Perth heads strong capital city hotel outlook with business travel trending upwards: Deloitte

Capital city hotels will continue to appeal to both local and offshore institutional investors due to rising demand from both overseas Asian visitors and more Australians choosing to travel locally, according to the latest hotel outlook report from Deloitte Access Economics.

However, much of the strong pick-up in domestic travel is business related, with a negligible rise in the number of Australian travelling domestically for holidays over the past 12 months, meaning regional hotels and coastal resorts are set to continue to struggle.

According to Deloitte, nationwide occupancy rates reached 65.9% in the year to June 2012, up from 64.8% over the year prior, but occupancy rates are much higher for capital city hotel markets, where many overseas buyers have made acquisitions and launched new developments.

The research firm forecasts that growth in the average room rate of 3.7% per year will underpin average annual revenue per available room growth of 4.3% over the next three years.

Perth has strongest outlook and represents very strong demographics for investors with a current occupancy rate of 86% for the year to June 2012, suggesting very little spare capacity, especially during the week when business travel is at its peak.