Marriott International, Mantra Group and AccorHotels have jumped on Australia’s “room boom” as Asian investment and visitor numbers are riding high.
GLOBAL REPORT—The Tourism Accommodation Association, part of the Australian Hotels Association, announced at an industry conference in late November that the country was experiencing a major “room boom.” Hotel operators were rushing to meet the already under-fed demand created by surging overseas visitors, which according to Tourism Australia rose by 11% in year-over-year comparisons through September.
Not since the Sydney Olympics—when 7,500 rooms were added between 1998 and 2000—had the country seen such hotel growth, the group said.
December pipeline date from STR, parent company of Hotel News Now, shows 25,917 rooms in 143 total projects in the Australia hotel pipeline. Of those projects, 54 are in construction, 20 are in final planning and 69 are in the planning stage.
With the new construction, the TAA expects hotel capacity to increase 30% by 2020.
By 2019, the association is predicting another 5,000 new rooms will come online as international visitor numbers experience nearly double-digit growth, particularly from the big-spending Chinese tourists who are increasing at a rate of 20% a year.
“There has never been a stronger vote of confidence in the Australian hotel industry,” TAA chairman and former tourism minister Martin Ferguson said. “Investment for hotel developments is coming from around the world, with China one of the leading sources of finance because Australia has proven to be a safe and reliable country for both their tourists and investors.”
Marriott growth fueled by acquisition
Sean Hunt, Marriot International’s VP for Australia, New Zealand and the Pacific, said the Starwood acquisition “has significantly increased Marriott’s distribution across Australia, bringing its total portfolio to 30, including 15 hotels in the pipeline.”
The benefits of the acquisition and Marriott’s vast global network are fueling the growth, he said, “along with soaring consumer demand for more upscale lodging options, brand strength and high returns these offer our owners.”
“One million loyalty members in the Australian market will also play a vital role in the growth strategy,” he added.
Marriott’s pipeline projects, he said, will add more than 4,500 rooms and provide 2,500 industry jobs across the region, which includes Australia, New Zealand, Samoa, Fiji and New Caledonia. Marriott hotels in the region will more than double—from 24 to 50—by 2020, he said.
Properties under development include W Brisbane, a 305-room new build which marks the W Hotels brand’s re-entry into Australia. It is set to open in Australia’s third-largest city in December 2017.
The group’s major development focus in the next few years, Hunt said, will be adding more properties to key Australian gateway cities Sydney, Melbourne, Perth and Brisbane, as well as emerging primary and secondary markets.
Hunt said strong growth in visitor arrivals to Australia has been met by a critical room shortage in Sydney and Melbourne, followed by Brisbane and Adelaide. That’s particularly the case with luxury rooms, he said. Despite some 3,800 additional rooms already signed in those markets, he said, there is still room for more, as demand outstrips supply.
In addressing the room shortage, Marriott will consolidate its brand presence in the region from a current seven to include more of its 30 brands, Craig S. Smith, Marriott’s president and managing director for Asia Pacific, said in a statement.
By the end of 2020, three new brands will enter the scene in Australia with the openings of W Brisbane; Aloft properties in Perth, Melbourne South Yarra and Adelaide; and Ritz-Carltons in Melbourne and Perth.
Smith said Marriott is in pole position for developing the largest portfolio of upscale and luxury hotels in the region, and gaining leadership in key markets.
“Our robust pipeline will go part of the way to filling the unmet demand,” he said, “with new hotels from our top-tier luxury brands.”
AccorHotels points to record performance
French hotel giant AccorHotels has more than 200 hotels in Australia, and more than 30 in New Zealand, said Simon McGrath, COO of AccorHotels Pacific, with plans to open 15 new hotels in the region in the next two to three years.
For AccorHotels, 2016 “has been marked by some record performances in terms of international and domestic travel, and the prospect of even faster arrivals as a result of an increase in air services from Asia, North America, Europe and the Middle East,” McGrath said.
Tourism growth has reaped new properties across the brands and price tiers throughout the region, he said, and that is expected to continue throughout 2017 with some of the region’s key openings.
“These include the Sofitel Sydney Darling Harbour, a 590-room luxury waterside hotel adjacent to the new International Convention Centre, and new Pullman and Ibis hotels at Brisbane Airport as part of a new $111 million development project, including an airport conference center,” McGrath said. “A new-build SO Sofitel in Auckland and a Pullman Resort in Fiji are also under construction.”
McGrath said AccorHotels is also building up its presence in the region through its recent acquisition of Fairmont, Raffles Hotels and Swissôtel Hotels & Resorts.
“Though strongest in the U.S. and Asia, those brands will also expand into Australia. For example, Swissôtel Sydney has now joined our network,” he said.
Mantra: ‘This is not a boom’
Homegrown Mantra Group, the second-largest hotel group in Australia by room numbers, also has seen bolstered growth with the signing of five new properties in Australia and New Zealand, including Peppers-branded properties in Melbourne and Queenstown, and Mantra brands in Perth and Brisbane.
As the company pursues “aggressive” international expansion from Singapore to Hawaii, CEO Bob East said, “Australia is still our core market and where we see most of our growth in the next 12-18 months,” with a total of 900 additional rooms in the strategic pipeline.
Mantra added 11 properties in 2016 across our three brands (Peppers, Mantra and BreakFree), earning it “the accolade as Australia’s fastest-growing hotel group,” East said.
“Australia is a mature market and opportunities are hard to come by, but we take a wide range of solutions to the market by offering flexible business models from hotel management agreements to leases, management letting rights of serviced apartments and franchising,” he said.
East rejected the idea of a boom, but said growth is being driven by exceptional consumer and investor confidence, as well as visitor numbers.
“There’s never been a better time to be in tourism in Australia in terms of the huge visitor economy contribution to GDP and jobs growth,” he said. “This not a ‘boom.’ It’s Australia’s new reality, given the vast emerging markets in our region. … Demand is strong, and the outlook is for sustained growth.”