The weak Australian dollar is translating into strong profit margins for local tourism operators and hotels. According to Tourism & Transport Forum Chief Executive Margy Osmond, “the lower dollar makes Australia a more attractive destination for international visitors looking for value for money on their holidays and encourages more Australians to holiday in their own backyard as the cost of overseas travel rises.”
This growth is evident in the figures. Australian hotel and motel sales increased by 20% in 2015. In addition, luxury hotel occupancy rates have reached 90% in both Sydney and Melbourne – with room rates surging above $300 a night (STR Global).
These numbers are attracting a wave of global investors looking to cash in on the Australian tourism goldmine. CBRE figures show that by mid-January 2016 there were already $100 million of hotels in the due diligence phase. Australian hotel investment sales are predicted to surge to a record breaking $4 billion in 2016 as the tourism boom brings in new investor groups from the US, UK and Europe to compete with Asian investors for trophy assets and big portfolios.
Hotel Sales Growth
2016 – $4 billion (predicted)
2015 – $3.87 billion
2014 – $2.55 billion
Thanks to the proliferation of online booking sites where you can research and review in real time, the quality of the accommodation is playing an increasingly important role in securing the all important tourist dollar. As such, we are seeing a plethora of hotel upgrades across Australia. Investors are injecting capital into their purchases, forcing local owners to do the same or risk losing market share.
Schiavello hotel expert Daron Johnson understands this process, having been involved in more than $100 million of hotel works. According to Daron, the biggest challenge is ensuring (positive) patronage while upgrades are happening. “It’s always difficult working in a live environment, but for the hotel sector this is extremely important. Guests don’t want their experience tainted by construction works. Schiavello has significant experience in this sector and can help owners navigate this process upgrade with minimal risk. It’s about coordinating the works to ensure the least amount of disruption, and the highest quality outcome.”