visitors 1.0 0.5 In contrast to the outlook for domestic visitor numbers, 0 international visitor nights are expected to continue 2000 2002 2004 2006 2008 2010 2012 2014 to grow solidly through to 2014, albeit at a slower New Zealand Japan China India United Kingdom pace than witnessed over recent years. Visitor nights are forecast to increase at an average annual rate of * ear to September quarter. Source: DAE, TRA Y 3.5%, which is below the 4.1% average annual growth experienced over the previous decade. 5
  • 6. Chart 2.5: verage expenditure per day and length of A However the overall strength in occupancy rates masks stay by country a divergence between demand for CBD rooms, where the market is expected to be tight, and softer conditions 160 in urban and generally regional Australia (reflecting, 140 among other things, the changing composition of the 120 tourism market). 100 80 Room rates are also expected to rebound further, 60 reaching an average $150 by year’s end and $160 by 40 end-2014. Average yield per room (RevPAR) for 2012 20 also forecast to grow solidly and is projected to reach 0 India United Korea Japan New China Singapore $100 by the end of the year – a 5.5% increase on 2011 – Kingdom Zealand and $110 by end 2014. Expenditure ($/day) Length of stay (nights) * ource: DAE, TRA S Sydney Looking ahead, arrivals from China are expected to Chart 3.2: Hotel outlook, Sydney continue to grow strongly in coming years, accounting 95.0% $240 for over one third of the forecast growth in international visitor nights over the period to 2014. 90.0% $200 Meanwhile, the number of international visitors from 85.0% $160 Australia’s traditional inbound tourist markets, including 80.0% $120 the UK, Japan, US and Europe, is expected to remain 75.0% $80 subdued amid ongoing global economic uncertainties and the high Australian dollar. New Zealand is the 70.0% $40 exception, where visitor numbers are expected to 65.0% $0 continue to trend higher. Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-09 Sep-11 Sep-14 Sep-08 Sep-10 Sep-12 Sep-13 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Room Occ% trend (LHS) Room Rate trend (RHS) RevPAR trend (RHS) 3 The hotel market outlook Occupancy rates in Sydney are the nation’s highest Australia and are forecast to increase further over the projection period, with average occupancy rates of 85% in 2012 Chart 3.1: Hotel outlook, Australia growing to 88% by 2014. These forecasts suggest that the market faces periods of operating at or above 75.0% $175 capacity during peak times over coming years. 70.0% $140 The Park Hyatt in Sydney reopened on 13 February 2012, returning additional capacity (and a small number 65.0% $105 of additional rooms) to the top end of the market. 60.0% $70 The hotel has undergone extensive renovations, and its reopening will bring 155 harbourside rooms back online. 55.0% $35 Such high room occupancy rates may act as a stimulus 50.0% $0 to further investment, as yields increase. Our projections Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 see RevPAR in Sydney growing to $165 by end 2012 and Room Occ% trend (LHS) Room Rate trend (RHS) RevPAR trend (RHS) reaching $185 by 2014. In addition to higher occupancy rates, the growth in projected yields is also driven Driven in large part by the forecast growth in forecast growth in room rates of 4% p.a. 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.6
  • 7. Tourism and Hotel Market Outlook Q1/2012Melbourne The outlook for the Brisbane market is characterised by a relatively high volume of new hotel projects thatChart 3.3: Hotel outlook, Melbourne are due for completion over the next two to four years. This increase in supply is expected to weigh on 90.0% $250 occupancy rates during the forecast horizon, which 85.0% $200 are expected to ease by around one percentage point over 2012. 80.0% $150 Nonetheless, increased room rates – growing from $170 75.0% $100 at the end of 2011 to $201 by end 2014 – are expected to underpin solid growth in yields over the period, with 70.0% $50 RevPAR growing by 5.2% p.a. 65.0% $0 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-04 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Perth Room Occ% trend (LHS) Room Rate trend (RHS) RevPAR trend (RHS) Chart 3.5: Hotel outlook, PerthThe Melbourne market is expected to level outover 2012, with room occupancy rates forecast to be 95.0% $240broadly stable over 2012 with associated slow growth 90.0% $210in both room rates and yields. Weakening economic 85.0% $180conditions mean that the previously forecast growth 80.0% $150in yields per room of near 10% for 2012 will not be 75.0% $120realised, with revised forecasts indicating that growth in 70.0% $902012 will be a more moderate 4%. 65.0% $60We forecast some recovery in room occupancy rates 60.0% $30from mid-2013, in line with the forecast increase in 55.0% $0 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14economic growth. Increased capacity from the openingof the new Sheraton Hotel in 2013 is expected to be Room Occ% trend (LHS) Room Rate trend (RHS) RevPAR trend (RHS)sufficient to meet growth in demand in the short-term, As the hub of mining boom, the Perth hotel sectorbut occupancy rates are expected to regain their 2008 has benefited for some time from relatively highpeak by the end of the forecast horizon. Growth in room occupancy rates. Resilient business travellers continuerates and yields is expected to be relatively restrained; to have visit Perth, with occupancy rates hitting 85%yields are forecast to grow by 15% between 2011 and in late 2011.2014 (4.7% p.a.). Looking forward, the market is expected to remain tight throughout the forecast period, with occupancyBrisbane rates steadying in 2012, before reaching the previous peak of 87% by the end of the forecast horizon.Chart 3.4: Hotel outlook, Brisbane Over the longer term, a range of initiatives aimed90.0% $240 at stimulating investment in the sector – including the removal of residential caps on mixed use85.0% $200 developments and the release and provision of crown80.0% $160 land for tourism investment – mean that occupancy75.0% $120 rates have the potential to moderate.70.0% $80 Room rates and yields are also expected to grow strongly over the forecast period, with room rates65.0% $40 jumping 14% in 2012 and 5.3% p.a. over the60.0% $0 following two years, reaching $220 in 2014. Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-98 Mar-06 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Room Occ% trend (LHS) Room Rate trend (RHS) RevPAR trend (RHS) 7
  • 8. Adelaide After the return to growth, Canberra occupancy rates are expected to rebound, rising almost five percentage Chart 3.6: Hotel outlook, Adelaide points to 75% in 2014. Limited expectations of future growth in capacity – and indeed the loss of some 90.0% $200 capacity as some older hotels are demolished to make 85.0% $175 way for mixed use or fully residential developments – 80.0% $150 are contributing to this. Growth in room occupancy 75.0% $125 rates combined with an increase in room rates mean 70.0% $100 that yields are forecast to grow moderately in Canberra 65.0% $75 over the forecast period, by 16% over three years. 60.0% $50 55.0% $25 Darwin 50.0% $0 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Room Occ% trend (LHS) Room Rate trend (RHS) RevPAR trend (RHS) Chart 3.8: Hotel outlook, Darwin 100.0% $240 Forecasts suggest that the occupancy rate in Adelaide will trough in 2012, before growing modestly in the 90.0% $200 latter two years of the forecast. Occupancy rates are 80.0% $160 forecast to end the next three years one percentage 70.0% $120 point higher than end-2011 rates, at 76%. 60.0% $80 Following several years of stagnant growth, room rates are expected to increase modestly over the forecast 50.0% $40 horizon, growing by around 10% between 2011 and 40.0% $0 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-05 Sep-07 Sep-04 Sep-06 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 2014. This growth in room rates is more akin to the expectations for regional Australia than the CBDs, Room Occ% trend (LHS) Room Rate trend (RHS) RevPAR trend (RHS) and would make Adelaide the cheapest mainland capital by some margin. RevPAR is forecast to grow The highly seasonal nature of the tourism industry from $107 at the end of 2011 to $120 by the end of in Darwin makes it a notoriously difficult investment the forecast horizon. 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- Canberra only development. Chart 3.7: Hotel outlook, Canberra Abstracting from the seasonality, Darwin’s hotels have the lowest average occupancy rates of any capital city, 85.0% $210 at 70% at the end of 2011. Occupancy rates are forecast 80.0% $180 to stagnate throughout 2012 before increasing steadily 75.0% $150 over 2013 – 14. Combined with an increase in room rates 70.0% $120 of 18% over the next three years, RevPAR in Darwin is forecast to grow strongly, overtaking Adelaide to reach 65.0% $90 $128 by the end of 2014. 60.0% $60 55.0% $30 50.0% $0 Sep-98 Sep-00 Sep-99 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-09 Sep-08 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Room Occ% trend (LHS) Room Rate trend (RHS) RevPAR trend (RHS) 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.8
  • 9. Tourism and Hotel Market Outlook Q1/2012 Gold Coast Tropical North Queensland Chart 3.9: Hotel outlook, Gold Coast Chart 3.10: Hotel outlook, Tropical North Queensland80.0% $210 80.0% $200 75.0% $17575.0% $175 70.0% $15070.0% $140 65.0% $12565.0% $105 60.0% $100 55.0% $7560.0% $70 50.0% $5055.0% $35 45.0% $2550.0% $0 40.0% $0 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-07 Sep-06 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Room Occ% trend (LHS) Room Rate trend (RHS) RevPAR trend (RHS) Room Occ% trend (LHS) Room Rate trend (RHS) RevPAR trend (RHS) Hotel performance on the Gold Coast has been weaker The Tropical North Queensland (TNQ) region has faced than other destinations covered in this report for some challenging conditions in recent times, losing market time, with new capacity coming online even as room share, particularly as the Japanese source market has occupancy rates lag behind those of other destinations. declined. Occupancy rates and RevPAR have fallen However over the coming years the Gold Coast is sharply since the onset of the GFC. forecast to experience some improvement in conditions, However, our forecasts suggest a turnaround in albeit at a slow pace and off a low base. Longer term, performance for the TNQ hotel market, with occupancy several new existing projects look set to rejuvenate this rates to be flat in the first half of 2012, before increasing important leisure destination. six percentage points – from 57% to 63% – by Room occupancy rates are expected to grow steadily end-2014. over the next three years, increasing from 65% in RevPAR is forecast to increase by 27% over the period 2011 to 68% by the end of 2014. This improvement in 2011 – 14, however, again, this is off a relatively low occupancy rates is largely due to fairly flat performance base. Indeed, by the end of 2014 RevPAR for TNQ in room rates, which are expected to only grow broadly region is forecast at just $86, which is the lowest yield in line with inflation over the next three years. among the regions reported here. 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. 9
  • 10. Deloitte is recognised as one Limitation of our work of the leading global advisors General use restriction This report is not intended to and should not to the Tourism, Hospitality be used or relied upon by anyone else and we accept no duty of care to any other person Leisure industry, with a practice or entity. The report has been prepared for the purpose of providing an outlook on hotel industry performance in Australia. You should of more than 2000 professionals 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 expertise Our 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/economics10
  • 11. Tourism and Hotel Market Outlook Q1/2012Contact usFor further information on how we can support your business needs, please contact one of our Tourism, Hospitality Leisure specialists:Australia/NSW South Australia Assurance Advisory Deloitte Access EconomicsIan Breedon Alyson Trottman Stephen Holdstock Lachlan Smirl+61 (0) 2 9322 5888 +61 (0) 8 8407 7259 +61 (0) 2 9322 7299 +61 (0) 2 6175 2000ibreedon@deloitte.com.au atrottman@deloitte.com.au sholdstock@deloitte.com.au lsmirl@deloitte.com.au Northern Territory Victoria Consulting Deloitte PrivateMark Rowberry Andrew Bethune Steve Hussenet Weng Ching+61 (0) 8 8980 6225 +61 (0) 3 9671 7968 +61 (0) 8 8407 7629 +61 (0) 2 9322 3513mrowberry@deloitte.com.au abethune@deloitte.com.au shussenet@deloitte.com.au wengching@deloitte.com.au Queensland Western Australia Corporate Finance TaxMartin Leech Gary Doran Andrew Jones Max Persson+61 (0) 7 3308 7245 +61 (0) 8 9365 7080 +61 (0) 2 9322 5917 +61 (0) 2 9322 7538mleech@deloitte.com.au gdoran@deloitte.com.au andrjones@deloitte.com.au mpersson@deloitte.com.au     Corporate Reorganisation SustainabilityCo-contributor (Hotels) John Greig Shauna CoffeyRutger Smits, AHS Advisory +61 (0) 7 3308 7108 +61 (0) 2 9322 3504+61 (0) 414 414 513 jgreig@deloitte.com.au shacoffey@deloitte.com.aurutger@ahsadvisory.com     11
  • 12. 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 ortaking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the DeloitteNetwork 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 memberfirms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legalstructure of Deloitte Touche Tohmatsu Limited and its member firms.About DeloitteDeloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globallyconnected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clientssucceed wherever they operate. Deloitte’s approximately 170,000 professionals are committed to becoming the standard of excellence.About Deloitte AustraliaIn 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 peopleacross 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 LtdAM_MEL_02/12_046454

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