Glut of new rooms see hotel profits take a hit

Brisbane has seen a slew of new hotels enter the market over the last 12 months.

Capital city hotels saw their profits slip last year despite an ongoing tourism boom.

A wave of new hotel openings made it harder for operators to lift their rates. Perth and Brisbane, which have both seen an influx of new properties, were the hardest hit with revenue per available room (revPAR) falling 3.5 per cent. Sydney saw a 1.9 per cent drop, Adelaide slipped 0.6 per cent while Melbourne recorded zero growth.

“Growing supply in all major markets is having a dampening impact on occupancy as the number of new rooms added is growing faster than additional rooms sold,” STR regional manager Matthew Burke told the Australian Financial Review.

Perth’s hotel room rates have fallen following a wave new supply .

“More rooms are being sold but typically in the short term it takes some time for the new supply to be fully absorbed. This does have an impact to average rate.”

According to hotel consultants Dransfield, more than 4000 rooms entered the market in the 2018 financial year, with this growth expected to reach 6.2 per cent by 2021.

Speaking to the Australian Financial Review, Marriott International’s head of Australian, New Zealand & Pacific business, Sean Hunt, says the hotel giant has budgeted for revPAR increases across all its hotels in 2019.

“We expect to achieve our targets,” he said. “Owners expect returns and the hoteliers that deliver that superior service experience and generate loyalty will come out ahead.”