Move FM Australian News

SYDNEY, Australia – The hotel bubble in Australia’s largest city may have been pricked as the industry reels from an accelerating supply of new hotels, coupled with falling demand.

High ccupancies and room rates have pushed Sydney ino being one of the top performing hotel markets in the world. However this in turn has ignited a construction boom which is now bringing new hotls to the market. 

Existing hotels have been forced into refurbishing their product, in order to compete with the new hotels. Some, such as the Hyatt Rgency in Darling Harbour, have added new rooms. Already the largest hotel in Australia, the Hyatt Regency Darling Harbour now boasts around 900 rooms.

Sydney hotels are also copping a fall-off in demand, largely due to the opening of the new Sydney Harbour Convention Centre and Exhibition Halls. Because major events are forward-booked, a new facility is unable to attract bookings until completed. In the years ahead, the new convention centre will be a major bulwark for the industry, but in the meantime the next 2 or 3 years the pickings will be leaner.

In the latest market statistis, for the month of July, STR reported that supply in Sydney over the previous 12 months had increased by 5.1%.

At the same time demand fell by 2.2%.

As a result occupancy fell a whopping 7% from 87.5% to 80%.

The average daily rate (ADR) was off by 6.9%, bringing the rate below $200 (AUD) to $194.05.

Revenue per available room (RevPAR) was even worse hit, falling by 13.4% to $156.12.

July was the second consecutive month with year-over-year declines in each of the three key performance metrics. STR analysts said  the absolute ADR level was the lowest for any month since September 2014, while absolute occupancy was the lowest for a July since 2009.

“The drop in demand was partly due to fewer significant events during the month, which also translated into lower rates. For example, in July 2017, Arsenal played two matches in Sydney on its summer tour,” an STR statement said.

STR will release full July results later in August. STR regularly maintains stastics and market forecasts for a host of markets across the globe.