Business hotels performing well while leisure sector struggles: Deloitte

There is some good news for struggling leisure operators in Queensland with a rosier outlook forecast for 2012, according to the Deloitte third-quarter Hotel Market Outlook.

The report confirms the two-speed state of the hotel sector – CBD business hotels strong, regional leisure hotels struggling – revealed in recent ABS accommodation statistics and other hotel reports.

However, year-end results for the Gold Coast market have been revised upward following a stable June quarter.

Deloitte expects the Gold Coast occupancy rate to rise to 67%, down only 1% from 2010, with average room rates set to reach $135, up 2% from 2010.

Revenue per room (RevPAR) is anticipated to reach $91, increasing nearly 1% on 2010.

By 2012, occupancy levels are likely to increase by 2% to 69%, average room rates up by 4% to $141 and RevPAR rates of $98, representing a growth of 7.7%.

“Further increases in forecast results have been made for 2012 also due to anticipated improvements in domestic and international travel to the region,” the report says.

Forecasts have also been revised upwards for Tropical North Queensland following greater than anticipated demand and the diminishing impact of natural disasters. 

For 2012, the occupancy rate is expected to increase by 3% to 59%, the average room rates is forecast to increase by 1% to $119 and RevPAR is set to reach $70, an increase of 6%.

“Leisure destinations are fighting to maintain occupancy levels though, often at the expense of growth in room rates.  There is increased upside however, with the longer term outlook for the leisure segment improving over our previous forecast,” says Deloitte’s national leader for tourism, hospitality and leisure, Rutger Smits. 

The report highlights the impact of the Australian dollar quoting the Tourism Forecasting Committee, which recorded a negative net outflow of visitors of more than 1.5 million in May this year

“Australians are now holidaying in the rest of the world instead of at home, while foreigners are being deterred by the sheer strength of the Australian dollar,” the report says. 

City-based business hotels continue to perform at record levels due to rising business demand with Sydney leading the pack, followed by Melbourne.

Sydney hotel occupancies are expected to rise from a record 86.4% for the 12 months to June 2011 to 87.4% by 2012.

Deloitte is forecasting 12% room rate growth with RevPAR for year-end 2012 projected at $187, down from $193 in previous projections.

Melbourne occupancies stand at 80.9% room occupancy for the 12 months to June 2011 with Deloitte forecasting an occupancy rate of 81.4% room, a room rate of $196, with RevPAR growing by 9.5% to $159.

More growth is forecast for the rebounding Brisbane market in 2012 with room occupancies reaching 82.7% by the end of 2012.

Perth’s reliance on business travel and reduced demand from leisure visitors, means forward estimates have been revised downwards though are still very healthy.

RevPAR forecasts for 2012 have been reduced from 23% to 20% due to slower occupancy growth, with rate forecasts maintaining at $206 and occupancy forecasts down from 89% to 87%.

The RevPAR forecast for 2011 remains unchanged at $93 and 4.9% growth over 2010.  The report has increased the occupancy outlook from 63.5% to 64.3% finishing the year at $153, a 5.6% improvement over 2010.

The RevPAR forecast for 2012 has been revised downward slightly from $100 to $99, with slightly higher occupancies and lower room rates.