21
ANNUAL REPORT 2014
MARKET REVIEW
Brisbane, Australia
Hotel Property Sector as of 1 March 2015
BRISBANE TOURISM MARKET
In the 2013/14 financial year there were 967,368 international
visitors to Brisbane, equating to approximately 47% of total
international visitors to Queensland, who spent 20,106,328
visitor nights in the region. Major source markets include
New Zealand, Europe, China, the United Kingdom and
United States. The average length of stay by international
visitors remains in excess of 20 nights. A major contributor to
this growth came from working holiday visitors.
In the same period, Brisbane attracted 26% of the domestic
visitors to Queensland, equating to 967,368 Annual Visits
and 16,541,000 visitor nights. Visiting friends and relatives
(VFR), holiday and business are all major reasons for travel
to the region.
HOTEL MARKET PERFORMANCE
Comparing the 10-year period from 2002/03 to 2012/13,
room nights available in the Brisbane Tourism Region have
grown by 36.5% and room nights occupied have increased
by 47.0% or an average of 3.9% per annum. The result has
been an increase in occupancy from 69.0% to 74.3% and an
average increase in RevPAR of 6.0% per annum.
The Brisbane market is dependent to a large extent upon
both intra and interstate corporate travellers. Corporate travel
increased over recent years due to continued population
growth and economic activity, including the contributions
made by the infrastructure and mining development cycles.
Corporate demand eased in 2009 but strengthened again in
2010 and 2011 as business confidence improved. Demand
slowed during 2012 and has contracted over the past
18 months.
EXISTING AND FUTURE SUPPLY
Room supply was relatively stable in the Brisbane market over
the five years to 2004, however, grew by 32% (3,170 rooms)
from 2005 to 2010, before stabilising over the past three years.
Renewed interest in short term accommodation projects,
however, was stimulated by strong RevPAR growth occurring
from 2010. The Brisbane City Council also announced a
moratorium on infrastructure charges for new four and five
star hotel developments approved before 30 June 2014, in a
bid to incentivise new hotel supply.
There are currently a number of projects under construction
with a significant number approved and mooted. Next Hotel,
The Four Points by Sheraton, the Gambaro Hotel, Mosaic
and Trype Hotels in Fortitude Valley have all opened in 2014,
introducing an additional 580 new hotel rooms into the
Brisbane City market. Overall, the total mooted projects for
Brisbane to 2022 equates to some 4,369 rooms. However, it
is unlikely that all of these projects will proceed. Increased
supply, together with recent softening in RevPAR may deter or
postpone the commencement of a number of developments
and constrain feasibility.
Demand since September 2012 has declined with reduced
corporate demand from the mining sector and government.
Looking forward, however, we expect continued growth
in demand supported by key fundamentals including a
government focus on all levels to drive tourism demand,
ongoing population growth, economic growth, increased
visitor numbers, development of new entertainment and
dining precincts together with new accommodation product.
It is difficult to accurately forecast future supply, however,
it is anticipated that supply will exceed demand during
the medium term resulting in lower occupancy levels. The
AEC Group estimates that Brisbane can sustainably absorb
between 216 to 330 rooms annually to 2022, allowing the
city to increase its capacity and capture more leisure and
international visitors arising from markets such as China.
HOTEL MARKET OUTLOOK
Based on forecast supply and historic trends it is expected
that occupancy levels will continue to decline over the
medium term to 2017 and reach a low in the mid 70% range,
after which demand is expected to exceed supply and
occupancy is forecast to again increase. We expect room
rates to decline in 2015 with minimal growth until 2019 due
to the extent of new supply and declining occupancy levels.
Strong growth is expected in RevPAR from 2019 to 2021. In
2022 hotel development proposed as part of the Queens
Wharf project is likely to open. The impact on the market will
be dependent upon the successful tenderer for this project
and the number of hotel and serviced apartments included
in this development.
