Hotel occupancy rates to reach 68% by 2014, with Perth hotels forecast to outperform Sydney: Deloitte

Hotel occupancy rates across Australia are expected to rise from 65% to 68% by the end of 2014, but the smaller regional hotels will continue to struggle to fill their rooms, according to forecasts by Deloitte Access Economics. 

By the end of 2014 Perth is forecast to have the highest hotel occupancy rate of 89% on the back of business demand due to the resources boom, replacing Sydney as Australia’s top-performing hotel market. 

Room rates in Perth are also forecast to become the highest in Australia by the September quarter of 2012 “on the back of the sustained strength of mining-related business travel” and are project to reach $249 by the end of the forecast period, an average annual increase of 14% – more than three times the national average. 

Sydney hotel occupancy rates are forecast to rise to 88% by the end 2014, a rise of only 2% from current levels, according to the Deloitte Access Economics Tourism & Hotel Outlook report. 

Sydney room rates are expected to grow by 3.9% annually, increasing to an average of $210 by the end of 2014.

Melbourne occupancy rates are expected to rise by 6% to reach 85% by the end of 2014, with room rates are forecast to grow at an average of 4.3% over the next three years to just under $200.

Across Australia projected average yield per room (revenue per available room – RevPAR) is forecast to increase by an average annual rate of 5.5% over the next three years, reaching $110 by the December 2014 quarter while average room rate is forecast to increase to $163 by the end of 2014, growing at an average annual rate of 4.1%. 

Deloitte says the forecasts are consistent with expected growth in international visitors, strong domestic business travel and a modest roll out of new hotel developments. 

Deloitte Access Economics’ Lachlan Smirl says demand in capital cities in particular has grown, and will continue to grow, strongly, but the stock of rooms, or room nights available, has grown just 2.8% over the last four years. 

“Looking forward, growth in demand is projected to continue to outstrip growth in supply. Room nights sold are forecast to grow by 2.3% a year, with room nights available to grow by just 0.7% a year.  It’s not surprising, therefore, that room rates and occupancies are on the up.”

Regional hotels though will continue to struggle.

Smirl says a clear gap between hotels in regional areas and capital cities will remain.

“We forecast regional occupancy rates to reach 60% by the end of 2014, compared with 80% or higher in many of the mainland capital cities,” he says. 

“Among other things, this reflects the continued shift in the nature of the visitor economy, with international travellers and the business segment becoming more prominent, and their hotel stays being heavily geared towards capital city destinations.”