Hotel occupancy rates at record high as inbound visitors increase – tourism in Australia is looking up

The Asian economic boom has led to an increase in tourism in Australia with hotel occupancy rates reaching a new high, according to a report published today by Access Economics.

Access Economics’ Tourism and Hotel Outlook shows room occupancy rates rose to 65.8%, 0.5% more than the last quarter, and the highest level ever recorded.

Lachlan Smirl, director at Access Economics, said the expected moderation of the Australian dollar over time and continuing growth in China and other key Asian economies is forecast to drive solid growth in international visitor numbers.

“There are strong signs that outbound travel by Australians is slowing and our forecasts project it continuing to slow further over the next three years.”

Smirl said while it is still too early to predict the extent to which this will buoy domestic leisure travel, the indications are encouraging.

“Nevertheless the long-term trends still point to Australia becoming increasingly reliant on international tourist expenditure, especially expenditure from emerging Asian economies,” he said.

The report found the demands of Asian economies have driven strong commodity price growth, which has fed through to the Australian dollar and increased Australian travel overseas.

Although China and India is the main source of international tourists, Malaysia and Indonesia have contributed significantly in growth, with both achieving growth over 50% in the last decade.

“Visitor arrivals from Indonesia are also forecast to grow by an average of 7.1% per year over the next three years, a similar rate to both India and China, while Malaysian arrivals are predicted to grow solidly by 4.3% per year over the same period,” Smirl said.

This growth will reflect on the demand in hotel rooms as the future for room occupancy rates is forecast to reach 67% by the March quarter in 2015.

However the occupancy rate growth is largely restricted to the mainland capital city – remaining below 60% in most regional areas but around 80% for all mainland capitals except Darwin, Adelaide and Canberra.

John Lee, chief executive officer of Tourism & Transport Forum, told SmartCompany 65.8% is just a national average; there is a clear distinction between capital cities and the regional areas, which are continuing to struggle.

“In the capital cities we are seeing average occupancy rates in excess of 80%, which means that during the week most of the hotels are full. Sydney and Perth are expecting occupancies in excess of 85% which should trigger additional investment,” he says.

Lee says in order to see continuous improvement state governments have to push for more investment.

“We need to ensure that state governments remain focused on investment attraction. Development must be appropriate to sustain ongoing confidence in the market.”

The report also attributed some growth to the mining industry, which has had a major impact on the hotel industry.

“The resources boom has been a big driver of the growth in corporate travel. This impact is particularly strong in the capital cities like Brisbane and Perth, the latter of which now has the highest occupancy rate and the highest and fastest growing room rates in the nation,” the report said.

The report shows occupancy in mining intensive regional areas has grown more rapidly than metropolitan and other regional areas, increasing by an average of 4% per annum over the last four years, compared to 1.9% and 1.6% for metropolitan and non-mining areas, respectively.

“Over the last four years, mining intensive regional areas have experienced considerably higher average occupancy and room rates than non-mining areas,” Smirl said.