The worst is over – and it wasn’t that bad after all – for Australia’s accommodation industry, which looks to have dodged a bullet in the recession that never was. Just six months ago, many industry leaders were downbeat, forecasting a continued decline in room rates and occupancies ahead of recovery some time during 2010.
Now many are saying the market is already in the early stages of a rebound, though some are not so sure. “We’ve gone past the bottom and are on the way up,” said analyst Dean Dransfield. “There’s well and truly no doubt about it,” agreed Accor Asia Pacific Vice President, Simon McGrath. “The bottom has been reached,” declared David Perry, Chief Executive of Melbourne’s Hotel Windsor.
But some such as Bruce McKenzie from IHG urged caution and said there are still uncertain times ahead. Either way, there is a general realisation that recovery will be a long, slow and perhaps painful process after a tough 12 months.
Mr Dransfield predicted that national RevPAR, the hotel performance benchmark, will fall by around 10 per cent for 2009 even though it began turning in July.
He is forecasting annual growth of more than four per cent through to 2012.
“Our bad day wasn’t so bad after all,” Mr Dransfield said.
At Accor, Mr McGrath said he was “surprised the turnaround has come this early – I thought it would be next year”.
Mr McGrath said Accor had noticed definite signs of improvement during August.
“We are down about 8.5 per cent for the year, which I think in the circumstances is pretty good.
“There’s no doubt it, there is positive movement.”
Bruce McKenzie, Chief Operating Officer of the InterContinental Hotels Group, agreed that demand has been “holding up better than we probably thought” but remains cautious about the rest of 2009.
“The volume lift needs to continue in the next quarter,” Mr McKenzie said.
“October and November are traditionally strong months and we are yet to see how they look.
“The issue is that it’s very difficult to forecast even a month out.”
The travelling market has been surprisingly resilient, he said, with some IHG properties running occupancies of more than 80 per cent at room rates five per cent to 15 per cent less than last year.
“It varies on where you are,” he said.
Perth, the Gold Coast, Sydney and Brisbane were all solid, while Melbourne had proved doggedly resistant.
Fears the southern capital would suffer major occupancy declines due to a dramatic increase in room supply, including the new Melbourne InterContinental, have dissipated although room rates are well down.
Yann Duroselle, Executive General Manager of the Quality Batmans Hill on Collins, said the additional supply is having a big impact.
He said the market is being driven by discounting from newcomers such Hilton Melbourne South Wharf, while inbound business has also been hit.
However, Mr Duroselle said he refuses to discount.
“This is the strategy we have taken for the past three crises,” he said, adding that business was three per cent ahead of budget as a result despite shedding occupancy and market share.
Mr Duroselle does not believe the recovery is here.
“My personal opinion is that we may have reached bottom but we are not on the way back up.”
“I think we are going to have a glimpse of hope followed by a period of despair again.
“The fundamentals of recovery are not there yet.”