As the Women’s Football World Cup provides a mid-winter boost for Australian city hotels, JLL Hotels and Hospitality’s Ross Beardsell says the continued stagnation in inbound visitor numbers is going to require new demand generators for the industry.
There were two contrasting reports last week that delivered mixed messages for the Australian hotel industry.
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On the one hand, there was news of the Taylor Swift ‘invasion’ of Australia with seven sold-out concerts in Sydney and Melbourne forecast to generate a boom in accommodation during February 2024.
But on the other hand, the Australian Bureau of Statistics released their latest international visitor arrival figures and noted that while overall arrivals to Australia had reached some 70 percent of the 2019 volume, short-term holiday arrivals – the most crucial figure for hoteliers – remained in the doldrums.
When visitors were asked to stipulate ‘reason for journey’, the ABS reported: “’Holiday’ increased by 1,034,980, but was just 24 percent of the 2019 volume, the lowest of any reason for journey.”
Of course, this is not news to most hoteliers, especially in Cairns, Gold Coast, and other destinations that traditionally rely on large-scale inbound in their overall market mix.
The fact that China continues to deny Approved Destination Status to Australia means that group travel to Australia – once the engine room of our inbound industry – is unlikely to revive until 2024 or, even more concerning, 2025, at the earliest.
The ABS figures also revealed that Australians are leaving the country for short-term international holidays at an accelerating pace, irrespective of high airline costs. Unfortunately, there is no corresponding return serve from our friends in Europe, North America, Europe and Asia, who are generally preferring to travel closer to home.
For hoteliers in Far North Queensland, Broome and the Northern Territory, the inbound decline has been exacerbated by the domestic airline sector.
The axing of five routes by Bonza may have been seen as inevitable by many industry observers, but the impact will go beyond the routes cancelled. Having an airline disruptor in the domestic aviation space can help keep the established airlines in check and moderate fare increases.
The aviation situation has been compounded by Bonza and other local airlines having to cope with a lack of hardware, as aircraft destined for Australian carriers have been delayed or diverted elsewhere.
Markets such as the Northern Territory, Northern Queensland, and regional Western Australia are reliant on access to affordable airfares, but with capacity continuing to be constrained, there isn’t much prospect of either more seats or lower airfares in the foreseeable future.
So, what are the prospects for the hotel industry as the inbound imbalance grows? Clearly, we need ‘Swift’ action.
The FIFA Women’s World Cup highlights the potential for events to drive domestic demand, as well as keep Australia in the world focus. The extensive media presence of the England football team training on the Sunshine Coast shone a light on the destination in the UK market, where the region’s ‘winter’ temperatures and perfect training conditions compared favourably with wet and cool temperatures experienced at the time in the UK.
However, anyone watching the Ashes cricket in England over the past month would have seen full grounds and massive splashes of green and gold spectators. In contrast, the Australian summer is unlikely to attract vast numbers of overseas spectators for Test matches with underwhelming series against Pakistan and the West Indies on the schedule.
Clearly, hotels are going to need to take matters into their own hands and also work with their local tourism organisations to boost guest volumes.
Hotels have undoubtedly responded to the challenges by investing heavily in creating destination style properties. The Darwin Airport hotels are finalising a massive recalibration of the properties to create a multi-faceted resort complex complete with a variety of accommodation from hotel rooms to luxe villas with plunge pools, complemented by extensive recreational facilities – all just five minutes’ walk from the terminals.
Dr Jerry Schwartz’s properties have added indulgent spas, ice rinks, and even equestrian facilities to boost leisure demand.
Hotels have also proactively aligned themselves with major theatre blockbusters, food events, and festivals.
Possibly the brightest star on the tourism horizon is the revitalisation of the business events sector, which has the potential to deliver sustained returns for both CBD and resort hotels.
This month sees the formation of the new Australian Business Events Association, bringing together the Association of Australian Convention Bureaux, the Australian Convention Centres Group, and the Exhibition & Events Association of Australasia to represent the vital meetings and conventions sector.
In 2019, 43.7 million people attended more than 484,382 business events across Australia, with the gross value representing some $17 billion.
Hotels have reported a revival of business events in the past year, but many of these have been deferred conferences from 2020-2022. The goal now is to use this market sector to drive future demand from both domestic and international sources.
Australian hotels have never been better equipped to host major conferences and events, but the global business events sector is the most cut-throat in the tourism industry. While not attracting Taylor Swift type numbers, the cumulative spend of a large conference can easily out-amp the revenue decibels generated by pop stars.
This is where governments really need to concentrate their attention and funding. While persuading the Chinese government to free up group travel to Australia might be beyond the control of most industry players, concerted – and well-funded – campaigns to attract major conventions and events to Australia has massive potential.
As an industry, we need to advocate to build support for our business events market. It will have relevance across the country, whether it be a city-based convention for 1000 delegates or a small, but high-yielding incentive group from America.
The times are a’changing, but with new hotel rooms coming into the market, we are going to need to continue finding innovative ways to generate new demand and protect revenues and rates.
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.