RevPAR Will Rise This Year
Room occupancies throughout Australia are forecasted to remain relatively constant for 2011, while average room rates are anticipated to grow by 5.2% to $146, resulting in revenue per available room estimated to increase by $4.35 (4.9%) to $93, according to the latest Deloitte report.
Deloitte’s Rutger Smits said, “Looking ahead to 2012, we predict occupancy growth throughout Australia to remain marginal, increasing by a further 0.5% to 64.0%. In the absence of supply growth, average room rates are set to increase further by $9.58 (6.5%) to $156, increasing RevPAR by $6.75 (7.3%) to $100, nation-wide.
The key city markets throughout Australia continue to record improvements in performance primarily due to an almost total absence of new supply and significant increases in corporate-based demand.
Mr Smits, says the longer the Australian dollar remains above parity to its US cousin, the harder it will be for tourism and international education, two key sectors which dominate our service export earnings.
The two speed economy has influenced growth in the Australian hotel market in contrasting ways. Strong growth in corporate demand tied to the resources sector and improvements to the business environment following the global economic downturn in recent years, has allowed for continued growth in hotel occupancy and rate in these markets.
With no significant supply increases announced for the foreseeable future, there is large investment potential in several key locations within Australia, Sydney in particular. Until new developments go ahead there will be a lot of opportunities in Australia,” said Rutger Smits.
However another report by Goldman Sachs warns that should Tiger Airways quit Australia it would push up domestic fares by up to 15%. Tiger this month suspended its ambitious growth plans for Australia and announced a strategic network review that could result in it ditching loss-making routes.
Goldman Sachs analysts said fares could increase by about 15% because Tiger had been one of the main reasons prices had fallen in real terms over the past three years. ”We would that expect that … Jetstar and Virgin would raise air fares in response to a reduction in the competitive pressures that have driven domestic real air fares to their all-time low,” they said.
”Based on this, if Tiger exits the market and… prices return to pre-2008 levels, arguably domestic passenger numbers could drop by about 5%”
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