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News release

Sydney

Strong CBD occupancy levels drive rate growth for hotels


Continuing on the solid growth trajectory witnessed in the second half of 2010, Australia’s major CBD hotel markets have traded strongly in the first seven months of 2011 according to Jones Lang LaSalle Hotels’ review of the latest STR Global data.

Mr Craig Collins, CEO – Australasia Jones Lang LaSalle Hotels said, “The major CBD markets are maintaining strong year-to-date (YTD) occupancy levels with Sydney (85.8%), Perth, (83.2%), Melbourne (80.5%) Brisbane (78.3%) and Adelaide (73.9%) all experiencing strong demand conditions.” He added, “A number of Australia’s major CBD markets are trading at near full capacity and hotel operators are capitalising on these strong occupancy platforms by driving room rates.” 

Notably, this trend has seen most of the major CBD markets record solid YTD average room rate growth against the corresponding period with Brisbane (+9.2%), Sydney (+7.1%) and Melbourne (+2.4%) all doing well. The standout performer has been Perth recording YTD double digit rate growth of 10.3%. “Continuing supply constraints across the key Australian CBD markets combined with already strong occupancy levels will see room rates continue to grow over the short to medium term,” said Mr Collins. 

Against this backdrop, revenue per available room (RevPAR) has experienced an equally significant increase with Perth, Sydney and Brisbane now all trading above their respective 2008 peaks.  Mr Collins said, “In terms of RevPAR growth, Sydney, Melbourne and Brisbane have all posted strong gains of between 5% and 7% with Perth posting a staggering 13.4% increase.” He added, “This level of growth further emphasises why there is heightened investor demand for hotel assets in each of these markets.”

 “Underpinned by strong fundamentals across the key CBD markets, hotel trading is expected to continue on this positive growth trend. As a result we are seeing strong investor interest with buyers pricing potential acquisitions on forecast earnings as opposed to historical performance,” noted Mr Collins.