Tourism the main determining factor of hotel industry performance: CBRE

Tourism the main determining factor of hotel industry performance: CBRE
Tourism the main determining factor of hotel industry performance: CBRE

One of the main determining factors of the overall strong hotel performance is the recent surge in the number of international and domestic tourists, according to CBRE’s latest report.

Australia has seen a steady increase in international visitors over the last decade, but in the last few years there has been rapid expansion, particularly from Asia.

Since 2009 the number of international visitors has increased by 44 percent, recently surpassing seven million annually and is forecast by Tourism Research Australia (TRA) to surpass ten million in 2020.

New Zealand remains the largest source of international visitors at over one million annually, but 2017 will see this group replaced by China as the number one source.

Chinese visitors already account for the largest share of international visitor nights at over 17%.

The domestic market has seen strong growth since 2013 – particularly in the leisure category – as a result of a weakened Australian dollar, but with recent gains against some major currencies, 2017 will likely see this rate of growth slow.

However, a mitigating factor will be corporate travel, particularly in states with strong growth in business activity and the broader economy.

Figure 15 illustrates the historical growth of a selection of major international sources of visitors over the last decade, and the shaded area is how TRA expects these countries to grow over the next decade.

China is by far-and-away the strongest growing market, with an average growth rate of 13% until 2025 when it is expected that over three million Chinese will visit Australia per year.

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Tourism the main determining factor of hotel industry performance: CBRE

Driving this growth of Chinese tourists will be the continued establishing of new airline routes which will be the key to harnessing the massive tourist potential of China.

This would be such as China Southern’s new route to Adelaide which is expected to bring in an over $20 million to the state economy annually.

The Chinese and Australian governments declared 2017 to be the “China-Australia Year of Tourism” with the objective to increase tourism between the two nations and also bilateral relations.

All Chinese airlines that currently fly directly to Australia have pledged support to the scheme and are opening up more routes outside of the major hubs of Beijing and Shanghai.

This will give Australians greater choice when visiting China, but more importantly for the hotel industry within Australia it will open up new resources of Chinese visitors.

Currently less than 2 percent of Chinese tourists visit Australia, and already we have seen how big an impact they have had on the hotel industry.

So if this number does double in the next 5-10 years then the hotel market will continue to see strong growth for the foreseeable future.

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CBRE Hotel Industry

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