Occupancy levels in Melbourne drop as room boom continues

The rapid supply of new hotel rooms in Melbourne is starting to bite, according to the latest data from industry analysts STR.

It found in year-on-year comparisons that Melbourne’s supply of hotel rooms rose 4.4 percent, while demand for accommodation increased 2.9 percent.

Occupancy has fallen 1.4 per cent to sit at 85.2 percent, compared with October 2018 marking the lowest absolute occupancy levels in six years. The average daily rate has dropped by 3.5 percent to $188.95, resulting in a slump in revenue per available room (RevPAR) of almost 5 percent to $160.98.

Melbourne has seen just under 2400 rooms enter the market in 2019, while a total of 8100 hotel rooms will be added to Melbourne’s CBD, Southbank and Docklands areas over the next four years.

“STR analysts note the effect of supply growth on occupancy and ADR levels even with a rise in demand,” the research company stated. “Daily data showed performance rather consistent with the corresponding days in 2018.”

Accommodation Association CEO Dean Long is still optimistic about the long-term outlook, saying growth will continue to be sustained by the city’s year round leisure event calendar, strong business events performance and a 24 hour airport.