This report by Horwath HTL in Australia provides an outlook for ten key city markets across Australia, assessing performance to September 2023 and the outlook for future growth.
The data as published in the report is based on the economic forecast by Deloitte Access Economics for the September 2023 quarter, historical hotel performance from STR as of September 2023, as well as historical tourism data available as of October 2023, including forecasted domestic and international visitation from Tourism Research Australia (TRA) as at December 2022 adjusted by Horwath HTL.
Year-to-date September 2023, all key markets but Sunshine Coast and Canberra have continued to record RevPAR growth compared to the same period in 2022, ranging from a low of 1.3% in Hobart to a high of 38.0% in Sydney. The Sunshine Coast recorded a decline in RevPAR of 3.9%, while Canberra has recorded a decline of 2.3%. Hobert is forecast to end 2023 with a marginal 0.7% growth in RevPAR. Declining RevPAR reflects declining demand levels (-2.0% and -0.5% forecast for Sunshine Coast and Canberra, respectively, for 2023) in these markets. Hobart is forecast to record a decline in demand of 5.0%; however, ADR growth remains strong enough to allow for marginal RevPAR growth.
Melbourne, on a rolling 12-month basis, has finally surpassed its year-end 2019 RevPAR of $150, and as of the year ending September 2023, sat at a RevPAR of $151.40. While demand growth remains impressive in Melbourne (26% YTD September), new supply continues to suppress occupancy growth, seemingly impacting ADR growth, which has recorded negative growth in four of the last six months.
ADR growth levels are moderating across the country. After the double-digit growth in ADR recently, we have seen all markets return to single-digit growth rates or declining ADR levels. Brisbane and Perth are the only markets that have not recorded even one month of decline in ADR. Strong first-quarter ADR growth will keep most markets’ ADR growth positive in 2023, with only Canberra set to record a decline in ADR for the year.
There remains a lot of upside in the return of international travellers to Australia, with short-term visitor arrivals sitting at about 73% of the 2019 volumes YTD August 2023. Discussions with the industry suggest that the corporate travel market is not yet back at pre-Covid volumes, and the industry is waiting to see if the current patterns of corporate travel are now the new normal.