Regional hotels raise their rates as demand for rooms exceeds supply

Owners and operators of regional hotels are upgrading and opening new properties as the rate of travellers exploring local destinations grows. 

According to STR data, hotel operators from Queensland’s Sunshine Coast and the Whitsundays, Victoria’s Mornington Peninsula and Phillip Island, and NSW’s Mid North Coast have been able to increase average daily rates by 30 to 50 per cent higher than 2019 rates due to demand.

Some hotels in regional towns are now charging more than inner city five star hotels. 

Speaking at this week’s AHICE hotel conference, STR regional director Matthew Burke said growth had been “supercharged” in many regional markets. 

“The scarcity of supply in many of these markets and the will of people to travel and the choices they have available have prompted these changes [to daily rates],” he said.

In Coffs Harbour, Michael Dougherty is adding 18 rooms to the 53-room Quality Hotel.

“I think the next few years will be very strong,” he told AFR Weekend. 

“I can’t see the situation here changing too much. People will get on planes and go overseas, but Coffs Harbour is a very desirable destination. The future looks super.”

Mr Dougherty has increased his rates, charging between $270 and $350 a night for a mid-week stay and is able to do so as the demand for accommodation is exceeding the supply of rooms. 

Director of Hotels at DOMA Group, Patrick Lonergan, has said with more people working from home, it has changed the working week and turned almost every weekend into a long weekend. 

Chief operating officer of Minor Hotels, Craig Hooley, thinks the boom is not sustainable since regional hotels could not deliver the service and experiences expected at those high rates. 

“There is a big expectation gap that is not being met. We need to invest regionally and there is still a big preference for city locations,” he said.

Irit Jackson, 9^th May 2022