AUSTRALIAN HOTEL MARKET UPDATE 2015 IN REVIEW€¦ · 4 PERFORMANCE (Year Ending Dec 2015) Source:...
Transcript of AUSTRALIAN HOTEL MARKET UPDATE 2015 IN REVIEW€¦ · 4 PERFORMANCE (Year Ending Dec 2015) Source:...
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1. Australian Hotel Markets Snapshot 1
2. Snapshot per Key Australian Market 2
3. Australian Hotel Development Pipeline 12
4. New Zealand Update 13
5. Australian Hotel Sales 14
6. Australian Hotel Yields 15
7. A Year of Consolidation 17
8. Are We Talking About the Same ADR? 18
9. Australian Outlook for 2016 19
10. CBRE Hotels Services 20
TABLE OF CONTENTS
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% Change
Adelaide -2.3%
Brisbane -10.9%
Cairns +9.3%
Canberra / ACT +5.8%
Darwin -15.2%
Gold Coast +7.2%
Hobart +9.6%
Melbourne +3.6%
Perth -2.7%
Sydney +8.4%
AUSTRALIAN HOTEL MARKETS SNAPSHOT
Australia +3.2%
Source: STR Global, CBRE Hotels
Page 1
OCC & ADR CHANGE VS LAST YEAR (Year Ending Dec 2015 vs 2014)
Note: in transition means one indicator (OCC or ADR) is positive and the other negative
REVPAR Year Ending Dec 2015
vs 2014
While there are growing fears that the Australian economy is in for a rough ride in 2016 due to domestic pressures and external factors, such as Chinese growth declining, the tourism industry is
not one that is likely to be suffering.
With record breaking visitor levels for 2015 came rising occupancy and ADR levels resulting in increases in RevPAR nationally of 3.2%. These gains were not seen across the board however, as
Perth and Darwin continue to suffer owing to the mining sector slowdown, and the recent supply increases in Brisbane have put downward pressure on results. Air Asia’s decision to stop flying
into Adelaide, coupled with the Adelaide Convention Centre having a limited calendar in 2015, have resulted in falling occupancy levels, and thus RevPAR, for the South Australian capital.
The Sydney and Melbourne markets show no sign of slowing down, but it is the more regional markets of Cairns, Hobart and Gold Coast that are the standout performers, benefitting from more
locals having to holiday at home due to a weakened Australian dollar, and the high levels of overseas visitors. The nation’s capital continues to perform surprisingly well, and with the recent
announcement by Singapore Airlines to fly there directly, this trend is set to continue for 2016.
RevPAR growth
RevPAR decline
Adelaide
Brisbane
Cairns
Canberra/
ACT
Melbourne
Perth
Sydney
Gold
Coast
Darwin
Hobart
-18%
-14%
-10%
-6%
-2%
2%
6%
10%
14%
18%
-18% -14% -10% -6% -2% 2% 6% 10% 14% 18%
%∆
A
DR vs Last Year
%∆ OCC vs Last Year
GROWTH
DECLINE
IN TRANSITION
IN TRANSITION
4
PERFORMANCE (Year Ending Dec 2015)
Source: STR Global, CBRE Hotels
1Based on visitor nights
Source: TRA, CBRE Hotels VFR: Visiting friends and relatives
Selected Recent Openings (in Last 12 Months)
Peppers Adelaide Hotel1 5 202 keys Sep-2015
SUPPLY (YE Dec 2015)
Existing Hotels, Motels and Serviced Apartments: 109 (8,191 rooms)
Dominant Source Markets1
1. Victoria
2. New South Wales
3. Queensland
ADELAIDE
ADR
AU$150.14
OCC
76.8%
VS. 2014
-2.3% Length of Stay
2.7 days
Visitors (‘000): 1,178
Visitor Nights (‘000): 3,208
Page 2
The decision by Air Asia to stop flights into Adelaide at the end of 2014 and reduced
conference activity at the Adelaide Convention Centre contributed to decreased room demand
during 2015. The completion of the Adelaide Oval and new footbridge linking the CBD with
that facility were significant in terms of attendances to this venue and will increase substantially
during 2016. The new Adelaide Hospital and adjacent SA University developments will be
completed later in 2016 whilst the new 3,500 seat Plenary Theatre and additional function
space at the Adelaide Convention Centre will be completed in 2017. No new room supply is
expected in 2016; this will provide the market an opportunity to consolidate. The relativity of
the Australian dollar should see increased domestic travel and low oil prices should contribute
to air fare discounting; both are considered beneficial attributes to the Adelaide market.
CBRE Hotels anticipates that 2016 will see growth in both ADR and occupancy reflecting a
RevPAR increase of 2.5% to 3.0%.
REVPAR
AU$115.26
DEMAND for Hotels, Motels and Serviced Apartments (YE Sep 2015)
Source: STR Global, CBRE Hotels 1
Rebrand / Refurbishment
Selected Projects Likely to Proceed
Holiday Inn Express Adelaide 4 245 keys Apr-2017
Aloft Adelaide (New Mayfield) 4.5 200 keys Jan-2018
Lester Hotel 4.5 244 keys 2018
Selected Mooted Projects
Sheraton Adelaide 4.5 160 keys May-2019
Sofitel Adelaide 5 252 keys Jun-2019
Adelaide Airport Hotel 4 260 keys Dec-2025
Source: STR Global, CBRE Hotels
Note: in transition
means one
indicator (OCC or
ADR) is positive
and the other
negative
OCC & ADR CHANGE VS LAST YEAR Note: OCC tracks horizontally and ADR vertically
RevPAR growth
RevPAR decline
75%
25%
Visitor Nights
Domestic International
87%
13%
Visitor Arrivals
42%
34%
14%
10%
Purpose of Visit1
Holiday
Business
VFR
Other
Q1 2015
vs '14
Q2 2015
vs '14
Q3 2015
vs '14
Q4 2015
vs '14
-7%
-5%
-3%
-1%
1%
3%
5%
7%
-7% -5% -3% -1% 1% 3% 5% 7%
%∆
A
DR vs Last Year
%∆ OCC vs Last Year
GROWTH
DECLINE
IN TRANSITION
IN TRANSITION
5
PERFORMANCE (Year Ending Dec 2015)
Source: STR Global, CBRE Hotels
2Based on visitor nights
Source: TRA, CBRE Hotels VFR: Visiting friends and relatives
Selected Recent Openings (in Last 12 Months)
Capri by Fraser 4.5 239 keys Mar-2015
SUPPLY (YE Dec 2015)
Existing Hotels, Motels and Serviced Apartments: 210 (15,835 rooms)
Dominant Source Markets2
1. Queensland
2. New South Wales
3. Victoria
BRISBANE
ADR
AU$173.57
OCC
74.4%
VS. 2014
-10.9% Length of Stay
2.6 days
Page 3
An increase in room supply over and above demand has seen the Brisbane market occupancy
levels fall and room rates decline as hotels compete for market share. STR Global results for
the 12 months to December 2015 indicate rooms available increased by 6.7% over the same
period in 2014, whilst rooms sold increased by 2.4%, resulting in a decline of 4.0% in
occupancy. Over the same period, room rates declined by 7.2% with RevPAR reflecting a fall
of 10.9%. The RevPAR decline was magnified somewhat as results were measured off 2014
results which was boosted by the G20 held in November 2014. With a number of new
developments under way and significant supply mooted, it is anticipated that ongoing supply
will exceed demand for the medium term, resulting in lower occupancy levels and further
declines in RevPAR. Over the longer term, however, Brisbane’s outlook is considered positive
with increased demand being generated by infrastructure development, new supply and world
class facilities.
REVPAR
AU$129.06
Source: STR Global, CBRE Hotels
Selected Properties Under Construction
Rydges RNA Hotel 4 208 keys Feb-2016
Holiday Inn Express 4 226 keys Jun-2016
Ibis Styles Brisbane 3.5 368 keys 2016
Emporium Southpoint 5 142 keys Dec-2017
W Brisbane 5 305 keys Jan-2018
Selected Projects Likely to Proceed
Westin Brisbane 5 286 keys Jan-2018
42 James Street 5 178 keys Sep-2018
DEMAND for Hotels, Motels and Serviced Apartments (YE Sep 2015)
Visitors (‘000): 2,337
Visitor Nights (‘000): 6,042
Source: STR Global, CBRE Hotels
Note: in transition
means one
indicator (OCC or
ADR) is positive
and the other
negative
OCC & ADR CHANGE VS LAST YEAR Note: OCC tracks horizontally and ADR vertically
RevPAR growth
RevPAR decline
71%
29%
Visitor Nights
Domestic International
81%
19%
Visitor Arrivals
41%
38%
11%
10%
Purpose of Visit1
Business
Holiday
VFR
Other
Q1 2015
vs '14
Q2 2015
vs '14
Q3 2015
vs '14
Q4 2015
vs '14
-20%
-16%
-12%
-8%
-4%
0%
4%
8%
12%
16%
20%
-13%-11%-9% -7% -5% -3% -1% 1% 3% 5% 7% 9% 11%13%
%∆
A
DR vs Last Year
%∆ OCC vs Last Year
GROWTH
DECLINE
IN TRANSITION
IN TRANSITION
6
PERFORMANCE (Year Ending Dec 2015)
Source: STR Global, CBRE Hotels
1Based on visitor nights
Source: TRA, CBRE Hotels VFR: Visiting friends and relatives
Selected Mooted Projects
Aquis Great Barrier Reef Resort
(8 luxury resorts)
5 7,500 keys 2020
SUPPLY (YE Dec 2015)
Existing Hotels, Motels and Serviced Apartments: 92 (7,352 rooms)
Dominant Source Markets1
1. Queensland
2. New South Wales
3. China
CAIRNS
ADR
AU$129.92
OCC
80.6%
VS. 2014
+9.3% Length of Stay
3.5 days
Page 4
Cairns continues to be one of the best performers in the market, exceeding market
expectations and recording a strong recovery from a low base. Based on STR Global results
for the 12 months to December 2015, RevPAR increased by 9.3% with market occupancy of
80.6%; however, ADR and RevPAR remain well below other destinations. Cairns is currently
witnessing a strong rebound in international and domestic tourist arrival numbers as a result of
increased air capacity into the region, especially from Asia. There are a lack of developments
in the pipeline but recent transactions including the Pullman Cairns International and Pacific
Hotel Cairns reflect renewed interest in existing properties and an increase in value levels.
REVPAR
AU$104.77
Source: STR Global, CBRE Hotels
OCC & ADR CHANGE VS LAST YEAR Note: OCC tracks horizontally and ADR vertically
DEMAND for Hotels, Motels and Serviced Apartments (YE Sep 2015)
Visitors (‘000): 1,008
Visitor Nights (‘000): 3,482
Source: STR Global, CBRE Hotels
Note: in transition
means one
indicator (OCC or
ADR) is positive
and the other
negative
RevPAR growth
RevPAR decline
56% 44%
Visitor Nights
Domestic International
55% 45%
Visitor Arrivals
76%
12%
6%
6%
Purpose of Visit1
Holiday
Business
VFR
Other
Q1 2015
vs '14
Q2 2015
vs '14
Q3 2015
vs '14
Q4 2015
vs '14
-11%
-9%
-7%
-5%
-3%
-1%
1%
3%
5%
7%
9%
11%
-11% -9% -7% -5% -3% -1% 1% 3% 5% 7% 9% 11%
%∆
A
DR vs Last Year
%∆ OCC vs Last Year
GROWTH
DECLINE
IN TRANSITION
IN TRANSITION
7
PERFORMANCE (Year Ending Dec 2015)
Source: STR Global, CBRE Hotels
2Based on visitor nights
Source: TRA, CBRE Hotels VFR: Visiting friends and relatives
Selected Recent Openings (in Last 12 Months)
Little National Hotel 4 120 keys Sep-2015
Adobe Narrabundah 4 86 keys Sep-2015
Vibe Hotel Canberra Airport 4.5 191 keys Nov-2015
SUPPLY (YE Dec 2015)
Existing Hotels, Motels and Serviced Apartments: 73 (7,032 rooms)
Dominant Source Markets2
1. New South Wales
2. Victoria
3. Queensland
CANBERRA / ACT
ADR
AU$164.19
OCC
73.6%
VS. 2014
+5.8% Length of Stay
2.3 days
Page 5
The nation’s capital posted increases across the major measures of hotel performance,
including occupancy rates at 76.6%, and RevPAR up 5.8% on the same period last year.
These increases are driven mainly by domestic visitors, however with the announcement of
Singapore Airlines flying direct to Canberra from both Singapore and Wellington, expect to
see increases in the number of international visitors in 2016.
New stock is continuing to come into the market, with three new hotels coming online in the
last few months which coincides nicely with the opening of the new Singapore Airline route, so
there should be no supply issues for any potential increases in international visitors.
REVPAR
AU$120.77
Source: STR Global, CBRE Hotels
Selected Properties Under Construction
Mantra Canberra Hotel 4 176 keys Feb-2017
Selected Mooted Projects
Canberra Bowling Club Hotel TBA 80 keys TBA
Campbell 5 TBA 150 keys TBA
Malmo Bruce Hotel TBA 60 keys TBA
OCC & ADR CHANGE VS LAST YEAR Note: OCC tracks horizontally and ADR vertically
DEMAND for Hotels, Motels and Serviced Apartments (YE Sep 2015)
Visitors (‘000): 1,090
Visitor Nights (‘000): 2,533
Source: STR Global, CBRE Hotels
Note: in transition
means one
indicator (OCC or
ADR) is positive
and the other
negative
RevPAR growth
RevPAR decline
90%
10%
Visitor Nights
Domestic International
94%
6%
Visitor Arrivals
46%
33%
14%
7%
Purpose of Visit1
Business
Holiday
VFR
Other
Q1 2015
vs '14
Q2 2015
vs '14
Q3 2015
vs '14 Q4 2015
vs '14
-11%
-9%
-7%
-5%
-3%
-1%
1%
3%
5%
7%
9%
11%
-11% -9% -7% -5% -3% -1% 1% 3% 5% 7% 9% 11%
%∆
A
DR vs Last Year
%∆ OCC vs Last Year
GROWTH
DECLINE
IN TRANSITION
IN TRANSITION
8
PERFORMANCE (Year Ending Dec 2015)
Source: STR Global, CBRE Hotels
2Based on visitor nights
Source: TRA, CBRE Hotels VFR: Visiting friends and relatives
Selected Recent Openings (in Last 12 Months)
Argus Apartments Darwin
4.5 101 keys Jun-2015
Top End 105 Mitchell Street
4.5 180 keys Aug-2015
Oaks Elan Darwin1
4.5 218 keys Sep-2015
Rydges Palmerston 4 200 keys Sep-2015
SUPPLY (YE Dec 2015)
Existing Hotels, Motels and Serviced Apartments: 44 (5,120 rooms)
Dominant Source Markets2
1. Victoria
2. New South Wales
3. Queensland
DARWIN
ADR
AU$170.70
OCC
67.4%
VS. 2014
-15.2% Length of Stay
5.0 days
Page 6
The Darwin market continues its struggles, with both occupancy rates and ADR falling 7.8%
and 7.9% respectively. This in turn has resulted in a further fall of 15.2% in RevPAR compared
to 2014. The contraction in the mining industry has played a big part in this decline, but so
has the increased levels of new supply entering the market.
This decline may well be the market normalizing after better than average results during the
off-peak seasons in recent years and could be a sign of things to come.
REVPAR
AU$114.97
Source: STR Global, CBRE Hotels 1Rebrand / Refurbishment
2Extension
Selected Properties Under Construction
Club Tropical Resort Darwin2 4 104 TBA
Selected Projects Likely to Proceed
85 Mitchell Street TBA 200 keys Jan-2017
Casuarina Shell Site TBA 175 keys 2018
Gateway Shopping Centre TBA 195 keys 2019
OCC & ADR CHANGE VS LAST YEAR Note: OCC tracks horizontally and ADR vertically
DEMAND for Hotels, Motels and Serviced Apartments (YE Sep 2015)
Visitors (‘000): 362
Visitor Nights (‘000): 1,799
Source: STR Global, CBRE Hotels
Note: in transition
means one
indicator (OCC or
ADR) is positive
and the other
negative
RevPAR growth
RevPAR decline
75%
25%
Visitor Nights
Domestic International
87%
13%
Visitor Arrivals
38%
37%
13%
12%
Purpose of Visit1
Holiday
Business
Employment
Other
Q1 2015
vs '14
Q2 2015
vs '14
Q3 2015
vs '14
Q4 2015
vs '14
-15%
-13%
-11%
-9%
-7%
-5%
-3%
-1%
1%
3%
5%
7%
9%
11%
13%
15%
-15%-12% -9% -6% -3% 0% 3% 6% 9% 12% 15%
%∆
A
DR vs Last Year
%∆ OCC vs Last Year
GROWTH
DECLINE
IN TRANSITION
IN TRANSITION
9
PERFORMANCE (Year Ending Dec 2015)
Source: STR Global, CBRE Hotels
2Based on visitor nights
Source: TRA, CBRE Hotels VFR: Visiting friends and relatives
SUPPLY (YE Dec 2015)
Existing Hotels, Motels and Serviced Apartments: 170 (17,004 rooms)
Dominant Source Markets2
1. New South Wales
2. Queensland
3. Victoria
GOLD COAST
ADR
AU$174.01
OCC
72.5%
VS. 2014
+7.2% Length of Stay
3.5 days
Page 7
With increased international visitor numbers, the Gold Coast market has recorded an increase
in both occupancy and ADR. STR Global results for the year ending December 2015 reflected
an increase in RevPAR of 7.2%. This recovery has buoyed investor confidence, with a number
of recent transactions reflecting strong growth in value levels. The upcoming 2018
Commonwealth Games will see an expansion of infrastructure including major upgrades to
the airport and will spotlight the destination. The Gold Coast hotel market has enjoyed
relatively stable supply over the last five years and going forward, the supply outlook looks
relatively benign. Increased demand from both domestic and international visitors is expected
to result in continual growth in both occupancy and ADR over the short and medium term.
REVPAR
AU$126.21
OCC & ADR CHANGE VS LAST YEAR Note: OCC tracks horizontally and ADR vertically
DEMAND for Hotels, Motels and Serviced Apartments (YE Sep 2015)
Visitors (‘000): 2,079
Visitor Nights (‘000): 7,263
Selected Properties Under Construction
Jupiter's Casino Hotel2 5 80 Nov-2017
Jewel Luxury Resort 5 153 Dec-2018
Selected Mooted Projects
Orchid Avenue Short Term
Accommodation Building
TBA 178 2018
Source: STR Global, CBRE Hotels 2Extension
74%
26%
Visitor Nights
Domestic International
76%
24%
Visitor Arrivals
Source: STR Global, CBRE Hotels
Note: in transition
means one
indicator (OCC or
ADR) is positive
and the other
negative
RevPAR growth
RevPAR decline
79%
13%
6% 2%
Purpose of Visit1
Holiday
Business
VFR
Other
Q1 2015
vs '14
Q2 2015
vs '14
Q3 2015
vs '14
Q4 2015
vs '14
-7%
-5%
-3%
-1%
1%
3%
5%
7%
-7% -5% -3% -1% 1% 3% 5% 7%
%∆
A
DR vs Last Year
%∆ OCC vs Last Year
GROWTH
DECLINE
IN TRANSITION
IN TRANSITION
10
PERFORMANCE (Year Ending Dec 2015)
Source: STR Global, CBRE Hotels
1Based on visitor nights
Source: TRA, CBRE Hotels VFR: Visiting friends and relatives
Selected Properties Under Construction
Macquarie Wharf Shed Hotel 4.5 114 keys Dec-2016
Crowne Plaza Hobart 4.5 187 keys Oct-2017
SUPPLY (YE Dec 2015)
Existing Hotels, Motels and Serviced Apartments: 53 (2,806 rooms)
Dominant Source Markets1
1. Victoria
2. New South Wales
3. Tasmania
HOBART
ADR
AU$163.63
OCC
81.7%
VS. 2014
+9.6% Length of Stay
3.1 days
Page 8
The Hobart market enjoyed a bumper 2015 with average occupancy just below 82% and ADR
growing by 3.8% to $164. The average occupancy level is suggestive of a market which operates
regularly to capacity. It is these peak trading periods which will provide the platform for demand
growth to cater for the new room supply during 2017, 2018 and 2019 which will swell supply by
over 36%. The accolade from Lonely Planet which nominated Tasmania as one of the world’s
‘must-see’ regions in its ‘Best in Travel 2015’ and the visit in November 2014 by China’s
President are two important foundations for inbound growth. Increased domestic airline capacity
and the introduction of direct international flights into Hobart are considered essential to this
market, both are demand sensitive which means that management of Tasmania’s tourism
becomes the most important ingredient to medium term outcomes. CBRE Hotels’ pragmatic view
is that occupancy levels will decline variously by 5% to 8% over the three year supply period
mentioned; the resultant impact on average market RevPAR forecast to fall by 2% to 4% per
annum.
REVPAR
AU$133.65
Source: STR Global, CBRE Hotels
Selected Mooted Projects
HOMO at MONA 4 90 keys May-2017
Former Roberts Building 4 80 keys Aug-2017
OCC & ADR CHANGE VS LAST YEAR Note: OCC tracks horizontally and ADR vertically
DEMAND for Hotels, Motels and Serviced Apartments (YE Sep 2015)
Visitors (‘000): 690
Visitor Nights (‘000): 2,123
Source: STR Global, CBRE Hotels
Note: in transition
means one
indicator (OCC or
ADR) is positive
and the other
negative
RevPAR growth
RevPAR decline
83%
17%
Visitor Nights
Domestic International
87%
13%
Visitor Arrivals
73%
16%
10%
1%
Purpose of Visit1
Holiday
Business
VFR
Other
Selected Projects Likely to Proceed
Argyle Street
4 120 keys May-2018
Q1 2015
vs '14
Q2 2015
vs '14
Q3 2015
vs '14 Q4 2015
vs '14
-11%
-9%
-7%
-5%
-3%
-1%
1%
3%
5%
7%
9%
11%
-11% -9% -7% -5% -3% -1% 1% 3% 5% 7% 9% 11%
%∆
A
DR vs Last Year
%∆ OCC vs Last Year
GROWTH
DECLINE
IN TRANSITION
IN TRANSITION
11
PERFORMANCE (Year Ending Dec 2015)
Source: STR Global, CBRE Hotels
1Based on visitor nights
Source: TRA, CBRE Hotels VFR: Visiting friends and relatives
Selected Recent Openings (in Last 12 Months)
BreakFree on Collins1
4 193 keys Jun-2015
SUPPLY (YE Dec 2015)
Existing Hotels, Motels and Serviced Apartments: 365 (32,032 rooms)
Dominant Source Markets1
1. New South Wales
2. Queensland
3. Victoria
MELBOURNE
ADR
AU$186.99
OCC
82.8%
VS. 2014
+3.6% Length of Stay
2.9 days
Page 9
Demand growth is currently constrained by lack of room supply. All facets of room demand
sources are considered strong, with a particular emphasis on inbound tourism. There remains
some price sensitivity in the market however with ADR growth in 2015 reflecting an increase
over 2014 of only 1.3%. During the period 2017 to 2019 it is likely that an additional 3,500
new rooms will be added to supply; this will test market resilience but provide operators with
their first real opportunity to promote Melbourne as a destination with the confidence of
sufficient supply to cater for the demand. Nevertheless, we expect occupancy levels to fall
from the current (2015) level of 83% to the upper mid 70% levels, given the quantity of new
room supply. ADR should register annual growth in the 2% to 3% range. Melbourne’s
calendar remains the envy of other Australian capital cities with a broad base of international
and domestic sporting, cultural and convention based events which has and will continue to
drive high yielding opportunities and provide fertile ground for room demand growth.
REVPAR
AU$154.91
Source: STR Global, CBRE Hotels 1Rebrand / Refurbishment
Selected Properties Under Construction
QT Hotel Melbourne 4 188 keys May-2016
Peppers Docklands 4.5 87 keys Dec-2016
Punt Hill Apartments 4
130 keys Aug-2017
Selected Projects Likely to Proceed
Parkroyal Docklands 5 281 keys Jul-2017
Four Points Docklands 4 320 keys Jan-2017
Aloft Melbourne 4.5 312 keys Aug-2017
80 Collins Street 5 250 keys Sep-2018
Crown Resorts Hotel 4.5 408 keys Jun-2019
OCC & ADR CHANGE VS LAST YEAR Note: OCC tracks horizontally and ADR vertically
DEMAND for Hotels, Motels and Serviced Apartments (YE Sep 2015)
Visitors (‘000): 5,230
Visitor Nights (‘000): 15,055
Source: STR Global, CBRE Hotels
Note: in transition
means one
indicator (OCC or
ADR) is positive
and the other
negative
RevPAR growth
RevPAR decline
67%
33%
Visitor Nights
Domestic International
79%
21%
Visitor Arrivals
49%
34%
10%
7%
Purpose of Visit1
Holiday
Business
VFR
Other
Q1 2015
vs '14
Q2 2015
vs '14 Q3 2015
vs '14
Q4 2015
vs '14
-9%
-7%
-5%
-3%
-1%
1%
3%
5%
7%
9%
-9% -7% -5% -3% -1% 1% 3% 5% 7% 9%
%∆
A
DR vs Last Year
%∆ OCC vs Last Year
GROWTH
DECLINE
IN TRANSITION
IN TRANSITION
12
PERFORMANCE (Year Ending Dec 2015)
Source: STR Global, CBRE Hotels
1Based on visitor nights
Source: TRA, CBRE Hotels VFR: Visiting friends and relatives
Selected Recent Openings (in Last 12 Months)
Alex Hotel 4 74 keys May-2015
Hougoumont Hotel 4 92 keys Jun-2015
Como The Treasury 5 48 keys Sep-2015
SUPPLY (YE Dec 2015)
Existing Hotels, Motels and Serviced Apartments: 102 (10,345 rooms)
Dominant Source Markets1
1. Western Australia
2. Queensland
3. New South Wales
PERTH
ADR
AU$196.86
OCC
81.6%
VS. 2014
-2.7% Length of Stay
3.2 days
Page 10
STR Global data indicates that the Perth market continues its slow downward correction
process (post GFC) albeit that the $161 RevPAR achieved in 2015 is second only to Sydney.
The Perth market commands strong demand from the corporate, domestic leisure and
inbound segments. However, it is likely that some 3,000 new rooms will enter the Perth
market over the next five years. CBRE Hotels’ analysis identifies 2017 as a crunch year with
approximately 1,000 rooms to be completed. In CBRE Hotels’ view, the market’s capacity to
absorb such supply will be constrained by airline passenger capacities in the short term;
occupancy levels will decrease to the mid 70% range over the medium term as a consequence
of the new supply, however ADR is anticipated to increase at or around CPI largely because of
the pricing of these new venues and a strengthening inbound market in particular.
REVPAR
AU$160.64
Source: STR Global, CBRE Hotels
Selected Properties Under Construction
Quest West Perth 4 72 keys Jan-2016
Quest East Perth 4 130 keys May-2016
Westin Hotel 5 362 keys 2017
Selected Projects Likely to Proceed
DoubleTree Perth Waterfront 4 247 keys Jun-2016
Ritz Carlton Perth 5 204 keys Jan-2018
OCC & ADR CHANGE VS LAST YEAR Note: OCC tracks horizontally and ADR vertically
DEMAND for Hotels, Motels and Serviced Apartments (YE Sep 2015)
Visitors (‘000): 1,401
Visitor Nights (‘000): 4,554
Source: STR Global, CBRE Hotels
Note: in transition
means one
indicator (OCC or
ADR) is positive
and the other
negative
RevPAR growth
RevPAR decline
64%
36%
Visitor Nights
Domestic International
80%
20%
Visitor Arrivals
42%
37%
9%
12%
Purpose of Visit1
Business
Holiday
VFR
OtherQ1 2015
vs '14
Q2 2015
vs '14
Q3 2015
vs '14
Q4 2015
vs '14
-6%
-4%
-2%
0%
2%
4%
6%
-6% -4% -2% 0% 2% 4% 6%
%∆
A
DR vs Last Year
%∆ OCC vs Last Year
GROWTH
DECLINE
IN TRANSITION
IN TRANSITION
13
PERFORMANCE (Year Ending Dec 2015)
Source: STR Global, CBRE Hotels
2Based on visitor nights
Source: TRA, CBRE Hotels VFR: Visiting friends and relatives
Selected Recent Openings (in Last 12 Months)
The Tank Stream St Giles 4 282 keys Sep-2015
Greenland Primus Hotel 5 173 keys Sep-2015
SUPPLY (YE Dec 2015)
Existing Hotels, Motels and Serviced Apartments: 358 (39,096 rooms)
Dominant Source Markets2
1. New South Wales
2. Queensland
3. Victoria
SYDNEY
ADR
AU$211.95
OCC
85.3%
VS. 2014
+8.4% Length of Stay
3.0 days
Page 11
Another strong year for the Sydney market sees ADR at record levels and occupancy rates
continuing their climb. With limited new supply coming into the market, these levels are
expected to remain above long term averages. The low Australian dollar relative to major
currencies across the globe, will see increased numbers of international visitors to Sydney
which will further push up daily rates and occupancy levels.
CBRE Hotels understands that a number of existing hotels are planning refurbishment
programs over the next few years, which will have a direct impact on the market during
constrained periods. The refurbished products will re-enter the market with expectations of
achieving high ADR levels, which should also flow through the market.
REVPAR
AU$180.8
Selected Properties Under Construction
Four Points by Sheraton2 4 222 keys 2016
Sofitel Sydney – ICC 5 616 keys 2017
Selected Projects Likely to Proceed
Crown Sydney – Barangaroo 5 350 keys 2019
OCC & ADR CHANGE VS LAST YEAR Note: OCC tracks horizontally and ADR vertically
DEMAND for Hotels, Motels and Serviced Apartments (YE Sep 2015)
Visitors (‘000): 5,928
Visitor Nights (‘000): 17,511
Source: STR Global, CBRE Hotels
2Extension
Selected Properties Exiting Market
The Menzies Hotel 4 -446 keys 2016
Mercure Potts Point 4 -227 keys 2016
Source: STR Global, CBRE Hotels
Note: in transition
means one
indicator (OCC or
ADR) is positive
and the other
negative
RevPAR growth
RevPAR decline
58%
42%
Visitor Nights
Domestic International
73%
27%
Visitor Arrivals
46%
37%
10%
7%
Purpose of Visit1
Holiday
Business
VFR
Other
Q1 2015
vs '14
Q2 2015
vs '14
Q3 2015
vs '14
Q4 2015
vs '14
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
-10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10%
%∆
A
DR vs Last Year
%∆ OCC vs Last Year
GROWTH
DECLINE
IN TRANSITION
IN TRANSITION
14
AUSTRALIAN HOTEL DEVELOPMENT PIPELINE
Source: STR Global, CBRE Hotels
Whilst there is little change in the net supply for Sydney, the other major cities will experience significant increases in the next few years. This will test the market’s ability
to absorb new supply whilst still maintaining the high levels of occupancy and ADR. Australia’s smaller cities will face a similar issue, in particular Adelaide and Darwin
who are already struggling with increased supply and falling demand. Hobart’s tourism fundamentals are strong and should remain so; however a net supply increase
of 19% will be tough for the market to cope with, and will likely result in falling occupancy rates and thus, RevPAR levels.
Page 12
Key Australian Markets
City Markets Greater City Regions Markets
(including City and Surrounds)
1Net percentage increase on existing supply in respective markets
Note: 'Likely to Proceed' are based on CBRE's estimates of developments more than 50% likely of occurring (not including rebrands) and opening
before Jan 2019. City was selected for Brisbane, Melbourne, Perth and Sydney due to their size.
-1,000
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Brisbane
City
Melbourne
City
Perth
City
Sydney
City
Num
ber of Room
s
Under Construction Likely to Proceed To Be Removed
+22.7%1
+16.4%1
+26.1%1
+6.4%1
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Adelaide Cairns Canberra /
ACT
Darwin Gold
Coast
Hobart
Num
ber of Room
s
Under Construction Likely to Proceed To Be Removed
+8.4%1
+0.0%1
+2.5%1
+12.9%1
+1.4%1
+19.1%1
15
NEW ZEALAND UPDATE
Double-digit RevPAR growth in most key New Zealand
markets, however Christchurch is experiencing negative
growth.
Page 13
Visitor levels hitting fresh new highs, and a strong economy have helped
key performance indicators for the New Zealand hotel market reach
record highs in 2015.
National occupancy levels maintain their momentum to close 2015 at a
record 77.8%, which beats the previous best of 76% achieved in the 12
months to October 2004. Strong gains for Wellington and Queenstown
of 5.4% and 6.7% respectively are the star performers, whilst Auckland
and Christchurch post small increases.
ADR levels are also continuing their upward trend, reaching NZ$155.97
which is an increase of 9% on 2014, and the highest levels ever achieved.
The strong performances of Auckland, Queenstown and Wellington more
than offset the 4% reduction in ADR posted by Christchurch.
New Zealand’s high level of occupancy and ADR growth have resulted in
yet another record broken with RevPAR increasing 13.4%. At
NZ$121.33, this is the highest level achieved, and is further evidence that
the New Zealand hotel market is booming.
% Change
Auckland +12.9%
Christchurch -3.3%
Queenstown +17.5%
Wellington +15.3%
New Zealand +13.4%
REVPAR
Year Ending Dec 2015 vs 2014
Source: STR Global, CBRE Hotels
OCC & ADR CHANGE VS LAST YEAR (Year Ending Dec 2015 vs 2014)
Note: in transition means one indicator (OCC or ADR) is positive and the other negative
RevPAR growth
RevPAR decline
Auckland
Christchurch
Queenstown
Wellington
-13%
-11%
-9%
-7%
-5%
-3%
-1%
1%
3%
5%
7%
9%
11%
13%
-13%-11%-9% -7% -5% -3% -1% 1% 3% 5% 7% 9% 11% 13%
%∆
A
DR vs Last Year
%∆ OCC vs Last Year
GROWTH
DECLINE
IN TRANSITION
IN TRANSITION
16
AUSTRALIAN HOTEL SALES
Total sales expenditure for hotels in Australia in 2015 reached over AU$2.6 billion, the highest level ever recorded.
The overall number of transactions may be down on 2014, primarily due to a lack of available assets rather than a lack of buyers, but the quality of the hotels
transacted has resulted in a record breaking year.
The sales of The Westin Sydney and the Hilton Sydney were the biggest deals of the year, combining for a 30% piece of total transaction expenditure. The lack of
available stock will lead to further decline in the overall number of transactions in 2016, but in turn could see investors having to pay even more of a premium to
secure their piece of the Australian hotel market.
The Ascendas Hospitality Trust and M&L Hospitality portfolios are currently on the market, and are rumoured to be receiving interest from a number of different
parties. Given the size of the holdings in Australia, if they do sell, they will go a long way to helping beat 2015’s sales record.
Page 14
0
10
20
30
40
50
60
0
500
1,000
1,500
2,000
2,500
3,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Nu
mber o
f H
ote
l Sale
s
Tota
l H
ote
l Sa
les (
AU
$ m
illi
on
)
Total Hotel Sales vs Number of Hotels Sold
Total Hotel Sales Total Number of Hotels Sold
Source: CBRE Hotels
17
AUSTRALIAN HOTEL YIELDS
There has been significant tightening of yields in 2015 as a result of some major assets transacting below levels traditionally associated with well performing assets,
most notably The Westin Sydney which traded at less than 4.5%.
Over the last four years there has been a considerable increase in the number of hotels being bought by overseas investors, mainly from Asia, as Australia is seen as a
safe haven, and hotels a sound investment. The widening gap between initial and stabilised yields indicates that investors believe there to be further growth in the
market in the medium to long term.
In previous years yield compression has mostly occurred in the major markets of Sydney and Melbourne, but it is worth noting that regional markets are starting to see
compression and this trend is set to continue as more investors look to regional markets for deals.
Page 15
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Initial Yield to Stabilised Yield Gap
Initial Yield Stabilised Yield
Source: CBRE Hotels
18
Initial Yields 2015 (Notable Sales)
Surfers Paradise Marriott
Resort & Spa
Yield: ~6.0%
Hilton Sydney
Yield: 6.3%
Westend Hotel Sydney
Yield: 6.8%
Quest Dubbo
Yield: 8.7%
Hilton Surfers Paradise
Hotel
Yield: ~6.0%
The Westin Sydney
Yield: 4.2%
Crowne Plaza Surfers
Paradise
Yield: 5.5%
AUSTRALIAN HOTEL YIELDS
The yield profile highlights investors’ willingness to pay a premium for quality assets located in major destinations that have strong market fundamentals. This is not only
true for the more corporate locations of Sydney and Melbourne, but also for the leisure destinations in Queensland as investors look to more regional locations for
investment. The record levels of visitor arrivals coupled with the low supply in Cairns and the Gold Coast should see this trend continue throughout 2016.
Page 16
Source: CBRE Hotels
4% 5% 6% 7% 8% 9%
Pullman Sydney Airport
Yield: 5.6%
Intercontinental Rialto
Yield: 5.8%
Crowne Plaza Melbourne
Yield: 6.6%%
19
The hospitality industry is
awash with talk of whether
home-sharing businesses
such as Airbnb, Stayz and
HomeAway, to name but a
few, are cannibalising the
hotel business. Whilst the
scale of the problem of
home-sharing sites is
constantly debated, there is
no doubt that they have a
disruptive influence on the
industry. Many believe that
home-sharing is only
impacting cheaper brands
targeting leisure travellers,
and not corporate travel.
This may well be the case
but given that many of the
larger brands have low-cost
budget hotels, they are
still facing increasing
competition.
A YEAR OF CONSOLIDATION
Page 17
2015 has been a year of consolidation for the industry. Mergers and acquisitions (M&A) were
sparked in late 2014 when Shanghai Jin Jiang International Hotels Group announced that it
would acquire Louvre Hotels Group and IHG agreed to acquire Kimpton Hotels & Restaurants.
The largest deal announced is that of Marriott International acquiring Starwood Hotels &
Resorts Worldwide – together, it makes them the biggest hotel company worldwide, with more
than one million rooms. This type of consolidation seems to be a growing trend with more
M&As set to be announced in 2016 therefore;
is consolidation the way to combat online travel agencies and home-
sharing sites?
The hotel industry has long been
fragmented, and the merging of brands is
a way to consolidate and increase the
scale of operations without having to buy
land and build. Picking up an existing,
well-established brand allows a company
to circumvent traditional barriers to entry,
and enter new markets where they
previously have not had a presence, with
minimal fuss. This not only increases the
size of their existing pipeline in one fell
swoop, but is a way to improve
economies of scale. And by consolidating
their management and removing
inefficiencies, brands are not only able to
make cost savings across the board, they
are able to redeploy their efforts in
combating the ever increasing problem of
OTAs and home-sharing sites. Size
matters, particularly in the hotel market.
The bigger the brand, the more power it
has to fight the rising tide of OTAs and
home-sharers.
20
The Agency Model is when
a booking agent is paid a
commission by the hotel.
The agent sends the client to
a hotel and the client pays
in full directly to the hotel.
The agent then invoices the
hotel commissions after the
clients departure, and this
commission is expensed as
a room cost.
The Merchant Model is
where the agent receives full
payment from its clients and
proceeds with a booking
order for the hotel at an
after commission (net)
amount.
ARE WE TALKING ABOUT THE SAME ADR?
Page 18
Average Daily Rate (ADR) is a key indicator used to benchmark a hotel’s top line performance
against its competitive set. However, with constantly evolving hotel distribution channels, and
the way each channel transacts its bookings, will the classic ADR formula still work?
Using the ADR formula of gross revenue divided by the total room nights sold, it is evident that
the Merchant Model bookings have a lower ADR compared to the ones that operate under the
Agency Model, assuming every channel charges the same compensation.
The different models have created a grey
zone in recording true ADR value for
hotels as theoretically there should not be
any discrepancies between the two. Third
party online travel agencies (OTAs) are
pertinent to the hotel business, indeed
some small hotels fully rely on attracting
business through OTAs. In Australia
especially, there are various OTAs that
bring different sources of business to
hotels and within them, the operating
models vary from each other.
We have seen markets starting to
benchmark their ADR performance
through the net ADR analysis, which
excludes the commissions from these
channels. This analysis takes into
consideration channel costs and thus
presents a hotel’s true performance and
value that flows to its bottom line.
$100 $100
$25
$75 $75
$0
$20
$40
$60
$80
$100
$120
Room Price Channel
Commission
Net hotel
revenue
ADR Merchant
Model
ADR Agency
Model
AU
D
Merchant vs Agency
21
The Australian hotel market
has maintained its strong
performance in the second
half of 2015 thanks in part
to record international
visitors. The falling
Australian dollar, coupled
with historically low oil
prices making air travel
cheaper, has resulted in
Australia being one of the
places to visit in 2015 with
this trend set to continue
into 2016. The weakened
Australian dollar means
domestic visitors are being
forced to cut back on
international travel, and
holiday locally which in turn
has further boosted
occupancy rates across the
market.
AUSTRALIAN OUTLOOK FOR 2016
Page 19
Recent volatility in global equity markets, particularly in China, and the onset of low-yielding
bond markets serve to increase the appeal of property as an investment class. Australia’s close
trade links to Asia’s developing economies enable it to benefit from Asian growth, whilst at the
same time providing investors with transparent property markets and familiar tax / legal
systems similar to other developed economies. These features have made Australia somewhat
a safe haven for capital allocation to APAC markets – a trend that will continue in 2016 and
beyond.
2015 has been a record year for Australian hotels on many levels as
investors remain optimistic about the potential for further growth
The high number of assets traded in the
last four years means that there is limited
stock available for purchase, and
investors will have to pay above the odds
in order to secure high quality assets in
well located areas. The Westin Sydney
and The Hilton Sydney both went for
above AU$440 million to overseas
investors, and accounted for over 30% of
total sales revenue. Over 75% of all hotel
sales were located in CBDs, whilst just
25% were located in regional areas.
The is no shortage of investment capital
available so we should continue to see
overseas investors looking at further
investment, but investors may well have to
start looking outside the traditional New
South Wales and Victoria CBD markets,
which accounted for 65% of sales last
year, and into the more regional areas of
Cairns and the Gold Coast.
22
CBRE HOTELS SERVICES
Page 20
For more information,
please contact:
CBRE HOTELS
AUSTRALIA
WESLEY MILSOM
National Director, Pacific
O: +61 2 9333 3423
M: +61 408 161 563
CBRE HOTELS
AUSTRALIA
JAEL FISCHER
Senior Analyst
O: +61 2 9333 9095
M: +61 411 798 913
CBRE RESEARCH
AUSTRALIA
BENJAMIN MARTIN-HENRY
Research Manager
O: +61 2 9333 3205
M: +61 415 949 742
Please click on any of the above icons for more information on CBRE Hotels services.
THROUGHOUT THIS PUBLICATION SOURCE: STR GLOBAL, LTD. REPUBLICATION OR OTHER RE-USE OF
THIS DATA WITHOUT THE EXPRESS WRITTEN PERMISSION OF STR GLOBAL IS STRICTLY PROHIBITED.