Darwin, Brisbane & Perth, Drag Down Aussie Hotel Performance But Leisure Markets Strong

Leading analyst Dransfield Hotels and Resorts has slashed its national Australian hotel forecasts for financial year 2016 due to worse than expected revenue performance across the struggling Brisbane, Darwin and Perth markets, which have been hit by increased supply and falling demand from the resource sector.

It predicts Darwin’s revenue per available room will drop -18.9%, Brisbane -14% and Perth -4.2%.

This has resulted in Dransfield cutting its FY16 forecast from a bullish 5.4% to just 1.3% “as rate opportunities fail to be realised and resource influenced markets continue to experience difficulties beyond expectations”.

However it says leisure markets such as the Gold Coast +6.6% and Cairns +9.2% are performing well due to increased domestic holiday traffic as the weaker $AUD encourages more Australians to holiday at home.

“Strength lies within leisure orientated cities as the re-positioning of the $AUD has a twin-barrelled effect, making it more expensive for domestics to holiday overseas and thus increasing domestic visitor numbers in Australia, as well as making Australia more attractive globally,” the Dransfield report says.

Sydney, Australia’s largest hotel market, was another standout and continues to perform strongly with a 7.5% year on year RevPAR increase forecast this financial year, followed by another +7% annual uplift over the next 24 months.

Looking ahead, Dransfield says Brisbane, Darwin and Perth will continue to struggle over the next couple of years, posting negative growth, before returning to modest growth levels.

This will be driven by the simple equation of demand outstripping supply.

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