This article is from the Australian Property Journal archive
DESPITE concerns of oversupply in the sector, Perth’s hotels market is set for a bright future as new hotel developments replace dated offerings and state government initiatives come to fruition, according to CBRE.
CBRE Hotels senior director David Kennedy, who recently spoke at the Perth Hotel and Venue Development Seminar, said more than 50% of the current 6,710 existing rooms in the Burswood, Perth and West Perth areas were over 30 years old, and 32% over 40 years old.
“Besides the 48-room Como The Treasury hotel and The Richardson in West Perth, the city hasn’t received a new five-star hotel for some 30 years; however, the tide has turned with a surge of developed under construction across the city.
“Rather than an oversupply issue, we’re seeing a market shift – with new projects offering a range of high quality accommodation options across the city. This will take Perth in line with the other main capital city markets across the country,” he said.
Kennedy said the steady trading of hotels across Perth was further evidence of the market’s resilience.
“Hotels are outperforming other sectors of the market, such as office, industrial and residential apartments.
“There has been a lot of speculation of a hotel glut, however, if there was real panic in the air we would be seeing a sell-off of assets, whereby in reality, there is not one established city hotel for sale,” he added.
“Although hotel trading has continued to subside, they are still trading at very profitable levels, with an average daily rate of $200 and occupancies, of 80%, which is above the national average,” he continued.
Currently Perth has 1,500 rooms under construction, including five-star hotels The Westin, Intercontinental and Crown at Burswood to add to the recently completed Como The Treasury hotel.
Kennedy said there were several demand drivers that would provide a boost to existing and new hotels in the immediate to long-term.
These include State Government initiatives such as Elizabeth Quay, City Link the cultural centre, Cathedral Square and the new Burswood Stadium, in tandem with consolidation of domestic and international airports will facilitate passenger movement to the city both by rail and vehicular.
New hotels will lift the standard accommodation, which is “desperately needed”, and attract more visitors.
“We will endure the economic gloom over the next 18 months, but that provides a prime time to develop. The predication is that Perth will sing in 2020 when government and private development is established and the economy rebounds,” Kennedy said.
CBRE’s Q1 Australia Hotel Market View found WA, along with NSW and QLD, were the top destinations for domestic travellers, accounting for 75% of national visitor nights in 2015.
“The weakened Australian dollar is a major attraction for international visitors and also means domestic visitors are being forced to cut back on international travel and holiday locally. This is subsequently assisting occupancy rates across the Perth market,” Kennedy said.
There were record tourist levels recorded by CBRE in 2015, with an 8% rise in international visitors to 6.9 million, and a 7% rise in domestic tourism to 87 million.
Australian Property Journal
