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News release


Australia’s hotel development pipeline continues to trickle

Australia’s hotel development pipeline continues to trickle with growth of 241 rooms (or 7.9%) over the past ten months, according to the Jones Lang LaSalle Hotels’ most recent Australian Hotel Development Register.

Mr Troy Craig, Managing Director – Strategic Advisory, Jones Lang LaSalle Hotels said, “The development pipeline remains at an historical low with 3,300 rooms. This low level of development activity is a result of financing restrictions for new developments and high construction and land costs in Australia’s major tourism markets. It is something we are expecting to see continue over the medium term.”

Across the ten major markets of Australia the majority of rooms (65.6% or 2,165 rooms) in the development pipeline are under construction. Construction activity is most prevalent in Sydney (432 rooms), Brisbane (362 rooms) and the Gold Coast (521 rooms).

“Although Brisbane has been identified as one of the development hot spots accounting for 18.1% of rooms under construction across the ten major markets we do expect that some construction projects will be delayed, and other mooted projects deferred, while the state focuses on re-building infrastructure and housing in the aftermath of the recent flood and cyclone disasters,” said Mr Julian Whiston, Senior Vice President – Strategic Advisory, Jones Lang LaSalle Hotels.

Australian Bureau of Statistics data on short term accommodation building approval further emphasises the continued lull in hotel development activity across the major tourism markets in the medium term. “Approved buildings works to November 2010 totalled $575 million, representing a 29% decline on the 2009 figure of $805 million,” noted Mr Craig.

Should all projects either under construction and proposed proceed, the new rooms will increase existing accommodation stock by an average of 0.9% per annum in the period to the end of 2015. “This is lower than the 1.3% per annum recorded over the five years to 2010,” noted Mr Craig.

Hotel openings across Australia’s ten major markets experienced a net increase of 807 accommodation rooms (+ 0.9%) to the existing stock in the second half of 2010. Major hotel openings were concentrated in the Melbourne and Adelaide markets in contrast with the Sydney market that experienced a decline in room supply due to the closure of the Grand Mecure Darling Harbour (-112 rooms).