Optimism Down Under: Hoteliers retain confident outlook
Optimism Down Under: Hoteliers retain confident outlook
27 JULY 2016 9:11 AM

A resilient hotel industry in Australia has kept owners and operators looking ahead to more opportunity as global travelers increase trips to the country, according to speakers at HotelsWorld in Sydney.

SYDNEY—The resiliency of the Australian hotel industry remains its biggest ally as it fends off global political unrest, terrorism and economic uncertainties, according to speakers at the HotelsWorld main event Wednesday at the Sofitel Sydney Wentworth.

But like most other regions, industry pundits here wonder when the good times will end.

“The reality is the industry has had an incredible run,” said John Smith, conference chair and CEO of HTL Capital Advisors, during his opening address. He cited political instability and a succession of underwhelming leaders in the region and wondered what the world would be like if Donald Trump becomes President of the United States. “The question is how much longer (will the run last).”

That ‘incredible run’ is not lost on investors, according to Jesper Palmqvist, area director-Asia Pacific for STR, parent company of Hotel News Now.

“Australia is really a rare force with its stable growth—six years now with between 2% to 4% (revenue-per-available-room) growth,” Palmqvist said. “That’s absolutely why foreign investors look here. They look here because there’s stable growth over a long period of time. It’s mostly rate these days because occupancy in Australia is comparatively flat.”

Industry leaders who participated in the “Plot thickens, pace quickens (again): CEO’s hard talk” panel were equally optimistic.

“From all the data points we’ve seen, from supply, demand, RevPAR performance from the trending perspective that needs to be leveraged at all costs, because come 2020 or beyond, times may become a little bit (rougher),” said Thorsten Kirschke, president of the Asia Pacific for Carlson Rezidor Hotel Group. “Let’s not take a short-term perspective on this industry, particularly in this part of the world. We are in the biggest growth engine here … we should be very positive about the opportunity.”

Bob East, CEO of Mantra Group, agreed.

“We should be overwhelmingly positive about our industry and its place in the emerging service economy,” East said. “We have never been in a better position where we’ve got support of government, we’ve got support of our industry and an obvious increase in demand drivers coming to our marketplace. … I’m very excited about the prospects for our industry in the short term, the medium term and the long term.”

That doesn’t mean there aren’t things missing. Like most countries, Australia has opportunities to improve its own lot, according to East.

“We do continue to look for visa reform to make it easier for people to visit our shores,” he said. “We do look for infrastructure build; we look for better aviation access because the size of the prize is enormous. We’ve never had it better but it can be exponentially better again.”

Infrastructure improvements will help the country achieve its goal of dramatically increasing the spend by international visitors, and increase the number of international visitors to 45% of total travelers in the country, said Karen Halbert, executive general manager of corporate affairs, government and industry for Tourism Australia, during the “More than a million reasons to be optimistic” session.

Like many countries, Australia is looking to Chinese travelers as a way to increase its international travel base. According to data from Tourism Australia, more than 1 million Chinese visitors traveled to the country in the 12 months ending with March, which is a 22% increase from the same period a year ago. Those visitors spent 41.1 million visitor nights (+15%) and had an average trip spend of more than 8,000 Australian dollars. Two-thirds of those visitors are under age 35.

“China’s been a major driving force for us, the last year, two years,” said Kerrie Mather, managing director & CEO of Sydney Airport. She cited India, Vietnam, the Philippines and Indonesia as other countries with growing middle classes that will eventually travel more.

The speakers also cited the United States as a primary target for visitor growth. Halbert said Tourism Australia expects visitors from America to spend as much AU$4.5 billion annually in Australia by 2020, which is an increase of nearly a billion dollars from the 12-month spend ending in March 2016. The U.S. sent 637,000 visitors to Australia during the 12-month period ending in March, which is a 12.5% increase from the previous 12-month period.

Slides of the day

International visitors from around the world are making an impact on Australia’s hotel industry. This slide presented by Karen Halbert of Tourism Australia shows the increase in visitors from specific countries as well as the increases in their spend while in the country. (Source: Tourism Australia)
Sydney’s hotel industry has been on a roll, according to data presented by STR’s Jesper Palmqvist. This slide shows the compression nights experienced by Australia’s largest city during 2015. “It’s a different conversation with GMs and revenue managers in Sydney than anywhere else (because of this landscape),” Palmqvist told attendees. (Source: STR)

Quotes of the day:
“It’s like an arms race for tourism around the world at the moment. We have to work hard to provide that intimate experience to make it easier when they come to the country.”
Kerrie Mather of Sydney Airport

“Social media’s had a big effect on the industry in totality. … The consumer is more and more determining what that brand actually is via social media. The consumer is very focused on experiential hospitality and they’re communicating that across a variety of mediums. We can think we’re in this sector, but if we’re not delivering that or a consumer doesn’t believe that, it’s getting broadcast pretty clearly, and it can be positive or negative.”
Barry Robinson, president and managing director of Wyndham Hotel Group South East Asia and Wyndham Vacation Resorts Asia Pacific, during the “Plot thickens” session.

“If you’re still using the same content to inspire it’s just out there because everyone looks the same.
Now to inspire, you kind of have to break out in a very different way. You have to tell your story in a more cinematic way. It is no longer OK for hotels to have a functional way to show their product. This is where a lot of hotel groups are having a hard time.”
Morris Sim, CEO and co-founder, Circos Brand Karma

Picture of the Day

Andrew Dunn (center), hotels development manager for TFE Hotels, makes a point during a coffee break Wednesday as Craig Bond (left), VP of operations for Oakwood Asia Pacific Limited and Ruwan Peiris, director of operations of Australia for InterContinental Hotels Group, listen. (Photo: Jeff Higley)

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