Number of Australia’s hotel rooms hit record high
Australia’s hotel boom has hit a new high with the number of rooms now over 300,000 rooms for the first time.
The latest report by STR shows Australia has 5600 hotels offering 300,229 rooms, putting the nation in the 12th spot globally for total room count and fourth in Asia Pacific.
The rise in the number of rooms is continuing to impact occupancy rates though, with Sydney recording its 23rd consecutive month of occupancy declines. Some of the decline has been associated with the ongoing bushfires, according to the analysts.
Sydney has seen a 1.9 per cent increase in room supply, while occupancy dropped to 86.5 per cent and revenue per available room fell to $202.
“Australia has been on a progressive development path since 2016 with more than 26,000 rooms added to the marketplace,” said Matthew Burke, STR’s regional manager for the Pacific.
“This uptick in investment reflects the country’s strong performance, especially in major markets. As a whole, Australia’s occupancy has been at or near 75 percent for each of the last five years, and average daily rate has consistently ranged around 185 Australian dollars.”
According to STR, the largest percentage of rooms sit in the upscale (24.2 percent) and midscale (23.6 percent) segments, with the upscale sector seeing the largest influx of new supply with 10,931 rooms opened since 2015.
“Australia is not likely to hit its construction peak until next year, and we don’t expect a substantial slowing in development anytime over the next several years,” Burke said.
Melbourne, Hobart and Adelaide are projected to see the largest increase based on their existing room counts.
But Burke says the sector is will have no problems absorbing the new supply in the long term.
“As we have seen in the data this past year, all of this new supply has put some pressure on occupancy levels, and subsequently, hotelier pricing confidence,” he said.
“Moving forward we anticipate demand growth in almost all markets, but with sustained supply increases, we’re still forecasting occupancy declines in the short term.
“Room rates will of course be weighed by the additional competition in the market, but that is not likely to become a long-term trend as many markets trade at high absolute occupancy levels with the ability to absorb new supply.”
Sheridan Randall, 16th December 2019
