Brand diversification drives growth for Australian accommodation supply
Australia’s accommodation supply was relatively stable in 2014 showing a decrease of -0.2% (-418 rooms) over the year, according to a new report by Jones Lang Laselle Hotels & Hospitality Group.
Despite this slight decline, supply levels remain high, recording just behind those of the 2013 peak, said the report.
“The supply growth trend is anticipated to continue over the coming years as major projects are completed in the short to medium term.
“Of the 229,646 accommodation rooms in Australia, the Top Ten Owners accounted for 11.3% (25,876 rooms) of total room supply at the end of 2014 and the Top Ten Operators 42.5% (97,487 rooms).
“Rooms owned by the Top Ten Owners have increased at an average rate of 1.2% per annum since 2000. This is on par with the growth in total accommodation supply. The Top Ten Operators have grown at a higher rate averaging 5.7% per annum.
“Australian hotel real estate has consistently been of significant interest to international investors over the past five years.
According to the Australian Top Hotel Owners and Operators Survey: “China’s recent policy change, a relaxation of the outbound investment regulations allowing investors to be more readily available to compete in international bidding processes, could almost guarantee an ongoing increase in South East Asian capital entering the Australian market.
“In the coming years we anticipate a further increase in brand diversification by operators as they seek to continue to differentiate product offering within the Australian market.
“Given the strong trading fundamentals across most of the major Australian markets, the introduction of new brands will offer an opportunity for owners and operators to capitalise on market trends.
“As new brands or evolving brands from other regions are introduced to the Australian market, while remaining supportive, we always recommend owners ensure they do not bear all of the financial risk associated with adopting a pioneer brand. Sound advice is essential to ensure a mutually beneficial arrangement is in place between owner and operator.”
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