Tourism Hotel Market Outlook


Tourism and Hotel Market Outlook

Edition 1, 2019

Strong growth remains on the cards, but headwinds on the horizon.

According to Deloitte Access Economics’ latest Tourism and Hotel Market Outlook, strong performance in Australia’s tourism sector in the last year has seen the sector’s growth outpace Australia’s national growth rate for the third consecutive year. That said, there are global and local headwinds on the horizon which could present some challenges in coming years.

Australia continues its long run of uninterrupted economic growth heading into 2019, but the strength of the economy has softened somewhat more recently with risks surrounding household finance and spending weighing on activity.

Notwithstanding the recent moderation in the economic outlook, both globally and here at home, Australia’s tourism industry is still expected to continue on a steady growth path in the years ahead.

Key insights

  • Australia welcomed over 9 million international visitors for the first time in 2018, an increase of 3.6 million or 65% compared to 10 years ago
  • However, with increasing economic and political uncertainty in many of our key inbound tourism markets, growth in international arrivals moderated to 4.9% last year compared to 7.5% average growth over the last three years
  • The Australian dollar is forecast to remain low over the medium term, and this will continue to support growth of international travel into Australia and encourage domestic travel
  • With a narrowing base of growth heading into 2019, global economic conditions will likely lead to slower growth for inbound tourism with international visitor trips forecast to grow by 6.2%, and visitor nights by 5.9%, on average each year over the next three years
  • For the first time in a while, domestic overnight trips have been increasing at a faster pace than international trips. Australians took more than 100 million domestic overnight trips in the year to September 2018 – an average of five trips for each of us, up 7% over the previous year
  • Despite challenges around falling property prices and household wealth, Australia’s economy is still expected to continue its run of uninterrupted growth heading into 2019, and provide stable conditions for continued strong domestic travel demand. Domestic trips are forecast to grow by 4.2%, and visitor nights by 3.8%, each year on average over the next three years
  • With record levels of international visitors and domestic overnight travel in Australia last year, the hotel sector continued to perform strongly
  • More than 7,100 new Australian hotel rooms were added in 2018, with this new supply now exceeding growth in demand for the first time in a number of years. The main contributors were Sydney and Brisbane, with around 700 additional rooms each, followed by Perth and Melbourne
  • Across the country, occupancy rates were down slightly year-on-year, but still a healthy 76%, and the average daily room rate increased 1.8% to $190, on par with growth over the last five years
  • Growth in new capacity is forecast to continue, with another 33,000 new rooms expected to be added over the next three years, half of these expected to be hosting guests by the end of 2020. The majority of this new stock will be concentrated in Perth, Sydney and Melbourne in particular, with around 6,500 new rooms expected to come online in Melbourne in 2019 and 2020 via 32 new properties. 

Edition 1, 2019 of Deloitte Access Economics’ Tourism and Hotel Market Outlook will be available for purchase on Monday the 18th of March here.

Tourism and Hotel Market Outlook - Edition 1, 2019

Deloitte’s Tourism and Hotel Market Outlook is a subscription publication that provides insight and analysis of the trends and issues facing the Australian tourism and hotel sectors. Both global and domestic economic developments are examined, as well as emerging trends, accompanied by commentary on the underlying drivers.

Against the backdrop of Deloitte Access Economics’ latest economic forecasts, this report forecasts growth in supply, occupancy, room rate and revenue per available room (RevPAR) across eleven major Australian tourism markets.

Tourism and Hotel Market Outlook

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