Capital city hotels hold up well under weak conditions

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Herald Sun, 23 November 2011

Capital city hotels are defying the weak conditions in Australia’s tourism industry caused by the high Australian dollar and uncertain economic outlook, according to new research.

A report released yesterday by consultancy group Deloitte says Australia’s tourism sector has suffered a double-whammy at the hands of the appreciation in the currency.

Australians are heading overseas in record numbers while traditional big spenders from Europe and the US are deterred by a growing perception that Australia is an expensive destination, the report says.

Tourist inflows to Australia increased just 0.8 per cent, or 22,000 travellers, in the first half of 2011 – compared to growth in world tourism of 4.5 per cent.

At the same time, an extra 330,000 Australians went overseas – a 10.5 per cent jump on last year.

Consultant Rutger Smits said business travel largely fuelled by the mining and finance industries meant occupancy rates in CBD hotels had held up well and would keep growing despite the malaise in the broader tourism sector.

Conditions were far more difficult for rural and regional hotels, Mr Smits said.

Nationally, revenue per available room for 2011 is likely to have climbed with occupancy levels, from 64.3 per cent last year to 64.6 per cent.

The rate per room is likely to jump 4.5 per cent to $145.

Room occupancy rates are expected to further increase to 65.2 per cent next year, with the room rate climbing to $154.

“That is one of the positives amid an otherwise distressed landscape,” Mr Smits said.

He said overall good figures hid “a pronounced performance dichotomy between core CBD markets and regional hotel and resort properties.”

A lingering weakness in tourist traffic meant the industry had held back investment in new hotel rooms, facilities and better attractions, Mr Smits said.

Rutger Smits was the National Leader for Tourism, Hospitality and Leisure at Deloitte until October 2011. He now manages his own hotel consulting business, AHS Advisory

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