PerthNow, 09 February 2011
Perth’s extraordinarily high hotel occupancy levels are poised to grow even further in 2011 and may soon lead the nation, according to industry research by Deloitte.
The lack of rooms in Perth has been damaging the local tourism industry in recent years, elevating the issue as a key development priority for Tourism WA in both the short and long terms.
Late last year Tourism WA chairperson Kate Lamont told Perth Now that the occupancy rates for Perth’s hotels was over 81 per cent, which she described as “full”.
Deloitte’s ‘Hotel Market Outlook’, released today, suggests Perth’s occupancy rate will reach 88.4 per cent by the end of year, up from 82.5 per cent at the end of December.
If Deloitte’s forecasting proves accurate then Perth will take the mantle as Australia’s highest hotel occupancy, removing incumbent Sydney.
Deloitte predicts occupancy levels in the harbour city will reach 87 per cent occupancy by year’s end.
In 2010, Ms Lamont said hotel room capacity in Perth was approaching critically low levels as no new hotels have been built in the city since 2006 and the 223 new rooms that have been added in the past four years were a result of building conversions.
“We have a critical shortage of short stay accommodation in Perth,” Ms Lamont said.
Ms Lamont suggested the lack of hotel-related infrastructure development was equivalent to hanging a sign on Perth which reads “not open for business”, highlighting the urgent need to encourage domestic and foreign investment in hotel developments in order to increase room numbers across the city and the State.
Perth Convention Bureau managing director Christine McLean has previously indicated that there was not enough development activity to satisfy demand for the new hotel rooms required each year.
There are currently around 11,900 hotels accommodation rooms in the greater metropolitan area (including around 4,000 in the CBD).
“If the Chamber of Commerce and Industry’s predictions for economic growth in Western Australia are correct, Perth’s hotels will be unable to keep up with forecasted demand,” Ms Mclean warned.
And a 2010 report prepared by Access Economics predicts that Perth will require an additional 300 new hotel rooms each year to simply keep up with demand and that without this infrastructure the State will potentially lose around $435 million in gross state product over the next ten years.
In launching the report today, Deloitte national leader for tourism, hospitality & leisure, Rutger Smits said Australian hotels were on course to nationally record room occupancy levels of 65.6 per cent by the end of 2011, improving from 62 per cent as recorded by ABS Statistics for year-end 2009 and an expected 63.9 per cent for year-end 2010.
Mr Smits said the Australia and Oceania hotel industry weathered the GFC better than their counterparts in other regions.
Australia and Oceania’s hotels finished 2010 with occupancy levels in the mid-70s, compared to Western Europe in the mid-60s, the Middle East in the low 60s and North America in the high 50s.
However Mr Smits said the economic outlook for Australia overall is positive, relative to the rest of the world, driven by an active resources market.
“This drives corporate demand for accommodation. In 2011, I expect average room rates in major Australian cities to see strong growth on the back of surging demand, supporting high room occupancies,” he said.
Mr Smits further explained that it is the prolonged absence of significant additions to accommodation supply that underpins the strong occupancy levels.
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.