The full force of the bushfires and coronavirus are yet to hit the hotel market with strong results recorded for 2019, according to Savills.
Bushfires could lead to a 40 per cent drop in bookings taking a marked toll on the on the $61 billion tourist industry.
The effect of the COVID-19 was also yet to be seen with Chinese tourists making up 15.4 per cent share of total visitors to Australia at 1.33 million guests in 2019.
This was followed by New Zealand 14.7 per cent, USA 8.9 per cent, UK 7.7 per cent, Japan 8.8 per cent and Singapore 4.8 per cent.
|STATE||Occupancy (capital city)||Average Daily Rate (capital city)||Total Visitor Growth YOY||Share of International Market||Share of Domestic Market|
(note: market share exceeds 100pc due to visitors going to multiple states)
Source: Savills Hotels Market Update - TRA, STR
Savills hotels managing director Michael Simpson said the number nights spent by international and particularly domestic visitors continued to grow last year.
“Of the 10 Australian key markets reviewed, five markets achieved occupancy in excess of 77 per cent, reflecting the continuing growth in international and domestic visitors,” Simpson said.
“Growth in demand for rooms was achieved in seven markets; however, three of those markets were impacted by increased new room supply, resulting in an overall decline in RevPAR for those markets, as compared to the previous corresponding period.”
According to the results “beyond the constant barrage of news, property investors are sanguine and their capital appetite remains high for investment grade hotel stock”.
In 2019 a number of hotels were sold including Vibe North Sydney, Ovolo Nishi Canberra, Best Western Lake Kawana and Paradise Resort Gold Coast.
Since peak transaction levels in 2015 at $3.5 billion for 73 transactions, volume and value had decreased significantly.
In 2019 total hotel transaction value approximated $2.1 billion arising from 48 transactions “due to a number of properties being sold to and held by long term, inter-generational Asian investors who typically do not trade their assets”.
According to the market update this was causing yield compression, with high net worth investors actively seeking Australian assets due to the strength in the market and favourable net yields compared to other classes.