Australia's major hotel markets have taken advantage of strong occupancy levels, to increase room rates. 

According to Jones Lang LaSalle Hotels, the newly released Australian Bureau of Statistics (ABS) tourist accommodation performance data for the September quarter 2005 shows that seven of Australia's ten major markets recorded average daily rate (ADR) growth in excess of 5.0%. "Subsequently, revenue per available room (RevPAR) has increased nationally for the third quarter in a row," said Mr Troy Craig, Executive Vice President, Jones Lang LaSalle Hotels. 

During the year ended September 2005, RevPAR for tourist accommodation across Australia increased by a healthy 7.5% to reach $75.  Very strong international arrival growth supported this result.  "For the year ended November 2005, international arrivals to Australia increased by 6.0% to reach 5.5 million visitors," said Mr Craig.  Furthermore, according to Tourism Research Australia (TRA), international visitor nights to hotels, motels, guesthouses and serviced apartments grew by 15.1% for the year ended September 2005.

Although Sydney occupancies dropped slightly, ADR increased by 8.0% during the quarter to reach $158.  "This strong rate growth assisted overall room yield with RevPAR levels increasing by 5.3% to $129," said Mr Craig.  He added, "After a prolonged period of minimal rate growth Sydney is now seeing widely anticipated and consistent improvements in rate after successive quarters of occupancy being 75.0% or higher."  Sydney is also benefiting from the continued growth in international visitation, largely being driven by increased demand from China and South Korea.  For the year ended September 2005, these markets have recorded increases in visitor nights of 86.2% and 66.4% respectively.  Limited new supply in Sydney has also allowed hoteliers to push rates higher. 

Sydney has recently again been named 'World's Best City' by one of America's most popular travel magazines, Travel + Leisure.  "This is the eighth time Sydney has won this accolade, including the last four in a row, keeping Sydney at the fore of global travel," said Mr Craig.

Melbourne's results were ground breaking.  Occupancy surged to 74.0% - the best result in a September quarter for more than 18 years.  Similarly, ADR surged 6.1% to $138 – the highest September quarter ADR result since 1999.  This comes as TTF Australia (Tourism & Transport Forum) continues to push for a crackdown on illegal serviced apartments, particularly in areas such as Melbourne Docklands.  "Victoria recorded a 13.2% increase in serviced apartment supply for the year ended September 2005 and the TTF is calling on Australian governments and the tourism industry for greater regulation in the lead up to the Commonwealth Games in March," said Mr Craig.

Despite some of the heat coming out of its high occupancy levels, the Brisbane hotel market managed to record the strongest increase in ADR.  "Brisbane is the most advanced in the hotel cycle of all the Australian markets and as new supply projects are still some way off, the market is expected to continue to perform strongly," said Mr Mike Tidbold, Executive Vice President, Jones Lang LaSalle Hotels.  ADR reached a new high of $131 over the quarter while RevPAR increased by 12.6% over the twelve months to September 2005.

In what is typically the strongest quarter of the year for the Cairns market, occupancies surged to 83.9%.  "This is a level not seen since before the Asian financial crisis in 1997," said Mr Tidbold.  A 5.9% increase in ADR also flowed through to an 8.9% rise in RevPAR.

On the Gold Coast, whilst ADR levels were driven 6.1% higher, occupancy levels softened slightly.  "This may be due to the fact new additions to supply, specifically a 4.9% increase in serviced apartment supply, have made the market very competitive," said Mr Tidbold.  He added, "However, according to TRA the Gold Coast is also currently one of the only markets recording growth in domestic travel, being up 1.7% over the previous year." 

The Queensland government has taken notice of the growth inbound markets of China, India and Korea by reassessing their marketing strategy.  "The State has seen unprecedented growth from the China market over the past two or three years, with visitor numbers increasing at average annual rate of 20% over the past three years," said Mr Tidbold.

In Perth, a reduction in supply has assisted hoteliers to drive both occupancy and rates higher, enabling RevPAR to increase 7.8% during the quarter.  Hobart recorded strong growth after a very poor September quarter in 2004.  "A star performer for this quarter however was the Adelaide market," said Mr Craig.  As the number of international flights to Adelaide reportedly increased by 40% during the year, RevPAR jumped by a substantial 12.0% during the quarter.

Jones Lang LaSalle Hotels' prediction last October that Darwin is set to continue recording strong growth in trading performance has come to fruition.  "The domestic tourism market has been exceptionally strong in Darwin with visitor nights up 24.0% during the twelve months to September 2005," said Mr Craig.  He added, "For the second consecutive September quarter occupancies have been above 90%."

"Looking ahead, due to ongoing healthy demand levels and limited new supply, Jones Lang LaSalle Hotels is confident that RevPAR growth will continue in most key markets," said Mr Craig.

Contact: Craig McCarthy Phone: +61 2 9220 8786

Email:  craig.mccarthy@ap.jll.com