Room For Hotel Improvements
The Age
Wednesday May 4, 2005
The Commonwealth Games promises to boost an already burgeoning accommodation industry
MELBOURNE'S luxury hotel market is set for an upswing following strong growth in corporate travel and a surge in international visitors. Occupancy levels at five-star hotels increased during the March quarter of 2005 to 84 per cent, with an average room rate of $202, according to the Australian Hotels Association. The figures represent the strongest quarterly growth since 2000 and are expected to rise as Melbourne prepares for next year's Commonwealth Games.Jones Lang LaSalle senior vice-president Mark Durran said rising occupancy rates had been underpinned by record international arrivals, a strong economy and discounted domestic air fares. "The strength in occupancy levels combined with limited new supply in Melbourne is likely to contribute to room rate growth this year, which will gather pace as the Commonwealth Games draw closer," he said.Victoria recorded a 7.9 per cent increase in international visitation in 2004, with a sharp rise in the number of Chinese tourists. They contributed $1.2 billion last year, forecast to rise to $5.9 billion by 2014, according to a report from the Tourism Forecasting Committee. The senior director of valuations for hotels and leisure for CB Richard Ellis, Peter Grieve, said the luxury hotel market had benefited from an increase in corporate travel and a burgeoning domestic leisure market attracted to Melbourne's sporting and entertainment events.The development of Avalon airport, which expects to carry 1.5 million passengers annually within three years, is also likely to boost domestic tourism. Mr Grieve said the market had absorbed the oversupply of rooms created when several large hotels opened between 1999 and 2001.The improving profile is expected to pique the interest of investors. Colonial First State has flagged its intentions to launch a second wholesale hotel trust this year, following the $189 million acquisition of the Travelodge portfolio by JF Meridian Trust and NSW motoring organisation NRMA in December.The historic Windsor Hotel, owned by Oberoi Group, is also on the market with an asking price of $35 million and is likely to receive close attention from the trusts.Last year the hotel market recorded strong sales of $1.5 billion - a 54 per cent increase on 2003.While the Commonwealth Games are expected to be a boon for the sector, hotel developers and operators will be keen to avert the oversupply that plagued the Sydney market after the 2000 Olympics. Sixteen hotels closed after those games.Several projects are in the pipeline including the Outrigger on Bourke, the Kuok Group's Shangri-La Hotel and the Savoy Plaza Tower. The strength of the market will be tested with 750 hotel rooms coming online in the next 18 months.Colliers International national director of hotels Robert McIntosh said serviced apartments were the greatest threat to the hotel market, but predicted a $10 increase in room rates during the next year."A lot is going to depend on supply, but the demand in Melbourne has been remarkably resilient and shows all the signs of improving," he said.
© 2005 The Age
