We often hear that 2011 was a year rather forgotten by many. What we don’t hear so often is that for many others, 2011 was a year of opportunity and growth.
The contrast between those that have succeeded and those that have struggled has provided the backdrop to 2011, none more so than in the accommodation sector, particularly in Queensland. While the mining sector continues to create boom times in certain areas, Queensland’s traditional hotspots continue to limp along.
From 2003 to 2007 Brisbane city was reported to have the second highest occupancy rate of any major city in the world, driven largely by interstate migration. The arrival of the GFC changed this. However, 2011 appears to have been another halcyon year for Brisbane with occupancies approaching pre-GFC levels. Much of this growth can be attributed to the mining sector, expanding or creating new head offices and filling short-term corporate lets with mid-week business travellers.
Sales of management rights have also been strong in the greater Brisbane area, with Chinese buyers becoming increasingly prominent. The importance of the freedom that Chinese nationals now have to invest their money overseas cannot be underestimated. We expect this to be become an increasingly important factor in driving management rights and motel sales in the coming years.
Nowhere is an influx of new buyers more needed at the moment than the Gold Coast. Only two to three years ago, the region was achieving 200+ management rights sales per annum. However, the general consensus is that 2011 sales were down 75% – 80% on this level. Although some tourism properties have maintained high occupancies throughout the GFC (a fact the press often forget to tell us), many have experienced tough times. Permanent properties continue to do well, although the reduction in job opportunities has created a highly competitive rental sector.
Further North on the Sunshine Coast, things seem to have generally improved as the year has progressed. In the early part of the year occupancies had been low and business had been slow (as evident by the seven vacant shops in Hastings St, Noosa). However, on the upside, most areas have registered an improved end to 2011, some reporting the best October/ November/December trading for the last five years.
Cairns and Port Douglas are suffering much in the same fashion as the Gold Coast. However, as interest rates drop we should see a decrease in the value of the Australian dollar meaning more people will holiday at home in 2012. This should cumulate in increased tourism trade in Far North Queensland, as well as the Gold and Sunshine Coasts.
As already mentioned, mining areas have been very popular. Rural areas in South East Queensland have flourished with the growth of the gas industry. Towns such as Roma (5 hours west of Brisbane) and townships all the way back to Toowoomba run at almost 100% occupancy during the week. Three months ago we had a significant sale in Chinchilla of a near new 44-unit motel which sold for $8.9million.
Gladstone is experiencing absolute boom time conditions; even with tariffs at $150 – $200 per night, it is almost impossible to find a bed within the city any night of the week. Further north Rockhampton is enjoying the best occupancies ever, largely due to the overflow from Gladstone. Further west the mining sector is driving the township of Emerald and surrounds to occupancies of between 85-90%. Middlemount and Merimbah are also running at near full capacity.
The city of Mackay that has approximately 80 motels has been running at occupancy of 91-92% throughout 2011 and shows no sign of slowing down. Mackay could do with at least another 400 units in the near term but finding land at the right price is difficult.
It doesn’t take a genius to work out that these soaring occupancies have created a great demand for motels, both leasehold and freehold. Year 2011 was one of our best years on record for motel sales and we expect 2012 to be better. The only thing that holds us back is listings; we genuinely believe we can sell any motel that is correctly priced.
I hope that gives you an overview of what is happening in the Sunshine State. The best of luck to everyone in 2012!