Australian Hotel Performance Goes from Strength to Strength
RevPAR Up Almost 8% During the First Nine Months of 2005
SYDNEY, Australia, October 26, 2005. The Australian hotel market seems to be going from strength to strength. Latest figures from the HotelBenchmarkTM Survey by Deloitte show that Australian hotels have posted the strongest growth for the first nine months of any year, well with the exception of the Olympic year that is. And, with revenue per available room (revPAR) at AUS$116, this is in fact only AUS$2 behind highs achieved in 2000.
But Australia doesn't plan to stop there. Recently the country's Tourism Forecasting Committee (TFC) announced plans to almost double its number of international arrivals within the next nine years. Growing at an annual rate of 5.6% international arrivals to Australia are expected to reach 9m by 2014, boosting the value of inbound tourism to AUD$32.1 billion. Whilst on the face of things this may seem aggressive, the reality is that this year, growth is forecast at 6.4%.
In order to achieve this tourism target, Tourism Australia (TA) has been busy making preparations to further raise the profile of the country. Over recent months, TA has launched advertising campaigns as far away as North America, Canada, Russia and Japan
After New Zealand, Japan is Australia's second largest source market, accounting for approximately 13% of all international arrivals year-to-September 2005. However, since its peak in 1997, with 814,000 Japanese people visiting Australia, this number has been gradually falling. In order to try to win back this declining market, in April 2005 TA launched an AUD$8m "Brand Australia" campaign, putting Australia back on Japanese television for the first time in seven years. In addition, a further AUD$7.5m will be spent on joint promotional activities between TA, Qantas Group and Japan Airlines.
In July, TA and Qantas also embarked upon an AUD$60m three year global destination marketing partnership. With the goal of increasing international demand, TA and Qantas will work together on joint global marketing campaigns in twelve of Australia's key source markets, namely the UK, USA, Canada, Germany, France, Italy, Hong Kong, China, Singapore, Japan, India and New Zealand.
While activity at TA is bustling, the airline industry has also been busy. With the Americas currently accounting for 11% of all international arrivals to Australia Qantas has been trying to tap further into this market. In July 2005, the company launched a new non-stop weekly service between Los Angeles and Brisbane. Qantas also has plans to add further new routes to the US in 2006, including three non-stop weekly flights from Sydney to San Francisco and new services to Vancouver.
Early next year, Qantas will begin to operate three weekly flights between Sydney and Beijing, with the aim of increasing this to a daily service within two years. These new flights come at an important time for Australian tourism as visitors from China are expected to grow to 9.6m in 2013, an increase of 23% on the levels achieved in 2004.
Not to be left out, Qantas's low-cost carrier Jetstar is also busy expanding its services too. In December it will start running a direct service from Christchurch, New Zealand to four major Australian destinations - Sydney, Melbourne, Brisbane and the Gold Coast. Jetstar's entry onto this route will increase the capacity for the Qantas Group by almost 1,500 seats. The combination of tourism marketing campaigns, together the airlines expanding into important markets, has and will continue to have a positive effect on hotel performance across the country.
While the future of international arrivals continues to look good, domestic tourism over recent years has been causing some concern. This year, domestic visitor nights are expected to drop by 3.3% to 287m, and this in on the back of limited growth in 2004. Domestic travel has been impacted by the strength of the Australian dollar which has increased the price competitiveness and attractiveness of overseas destinations. The solid growth of inbound tourism has also played a part in this decline, as inbound visitors often reduce the availability of discounted accommodation for the domestic market. With these factors in mind, the TFC forecasts the number of domestic visitor nights will only grow at an annual rate of 0.9% until 2014.
Australia's hotels have seen revPAR increase by almost 8% during the first nine months of 2005. Whilst there has been some occupancy growth, performance has mainly been driven by improvements in average room rates. Whilst every city has seen performance improved on 2004, it is Brisbane and Perth that have emerged as the clear winners, each seeing revPAR increase by more than 10%.
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