Is the three year golden era for regional accoms about to end?
Exclusive Op-ed: Are Australian regional hotels set to face a change in consumer buying behaviour as the outbound tourism wave gains momentum?
By Ross Beardsell and Vibhor Kalra, JLL Hotels & Hospitality
With arrivals to Fiji and Bali surging, the strength of outbound travel is likely to impact regional Australia significantly, so what can hotels in regional centres do to keep afloat in increasingly choppy waters?
It has taken some time for outbound travel to recover after borders opened in February 2022, but the latest arrival figures to popular holiday destinations Fiji and Bali suggest that Australian holidaymakers have regained confidence in travelling overseas, which could be at the expense of local regional destinations.
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Bali’s Ngurah Rai Airport reported a 27 percent growth in arrivals in January 2023 compared to January 2022, with 99,075 Australians passing through immigration, representing the largest inbound market.
Similarly, Fiji received more tourists in January 2023 than it did in January 2019, with 37,269 Australians making up 55 percent of the arrivals.
Both markets are targeting holidaymakers who may otherwise have selected a Queensland, northern NSW or WA beach holiday.
It could well indicate the imminent end to a three-year golden era of domestic holiday travel for regional hotels.
Of Finder’s Top 10 destinations Australians were planning to travel to in 2023, only two Australian contenders – Melbourne and Bright – made the cut.
Hotels in high-end beach destinations such as Noosa, Port Douglas and Byron Bay will be particularly vulnerable to substitute overseas ‘flop and drop’ locations as airlines grow outbound capacity and international fares become more competitive.
This is one of the conclusions of Expedia, which aggregated data from Expedia, Wotif, and Stayz to forecast likely travel trends in 2023.
Jon Gieselman, president of Expedia Brands, noted “We’re seeing a …spike in demand for outdoor destinations beyond just beaches – not a new normal, but people branching out to unexpected trends in what we’re calling the ‘no-normal.”
He identified “hay-cations” as a growing attraction for travellers seeking alternative-style holidays, which might not be great news for Australian beach destinations but suggest that some regional destinations still have the chance to continue their occupancy honeymoons.
“Travellers are exploring charming locations from high alpine places to farm-style escapes,” he said. “These regional spots are the go-to getaways for groups who want to enjoy their time soaking up new destinations with loved ones.”
Complementing Finder’s research, Expedia also identified Bright as the most in-vogue regional destination, attracting an increase in demand of over 55 percent. It reflected an overall increase of 50 per cent in searches for Stayz high-country properties.
The arrival of Bonza on the domestic travel scene provides a chance to shine for numerous regional areas the opportunity to shine, with the increase in airline seat capacity coming at exactly the right time.
The Sunshine Coast has almost overnight become one of Australia’s busiest regional airports with direct flights coming from 16 markets.
Other coastal airports such as Coffs Harbour, Port Macquarie, Mackay, and Townsville will also benefit from the injection of new visitors, particularly if Bonza maintains its commitment to low airfares.
In fact, Bonza’s introduction has also had an immediate impact on domestic airfares, with their competitors unleashing a flood of special offers. It may not slow the move to overseas holidays, but it will enable regional destinations to continue competing strongly for short-break holidays, groups, conferences and special occasion travel.
The key, however, will be for hotels and attractions to excite travellers with authentic experiences that go beyond the obvious – the “no-normal” trend, as Expedia has dubbed it.
Industry observers cite cultural and food-based tourism as new demand drivers, and hotels will need to work with local tourism bodies to provide seamless packaging and added value.
The record crowds at the recent Australian Grand Prix in Melbourne suggest that Australians will always engage in exciting major events. Regional destinations may not be able to mount such vast activities, but highly individual food and wine festivals, art trails and outdoor events such as triathlons, mountain biking and trekking will likely resonate with travellers.
Converting motels into trendy lifestyle hotels has proven a massive success for properties up and down the east coast.
Teaming up with well-known chefs can make regional hotels a destination in their own right.
Other ways of boosting competitiveness include upgrading spa and wellness facilities beyond the norm and becoming an integral part of the local destination through interior design, the restaurant menu, minibars, and partnerships with walking and cycling tour operators.
Just as with flood and drought, travel is often cyclical. Most regional destinations are enjoying sound trading conditions at the moment, even if demand may be softening compared to 2022.
Fortunately, there are still many positives. Firstly, three years of rainfall has created ideal conditions for the agricultural sector. And secondly, the exodus of many workers from cities to regional centres has created new demand, with friends, relatives and colleagues likely to visit, stay in hotels and use local restaurants.
It may be impossible to hold back the tide of growing overseas travel, but regional Australia still has plenty of ammunition to maintain its position in the travel market.
Ross Beardsell has over three decades of experience in the hotel industry in senior management roles in operations and development. Working initially with Southern Pacific Hotels, then IHG and the Carlson Group, Ross worked in GM positions across the Asia Pacific. In 2008, he joined JLL’s Hotels & Hospitality Group, providing asset management services on behalf of hotel owners to maximise profitability and to provide strategic guidance. He has provided hotel advisory services to the owners of luxury, upscale, mid-market, new hotels, limited-service accommodation, resorts, convention hotels, and pubs – both nationally and internationally.
