Tourism and hotels buoy commercial property

By Greg Bell

Visitors are flocking from all over the globe to visit Australia, and the bright and exciting area of Surfers Paradise holds great appeal for domestic and international travellers alike. It appears this is reflecting positively on hotels nationwide, with this type of accommodation seeing exceptional growth in 2014.

The occupancy rate for hotels soared in 2014, offering some fantastic opportunities for investors to sink their teeth into tourism-related commercial property. The figures come from Deloitte's twice-yearly Tourism and Hotel Market Outlook, which predicts the future of tourism in Australia in the next three years. The report has some encouraging insights into this industry, noting that Australia hasn't seen such a strong performance in the hotel sector since the Global Financial Crisis. 

Increasing demand for accommodation will likely have great results for hotel investment – an ideal outcome for those interested in commercial property in Surfers Paradise

Tourism mania

While many of Australia's tourism sources are experiencing a marginal slowdown in economic activity – China being the main example – a relatively low Australian dollar and declining oil prices mean that tourism has taken off. According to the Tourism and Hotel Outlook, international tourism continued to grow in leaps and bounds at the end of 2014. The number of international visitors arriving on Australian shores surged 8.2 per cent over the 12 months to September. 

This is the fastest rate in a decade and points to sustained demand for accommodation. Similarly, domestic travel recorded an exceptional performance in 2014. The number of trips taken within Australia grew 5 per cent and overnight visits bloomed 6.7 per cent over the year. 

China continues to supply a steady stream of visitors, but this report confirms that emerging economies like Malaysia, Singapore and Hong Kong will also continue to have a positive influence over the Australian tourism industry. Tourist numbers swelled more than 14 per cent more for each of these nations – outstripping China as the major player. That's not to say China isn't supporting the industry. In fact, the report shows that nearly 100,000 Chinese tourists visit the country each year. 

With the Australian tourism industry bolstering economic growth, businesses and commercial property investment in Surfers Paradise should see positive trickle-down effects. 

Hotel Surfers Paradise 

The hotel industry is reaping the benefits of the burgeoning number of visitors. According to the report, hotels across the country showed a record occupancy rate of 68 per cent in 2014 – 2.2 per cent more than in 2013. 

This is the most encouraging result since the GFC. While the crisis decimated global tourism, Australia's industry has bounced back strongly. Gains made since then are double what was lost, although there was bit of variation across markets, particularly in resource-reliant locations. However, all states recorded strong results.

Southeast Queensland performed particularly strongly. Meanwhile, Sydney and Melbourne posted the highest occupancy rate – over 90 per cent in both cases over the year – hotel occupancy rates on the Gold Coast shone brightly despite a slowdown in leisure activity. The proportion of occupied rooms surged 4 per cent over the year on average over 2014, racing past previous records.

Similarly, year-on-year room rate growth on the Gold Coast far and away outstripped any other location, soaring 4.3 per cent over 2013-2014. 

The forecast is even more promising for commercial investors in Surfers Paradise. Based on the number of rooms sold per night, demand for hotels in expected to grow 2.5 per cent yearly. The report notes that demand will likely surpass supply, but investment in hotels remains a strong option. There are 75 new projects planned in coming years, but the report also predicts 15 per cent fewer rooms in the coming three years than was the case in 2014.

As a result, the occupancy rate is similarly expected to surge past 71 per cent by 2017 – which is great news for investors. 

With the tourism and hotel sectors augured to blossom even further in coming years, investing in this type of commercial property could prove fruitful. Whether you want to diversify your portfolio with a hotel asset, or are interested in Surfers Paradise as an investment locale, get in touch with the commercial property experts at Ray White Surfers Paradise.

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