Perth hotel rates now some of the lowest in the country
The sobering assessment of Perth’s hotel market comes from Jane Hastings, the chief executive of hotel and entertainment company EVENT, which has just celebrated the opening of QT Perth.
Over the last few years, Perth’s hotel scene has been evolving, with the most recent newcomers including Westin Perth, InterContinental Perth and Aloft Perth, to name but a few.
The new burst of hotel investments followed a long period of stagnation in the market driven by a resources boom that meant hotels were rewarded handsomely without doing much to earn it. Since then, room rates have dropped considerably as corporate demand slumped coupled by a surge in new hotel investment. Perth hotel rates average $165 compared to $221 in Sydney and $184 in Melbourne.
Speaking at their annual shareholder meeting, Hastings said that they believed in the Perth market in the long term.
“However, at this point in the cycle, Perth is a tough market with negative market revenue per available room growth forecasted for the next three years,” she said. “As a result, it will take at least three years for this investment to generate a positive contribution to earnings.”
Perth’s revenue per available room (RevPar) during the year to June fell by 3.3 per cent, to $121, the worst in the nation, according to The Savills Hotels quarterly update. Australia-wide RevPar inceased 3.2 per cent, while the best performing markets were the Gold Coast (up 14.4 per cent), Darwin (6.8 per cent) and Adelaide (3.6 per cent).
The number of new rooms in Perth has increased about 10 per cent, exceeding demand, which had risen only 5 per cent, according to Savills hotel valuations national director Adrian Archer.
According to the Tourism Council, expenditure by international visitors to WA fell 5.5 per cent, the number of international tourists visiting WA declined 0.8 per cent and the number of visitor nights fell 7.7 per cent in the year to December 2017.
But it’s not all doom and gloom in the short-term for the hotel market. Perth’s direct flights to London with Qantas and a falling Aussie dollar may be the shot in the arm it needs.
New hotels coming to Perth include DoubleTree by Hilton, Northbridge; DoubleTree by Hilton, Perth waterfront; The Ritz-Carlton; and Mantra on Hay. There are also two hotels planned for the Elizabeth Quay site and Capital Square site.