Perth surpasses Sydney as best-performing hotel market: Dransfield

The effects of the mining boom continue to flow through to Perth’s hotel sector, which has now surpassed Sydney in terms of occupancy rates and revenue growth, according to the latest Dransfield report.

Perth hotel occupancy rates improved by 5.8 percentage points to reach 87.5% over the first three months of the year, while Sydney recorded a 1.8 percentage point decline in occupancy to 81.8% and Melbourne edged up 1.5 percentage points to 80.1%.

There was some improvement for the tourism-dependent Cairns market, with the occupancy rate increasing by 8.3 percentage points, but to a still low 51.7%. Occupancy rates on the Gold Coast increased by 6.1 percentage points to 71%.

Hotels in the west coast capital city also significantly outperformed Sydney and Melbourne on the key metric of revenue per available room (revPAR), which rose 22.1% over the quarter.

Sydney hotels' revPAR was flat (-0.1%) over the March quarter while there was modest gain in Melbourne (up 2%).

In its previous outlook report, Dransfield noted that Perth had rebounded to again be the "outperforming hotel market, with demand growth rebuilding confidence following the fall in 2009".

Dransfield forecasts revPAR growth at around 7.5% for the medium term to 2013 and 2.6% for the full forecast period to 2019 as new hotel supply comes on board.

“The Western Australian government is actively trying to encourage development, through financial incentives to promote new hotel development,” noted Dransfield in its 2011 Hotel Futures report.

Dransfield attributed the relatively poor performance of Sydney hotels to a “combination of a softer conference and government market and lack of large-scale events”.

The Brisbane hotel sector also performed strongly over the March quarter with revPAR up 17% over the quarter. However the Brisbane hotel occupancy rate fell from 82.5% in the December quarter to 77.6%.

Adelaide was also a strong performer, recording 12% revPAR growth over the quarter.

Nationally, Australian hotels recorded revPAR growth of 5.3% compared with 4.8% for the prior corresponding period and 4.6% for the full year in 2011. This compares to full year expectations of 6.1%, with the results dragged down by Sydney and Melbourne.

Rate and occupancy both grew by 2.6%, evenly contributing to the March quarter results.

RevPAR growth was ahead of the 3.4% recorded in the December quarter.

National occupancy remains high at almost 77%, however this is still below the pre GFC level of 78.5% in 2007.

Room rates have continued to increase and at $167.11, have now moved well beyond the previous high of $162.31 in March 2008, says the Dransfield report.

Looking ahead, Dransfield expects Australia’s city hotel markets to continue to perform well in the short term, despite scope for volatility.

“Some uncertainty remains related to the recovery of leisure markets and the ongoing impact of the European financial woes.”

“Supply under construction and new proposals remain limited. The three year outlook sees a mixed performance in revenue growth, with some cities in the 7-10% range and others with little growth or even declining."

Dransfield Hotels & Resorts are a specialist professional services organisation advising tourism and hospitality enterprises and has advised on hotel projects involving over 40,000 hotel rooms.