Darwin and Gold Coast top performers edging out Cairns, as revenue per room grows
Gold Coast and Darwin shone as Australia’s best performing hotel markets over the last 12 months, edging Cairns from the top spot – a position that the far North Queensland destination has held for a number of years.
20 Aug 2018
This was a key outtake from CBRE’s latest Hotels MarketView report for Q2 2018, which found the Commonwealth Games had significantly contributed to raising RevPAR (revenue per available room) on the Gold Coast by 49% in April 2018, when compared to the previous year. RevPAR highs continued throughout May and June, putting the sparkle back into the Gold Coast economy.
CBRE Senior Research Manager Danny Lee said the Gold Coast had been an extremely strong performing during the Commonwealth Games and this continued even after the Games, across all major indicators (ADR, RevPAR and occupancy) – suggesting that the market was back on its feet after a turbulent 2017.
“Tourism is experiencing a surge, and the Gold Coast is popular with domestic and international tourists. Growth in visitor nights by international travellers is forecast to increase by 6.8% per annum over the next five years, which is one of the strongest forecasts across all markets,” Mr Lee said.
“Infrastructure development in the Gold Coast including the $1 billion light rail network, expansion of the Gold Coast Airport, and an emerging health, wellness and knowledge precinct are factors which are attractive for business, population migration and tourists.”
CBRE Hotels National Director Wayne Bunz added; “The Commonwealth Games has put the Gold Coast on the world stage. You cannot beat that kind of worldwide exposure, and this is expected to lead to strong hotel market performance, off the back of growth in tourist arrivals.”
CBRE’s MarketView shows that Darwin was the best performing market over the past 12 months, achieving the highest RevPAR increase across major Australian cities. Hotel operators deployed a strategy of cutting room rates substantially to encourage guests to book room nights. This is a turn-around for Darwin as it has struggled since 2014 with a severe economic downturn.
The report states Darwin registered an annual RevPAR increase of 8.2% to $113, while occupancy grew by 7.8% to 75.2% and ADR was up by 0.3% to $150. Comparably, the Gold Coast RevPAR increased by 7.1% off the back of a 2% increase (to 72.8%) in occupancy and a 5% increase in ADR to $197.
Cairns also performed strongly and posted increases across all major indicators. Occupancy grew 0.7% to 84.6%, whilst ADR rose 5.0% to $152 per night, which resulted in RevPAR posting an increase of 5.7% to $128.
The strength of the market, which has not seen a new hotel open in almost 20 years, is attracting interest from developers, with Rydges Tradewinds Cairns currently being redeveloped and is scheduled to open its refurbished doors in September this year. Two new hotels, Abbott Street Hotel that is scheduled to open in 2019 and a Bellview site scheduled for opening in 2020 will see more than 600 new rooms come to market.
On a national level, CBRE’s MarketView shows that international visitor arrivals reached a record high of 8.3 million, up 7.5% on 2017. Annual RevPAR for the year ending June 2018 jumped 3.2% to $144, ADR grew by 1.7% to reach $188 and occupancy recorded 1.4% growth to 76.4%.
The report also highlights that the national supply pipeline in markets such as Hobart, Perth and Melbourne could have a detrimental effect on the performance of those markets as they struggle to cope with a large influx of rooms.
On the investment front, the MarketView highlighted that notable transactions included the sale of Bell City Hotel in Melbourne’s Preston to Gaw Capital for $157 million, following the sale of Brisbane’s Emporium Hotel to Ovolo, for $38 million and Metro Hotel Tower Mill was sold to Interstay Holdings Pty Ltd for $10 million.
Mr Bunz said; “Whilst buyers remain active in the market, the lack of quality stock available, especially at the top end of the market, is limiting transaction volumes. Foreign investors continue to see Australia as a core market and any large assets will generate considerable interest.”For Australian/international news or global stories, follow us on Twitter: @cbreaustralia
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at https://www.cbre.com.