It's been hard for hotels, but relief is on the way

Sydney Morning Herald

Saturday July 18, 2009

Carolyn Cummins

IT'S been a tough 18 months for the hotel sector with sharp declines in tourism, but the latest figures for the March quarter show businesses have weathered the decline.The Australian Bureau of Statistics shows the accommodation sector continued to perform steadily, even though hotel occupancy levels eased.Michael Thomson, the national director for hotels and leisure at Colliers International, said the best performing markets were Perth and Canberra, which showed strong room rate and growth in revenue per available rooms. He said most Australian cities experienced moderate room rate growth in the 12 months to March this year. While the Sydney hotel market was comparatively weak with lower room rates and declining occupancy, the Melbourne market remained resilient with slight improvements in average room rates in a period of weakening demand."In the first quarter of 2009, the deterioration in the global economy translated into cutbacks and fewer bookings in the corporate and leisure markets, and this was felt across most accommodation markets," Mr Thomson said."Hoteliers in Sydney have been discounting nightly rates with the aim of chasing greater volumes."The market consensus is for sustained challenging market conditions this year with the opportunity for a modest recovery at the end of 2010 and into 2011."The latest LandMark White's Byte report says limited growth in available room nights has assisted hotel revenue performance at a time of economic uncertainty."It is a defining difference between this global economic slowdown compared with previous global recessions which were accompanied by significant increases in room supply in some cities," the report says. "Visitor arrivals have fallen over the past 18 months because the global economic crisis has affected those visiting Australia for business or leisure."Sydney and Melbourne historically have had a high level of business and corporate travel and are being adversely affected by the contraction in corporate [trade], meetings and incentive-associated room demand."The Byte report said that despite the low-supply environment excluding Melbourne occupancy rates were likely to remain under pressure for the remainder of 2009, with some rebound likely in 2010.