Turning Point Reached For Australian Tourism

By Martin Kelly, Editor, Travel Trends

THE numbers don’t lie. Putting the rhetoric of tourism lobby groups to one side, a couple of announcements this week, most notably the profit downgrade by the General Property Trust, which owns Voyages Lodges and Ayers Rock Resorts, clearly shows that Australia now has a two or even three class tourism economy. Travelling in some comfort up front (at least for the time being) are the CBD tourism markets with strong hotel occupancies and room rates. Further back are outbound retailers, still doing ok business but for how long? Seated next to the toilet at the very rear of the plane, perhaps considering staying home next time, is Australia’s domestic and regional tourism industry.

The numbers show that many regions are in big trouble, particularly Far North Queensland, which, despite what they’ll tell you (it’s all the fault of Qantas), is also paying for its own complacency, reliance on the Japanese market, and lack of marketing savvy. Fresh ABS figures crunched by Jones Lang LaSalle show that the Cairns tourism market continues to slide – during the first quarter, hotel room demand fell 11%, occupancy slumped to 53% while the benchmark Revenue Per Available Room was a pathetic $60. Compare this with Sydney – 85% occupancy and RevPAR of $165, Melbourne was on 82% occupancy and RevPAR of $146.

Quite a contrast, and part of a trend that’s been obvious to everyone except some key FNQ tourism figures, who want to reprise the good old days and continue pointing the finger everywhere but themselves. Sure, it’s a fantastic part of the world but so are lots of other places. The Japanese are not coming back, get over it. There are alternatives. How about the big FNQ operators marketing hard to the southern markets or – what about this – shaking up their distribution strategies and embracing the Internet?

GPT is one owner-operator that has a big stake in FNQ – with eight properties in the region – that is finding it particularly tough. This week GPT announced a general profit downgrade, including a 26% reduction in forecast profit from its hotel and tourism holdings. To blame are the usual suspects – high $A, rising fuel prices, falling consumer confidence etc. It added that a “continuation of these trends is assumed for the balance of 2008”. So according to the experts it ain’t getting better any time soon. But there was one bright light for GPT – its sole CBD property, the 630 room Four Points By Sheraton in Sydney, which was “still performing strongly”.

There you have it – the short-term future of Australia’s domestic tourism industry neatly encapsulated. The big question is: will the trends we are seeing now become long-term? I suggest there is good chance they will, though where there is adversity, there is also opportunity.

Travel Trends: July 10, 2008

Share and Enjoy: