Vacancy rates to rise in two cities as hotel boom rolls on

A new Deloitte Access Economics report suggests vacancy rates in Melbourne and Perth could creep up as new hotels open.

Thirty-two new accommodation properties are expected to open in Melbourne alone over the next two years as Australia’s tourism industry continues its growth trajectory.

Deloitte Access Economics partner Adele Labine-Romain says Melbourne will see 6,500 new rooms added to its existing stock of about 20,000 in the next 24 months, pushing its occupancy rate below 80 per cent in 2020.

Ritz-Carlton at Elizabeth Quay to add to the city’s supply.

Perth hotels are also feeling the squeeze, with a number of new properties to open, including a Ritz-Carlton at Elizabeth Quay, pushing its vacancy rate below 70 per cent in 2020.

“Travellers to Melbourne and Perth will be able to take advantage of some good prices in those markets,” Labine-Romain said.

“In the short term there will be some good value. … there will be a period of adjustment for the market.”

While Perth and Melbourne may see a dip in room rates, the national trend is still upwards, increasing 2.4 per cent a year over the next three years and exceeding $200 a night by 2021.