121223 Hotel Futures 2011cdn0.blocksassets.com/assets/dransfield/hotel-futures/... · 2013. 9. 6. · 4 DRANSFIELD HOTEL FUTURES 2011 SUMMARY This is the fifteenth edition of Hotel

HOTEL FUTURES 2011

A REVIEW OF THE REVENUE PERFORMANCE OF MAJOR AUSTRALIAN HOTEL MARKETS WITH FORECASTS TO 2019

DRANSFIELD HOTEL FUTURES 2011 1

DRANSFIELD HOTELS & RESORTS

Dransfield is a specialist professional services organisation advising the tourism, finance and property industries. Our experience includes a wide range of property and business related projects involving over 30,000 hotel rooms and numerous food and beverage outlets in more than 300 hospitality enterprises throughout Australia. A wide range of interrelated services are provided by Dransfield Hotels & Resorts. Our core offering is the ability to integrate the various service skill sets into a cohesive solution for development, operations and overarching advice. Service streams include:

ASSET MANAGEMENT

� Asset Management � Strategy development & implementation � Operations Implementation � Financial & Operational Reporting � Stakeholder Management � Refurbishment

DEVELOPMENT

� Development Management � Refurbishment Strategy � Commercialisation of Design � Integration of Development & Operations � Feasibility Assessment � Planning � Design

FINANCE

� Debt & Equity Sourcing � Refinancing � Valuation Management � Joint Venture/Equity Participation � Independent Advisory � Debt restructuring

ADVISORY

� Feasibility & Best Use Studies � Strategic Consulting � Restructuring Services � Investment Risk Analysis � Portfolio Assessment

TRANSACTIONS

� Co Agency � Due Diligence � Vendor Representation � Interested Party Assessments � Bid Advisory � Transaction Management � Leasing

SHARED OWNERSHIP

� Scheme Concept � Responsible Entity (AFS Licensed) � Marketing & Sales � Feasibility � Advisory

STRATA/COMMUNITY TITLE

� Scheme Concepts � PDS & Prospectus (AFS Licensed) � Offer Structure � Project Design and commercialisation � Operator Selection � Project Marketing

EXPERT’S REPORTS

� Independent Expert Reports - Prospectus - PDS

� Expert Witness - Independent Court Reports - Litigation Support & Management

OPERATIONS

� Management � Independent Review � Cost Reduction � Operator Selection Our work is focussed on practical and realistic advice, which we are often asked to implement. We have owned and operated Resorts. We focus on integrating consulting theory with the reality of having implemented development and operational strategies from cradle to completion. For further information on the range of services we provide and the ways in which we can assist you, please visit our website www.dransfield.com.au or contact Dean Dransfield at [email protected]

Level 2, 346 Kent Street, Sydney NSW 2000 Telephone: (61 2) 8234 6600 Facsimile: (61 2) 8234 6699

– Cover Photos: Quay West Suites Brisbane, Peppers Broadbeach & Barnbougle Dunes


HOTEL FUTURES 2011

CONTENTS

DRANSFIELD.COM.AU ........................................................................................................................................ 2

SHARED OWNERSHIP ........................................................................................................................................ 3

SUMMARY............................................................................................................................................................ 4

MARKET TRENDS ............................................................................................................................................... 9

BACKGROUND TO FORECASTs ..................................................................................................................... 10

Australian Hotel Cycle ..................................................................................................................................... 10

Demand ........................................................................................................................................................... 11

Supply.............................................................................................................................................................. 14

ADELAIDE .......................................................................................................................................................... 15

BRISBANE .......................................................................................................................................................... 18

CAIRNS .............................................................................................................................................................. 21

CANBERRA ........................................................................................................................................................ 24

DARWIN ............................................................................................................................................................. 27

GOLD COAST .................................................................................................................................................... 30

HOBART ............................................................................................................................................................. 33

MELBOURNE ..................................................................................................................................................... 36

PERTH ................................................................................................................................................................ 39

SYDNEY ............................................................................................................................................................. 42

GLOSSARY ........................................................................................................................................................ 45

METHODOLOGY ............................................................................................................................................... 46

DISCLAIMER

This document contains both qualitative and quantitative statements concerning the future performance of hotel and property markets, which may or may not prove to be correct. Dransfield & Co Pty Ltd does not make any representation or warranty, express or implied that such statements will prove correct, or that estimates or forecasts contained in this document will be achieved. The projections contained in this document are estimates and represent only one possible result, depending on the assumptions made. Potential users of these forecasts should satisfy themselves as to the current market conditions. Individual hotel performance may differ to market averages. Due to the difficulty in predicting future events, the assumptions we have used may not hold true. Dransfield accepts no responsibility for any action taken or any failure to act, in reliance upon the information contained in this document. No liability for negligence or otherwise is accepted by Dransfield directly or indirectly in relation to the material contained in this document.

Hotel Futures 2011 was compiled by Dean Dransfield, Scot McLaughlin, Amanda Campbell and Grace Lam. © December 2011

2 DRANSFIELD HOTEL FUTURES 2011

DRANSFIELD.COM.AU

INDUSTRY FRIENDLY WEBSITE Dransfield’s experience spans a range of interrelated services that are relevant in different ways to our clients and their projects. To better communicate how we can enhance your tourism investment we have updated our website. This enhanced platform provides the flexibility to provide a range of specific information relevant to industry participants in the hotel and resort industry. The new platform also enables additional client services including personalised project web pages, and secure data room capabilities.

SERVICES BY CLIENT AND TYPE

Dransfield offers a wide variety of services that can be utilised by a range of different client types from developers to lawyers and architects. Dransfield’s new website allows visitors to search for specific services such as transactions or development, as well as search for those services typically required by certain clients such as financiers or Investors. Closely linked to these services are examples of our past projects that relate to each of our service offerings.

INDUSTRY PORTAL

The website includes an Industry portal, which provides visitors with a central location for the latest news and research from key industry participants. Information includes:- � Links to the latest industry publications published by

Tourism Australia and the Tourism Forecasting Committee

� Latest ABS data releases for accommodation and passenger movement, which form the basis of the hotel futures publications

� Links to the key state and national tourism bodies � Links to key industry websites We are always looking to improve on our industry portal, and welcome any recommendations of further inclusions. http://www.dransfield.com.au

PERSONALISED PROJECT PAGES

Personalised project pages can service a number of needs including:- � Developing a professional presentation platform for

key stakeholders from financiers to government authorities.

� Eliminate concerns faced with size limits on email servers.

� Creation of a central location for information dissemination, which is of particular importance when working in multiple states or countries

� Direct access to database and email marketing if required.

SECURE DATAROOM CAPABILITY

As part of the new web tools, Dransfield now has the capability to develop, maintain and monitor secure data rooms for projects. From selling an asset to creating a central repository for a major project, our data room capabilities make the process of sharing a library of documents and information very simple.


SHARED OWNERSHIP

DRANSFIELD SHARED OWNERSHIP

Dransfield manage and operate the Dransfield Shared Ownership Webpage and associated project pages on the same web platform.

WHAT IS SHARED OWNERSHIP

Shared Ownership is an alternative way to own a holiday home which recognises that it is a second home that is not used all of the time. Typically, six to eight owners buy a share in the home, entitling each owner to 6-8 weeks occupancy per year. The key to Shared Ownership is to reduce the entry and ongoing cost and make the experience more enjoyable by only paying for the amount of the home an owner wants to use. This typically reduces ownership costs by more than 80%. The key elements of Dransfield’s Shared Ownership concept include: � Owners are on title as tenants in common. � Owners occupy their house for whatever proportion

of time they wish, typically between 4-8 weeks a year, by purchasing an appropriate share (1/6th share is 8 weeks use).

� The property is fully managed on the Owner’s behalf, including cleaning and maintenance.

� Usage allocations can be swapped with other Owners.

� Capital can be returned through expiry of the initial period (6-10 years) or sale of a share.

� Independent Owners’ representation by Dransfield. � Quality homes and a quality Site Operator.

STAKEHOLDER BENEFITS

Shared Ownership provides benefits to major stakeholders:

THE DEVELOPER

� Alternative strategy to sell down stock. � Can co-exist with whole of home sales and resort

operation. � Increases the market size of potential buyers. � Establishes sales evidence for valuation purposes. Decreases level of direct competition.

THE OPERATOR

� Gains an additional source of quality room stock. � Reduces interaction with Owners to a single point. � Strengthens management capabilities for proposals.

� Reduces issues related to investment owner’s returns.

� Increases patronage to brand. � Shares operating costs.

THE FINANCIER

� Potential to add premium to stock for valuation purposes.

� Creates sales evidence. � Alternate strategy to sell down existing stock. � Creates an alternative exit.

DRANSFIELD’S ROLE

Dransfield has devoted considerable resources to developing an Australian Shared Ownership concept including all necessary support systems. Dransfield will conceive, develop and operate the entire Shared Ownership Scheme, typically in conjunction with a developer and project sales team. Dransfield’s role includes:

SCHEME ESTABLISHMENT AND MARKETING

� Site assessment. � Developing a market friendly and executable

Scheme concept and related web presence. � Project marketing strategy and related Shared

Ownership collateral. � Sales force training and guidance. � Supervision of authorised representatives. � Scheme Sales. � All documentation including:

- Product Disclosure Statements - Owner Agreements - Leases - Sale Agreements - Caretaking and maintenance

SCHEME MANAGEMENT (RESPONSIBLE ENTITY)

� Owner booking management, calendar maintenance and swapping.

� Owner liaison. � Owner representative and collective management. � Financial management, collecting levies, insurance,

paying bills. � House operation (arrange caretaking and cleaning

with Resort Operator). Dransfield can also assist with other project sales and development functions as required.


SUMMARY

This is the fifteenth edition of Hotel Futures. We report on the performance of major Australian hotel markets during 2010 with forecasts to 2019.

AUSTRALIAN MAJOR CITY HOTEL MARKETS

Location Actual Actual Forecast Short Medium Long

RevPAR RevPAR Δ RevPAR ∆ 2011 2011-2013 2011-2019

Adelaide 4,284 76.6% $141.84 $108.66 3.1% -0.7% -3.2% 0.2% 2.7%

Brisbane 8,137 78.8% $160.14 $126.27 9.7% 8.0% 7.6% 4.6% 2.6%

Cairns 7,532 60.3% $108.76 $63.84 0.8% 1.5% 4.0% 5.4% 4.8%

Canberra 4,944 75.9% $150.95 $114.59 11.1% 13.1% 0.6% -0.3% 1.8%

Darw in 3,746 70.6% $140.83 $99.38 1.0% 1.0% -0.2% 1.4% 2.5%

Gold Coast 13,046 68.1% $132.38 $90.18 2.5% 3.4% -1.1% 3.8% 3.5%

Hobart 2,547 73.4% $126.02 $92.51 -2.2% 1.4% -2.8% 0.6% 1.9%

Melbourne 16,074 78.7% $167.80 $132.11 4.6% -1.2% 4.0% 5.6% 3.9%

Perth 5,815 81.2% $163.91 $133.11 5.9% -1.0% 10.2% 7.5% 2.6%

Sydney 19,911 85.5% $175.70 $150.27 10.8% 11.5% 10.7% 8.9% 3.3%

Total Market 86,036 76.5% $155.44 $118.87 6.7% 5.1% 5.3% 5.7% 3.4%

Forecast Average RevPAR Growth

Rooms Occupancy ARR

2010

Source: Australian Bureau of Statistics / Dransfield. Notes: Total market revPAR is weighted by room night demand

CHANGES IN KEY REVENUE INDICATORS – 2010

Supply Change Demand Change ARR Change Occupancy

2010 HF Forecast 2.1% 4.7% 2.5% 75.3%

2010 Actual 0.7% 4.9% 2.5% 76.5%

Source: Australian Bureau of Statistics / Dransfield

AUSTRALIAN FORECAST SUMMARY

2010 IN REVIEW

In 2010, hotel revenue increased by 6.7% exceeding the 5.1% forecast. This was despite a slow start to the year with the March quarter having RevPAR growth of just 2.9%. The second half of 2010 experienced strong growth with both the 3

rd and 4

th quarters above 8% for

the nation. The improved results were a result of a delay in supply and slightly higher demand than expected. The stronger performers were the major eastern cities of Sydney, Brisbane and Canberra, all recording revenue growth in excess of 9.5%. Hobart was the only city to experience a decline. Five out of ten cities met or exceeded forecasts; this excludes Sydney and Canberra who still both experienced double digit growth.

2011 OUTLOOK

Our 2011 forecasts are for a similar result with revenue growth again exceeding 5% and consistent with the forecast from a year earlier. The makeup by city is however highly varied and different to prior expectations. Melbourne and Perth have been big improvers. Adelaide and the Gold Coast have been substantially downgraded with lesser downgrades in Brisbane, Darwin and Hobart. First half results for 2011 show consistent performance with revPAR up 4.8% in the March quarter and 6.4% in the June quarter to record 5.6% in the first half.

MEDIUM TERM OUTLOOK TO 2013

For the three years to 2013 we expect revenue growth of 5.7% which is consistent with earlier average revPAR expectations. Sydney and Perth are the positive outperformers with Adelaide, Canberra, Darwin, Gold Coast and Hobart all having limited growth outlooks. The medium-term outlook is supported by low levels of supply; however there are correspondingly low expectations for demand growth.


SUMMARY

LONG TERM OUTLOOK

For the period to 2019, revPAR for Australia is expected to grow at 3.4%. This represents a forecast upgrade, averaging 4.4%, with Cairns and Melbourne being the highest long-term performer, from their current low base in the cycle.

CONCLUSION

The Australian hotel market remains well placed for consistent growth in revenue as a consequence of low levels of supply and high occupancy. Reduced demand growth has lowered the medium term outlook outside of the major eastern cities and Perth.

TOTAL AUSTRALIAN MAJOR CITIES (WEIGHTED) – HMGSA REVPAR VS. REAL REVPAR AND HOTEL FUTURES 2010 VS. HOTEL FUTURES 2009

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 19

RevPAR (In 2009 $)

Australian Major Cities (Weighted)

Real Room RevPAR 1988 - 2019


RevPAR

RevPAR Real RevPAR Real RevPAR HF10

Real RevPAR HF09

ACTUAL FORECAST

Above: Quay West Suites Sydney


SUMMARY

A summary of historical supply and demand relationships and our forecast for the 10 Australian Major Cities is:-

TOTAL AUSTRALIAN MAJOR CITIES (WEIGHTED) – HOTELS, MOTELS AND SERVICED APARTMENTS

Room Room $2010

Year Night Rooms* % Night % ARR % RevPar % Real Occ

Supply Chng Demand Chng Chng Chng RevPar

2001 28,545,143 78,206 1.9% 19,165,525 1.5% $117.35 -4.4% $78.79 -4.8% $101.25 67.1%

2002 28,149,952 77,123 -1.4% 19,254,705 0.5% $116.46 -0.8% $79.66 1.1% $99.36 68.4%

2003 28,339,597 77,643 0.7% 19,854,636 3.1% $120.48 3.5% $84.41 6.0% $102.85 70.1%

2004 29,001,894 79,457 2.3% 21,160,702 6.6% $123.32 2.4% $89.98 6.6% $106.87 73.0%

2005 29,444,580 80,670 1.5% 21,781,396 2.9% $130.74 6.0% $96.71 7.5% $111.74 74.0%

2006 29,774,898 81,575 1.1% 22,489,772 3.3% $140.47 7.4% $106.10 9.7% $118.72 75.5%

2007 29,962,202 82,088 0.6% 23,145,992 2.9% $149.90 6.7% $115.80 9.1% $125.85 77.3%

2008 30,796,374 84,374 2.8% 23,176,995 0.1% $158.80 5.9% $119.51 3.2% $125.27 75.3%

2009 31,194,943 85,466 1.3% 22,901,568 -1.2% $151.70 -4.5% $111.37 -6.8% $111.37 73.4%

2010 31,403,142 86,036 0.7% 24,015,606 4.9% $155.44 2.5% $118.87 6.7% $118.87 76.5%

Actual Average 1988-2010 4.0% 4.5% 2.3% 2.8% $111.01 68.9%

2011 32,064,143 87,847 2.1% 24,642,570 2.6% $162.94 4.8% $125.23 5.3% $121.58 76.9%

2012 32,758,389 89,749 2.2% 25,328,147 2.8% $171.92 5.5% $132.93 6.1% $124.99 77.3%

2013 33,714,456 92,368 2.9% 26,082,741 3.0% $181.22 5.4% $140.20 5.5% $127.99 77.4%

Average 2011 - 2012 2.4% 2.8% 5.2% 5.7% $124.85 77.2%

2014 34,743,308 95,187 3.1% 26,953,612 3.3% $189.16 4.4% $146.75 4.7% $132.29 77.6%

2015 36,309,765 99,479 4.5% 27,955,910 3.7% $193.85 2.5% $149.25 1.7% $128.43 77.0%

2016 38,070,009 104,301 4.8% 28,883,836 3.3% $196.43 1.3% $149.03 -0.1% $124.51 75.9%

2017 39,659,818 108,657 4.2% 29,712,616 2.9% $200.27 2.0% $150.04 0.7% $121.70 74.9%

2018 40,342,888 110,528 1.7% 30,502,988 2.7% $205.38 2.5% $155.28 3.5% $122.29 75.6%

2019 41,040,224 112,439 1.7% 31,114,526 2.0% $211.62 3.0% $160.44 3.3% $122.67 75.8%

Average 2014 - 2019 3.3% 3.0% 2.6% 2.3% $125.32 76.1%

Total Forecast Average 3.0% 2.9% 3.5% 3.4% $125.16 76.5%

FORECAST

HISTORICAL

Source: Australian Bureau of Statistics / Dransfield. Note: Growth rates for 2003 have been adjusted as advised by the ABS following the break in the time series

Above: Diamond Beach Resort, Diamond Beach Above Right: Holiday Inn Gold Coast


SUMMARY

CITY SUMMARIES

ADELAIDE

In 2010, Adelaide recorded revPAR growth of 3.1%, better than our 0.7% forecast decline. This was due to lower than expected supply and an increase in ARR

Our revised forecasts for revPAR growth are: RevPAR Forecast HF2011

Short 2011 -3.2%

Medium to 2013 0.2%

Long to 2019 2.7%

Real RevPAR avg change to 2018 -4.5%

The Adelaide market will perform poorly in 2011 affected by a large increase in supply of 9% with more supply expected from 2013, however occupancies should still remain over 70%. Medium term real revPAR expectations have been downgraded Long term average real revPAR growth represents a 4.5% downgrade to earlier expectations from the poor starting point.

BRISBANE

In 2010, Brisbane recorded high revPAR growth of 9.7%, better than expectations due to a stronger ARR. Our revised forecasts for revPAR growth are: RevPAR Forecast HF2011

Short 2011 7.6%

Medium to 2013 4.6%

Long to 2019 2.6%

Real RevPAR avg change to 2018 -0.8% The Brisbane market appears to have weathered the severe storms from the beginning of the year and is on track to build on a high performing 2010. Proposal activity has increased significantly and supply is expected in 2013-14 which should slow down rate growth and see occupancies fall below 80%. Medium term revPAR growth of 4.6% represents a slight downgrade to prior forecasts. Long term revPAR growth of 2.6% is forecast. This is a minor downgrade off a high base.

CAIRNS

In 2010, Cairns recorded limited revPAR growth of 0.8%, but slightly below our forecast of 1.5% growth. Our revised forecasts for revPAR growth are: RevPAR Forecast HF2011

Short 2011 4.0%

Medium to 2013 5.4%

Long to 2019 4.8%

Real RevPAR avg change to 2018 -7.2%

The Cairns hotel market appears to have reached its cyclical trough. Occupancies have returned to above 60% and are forecast to remain so to 2019. Cairns again has the highest average growth rate albeit from a very low base. Medium term revPAR growth is forecast to average 5.4% to 2013. Long term forecasts for 4.8% growth represent a downgrade from prior expectations. This long term outlook represents a real revPAR downgrade of 7.2%.

CANBERRA

In 2010, Canberra recorded significant RevPAR growth of 11.1%, below our forecast of 13.1%.


Short 2011 0.6%

Medium to 2013 -0.3%

Long to 2019 1.8%

Real RevPAR avg change to 2018 5.8% Following a very strong 2010 Canberra will experience a much softer 2011 as visitor numbers normalise. A reduction in supply will assist the market. Medium term revPAR decline of 0.3% represents a downgrade on previous expectations and indicates the market is in the back end of a cycle. Long term average revPAR growth of 1.8% is forecast and represents a 5.8% upgrade on Hotel Futures 2010.

DARWIN

In 2010, Darwin recorded revPAR growth of 1.0%, in line with our forecast


Short 2011 -0.2%

Medium to 2013 1.4%

Long to 2019 2.5%

Real RevPAR avg change to 2018 -2.3% Having performed strongly since 2005, the amount of new supply has not generated sustained demand. This will see occupancies fall below 70% and remain for some time, placing pressure on rates in the short to medium term. Medium term revPAR growth is low and well below the nation average for the period to 2013. Long term revPAR growth is forecast at 2.5% to 2019, this represents a downgrade of 2.3% to prior expectations.


SUMMARY

GOLD COAST

In 2010, the Gold Coast recorded revPAR growth of 2.5% slightly below our 3.4% forecast and due to no rate growth.

Our revised forecasts for revPAR growth are:

RevPAR Forecast HF2011

Short 2011 -1.1%

Medium to 2013 3.8%

Long to 2019 3.5%

Real RevPAR avg change to 2018 -8.4% The outlook for the Gold Coast has been downgraded as a result of a weaker 2010 and a fall in demand in the first half of 2011. The recent addition of several high quality projects should boost average room rates in the coming years. The continued growth of the Chinese market and a weaker Australia dollar could positively impact the rate of recovery. Medium term revPAR growth of 3.8% is forecast, with Long term revPAR growth of 3.5% representing a large 8.4% downgrade on prior expectations.

HOBART

In 2010, Hobart recorded revPAR decline of 2.2%, below our forecast of 1.4% growth as a result of weaker than expected demand.


Short 2011 -2.8%

Medium to 2013 0.6%

Long to 2019 1.9%

Real RevPAR avg change to 2018 -3.6% After an extended period of strong growth Hobart is forecast to face consecutive years of revPAR decline. A weakening in demand in the latter half of 2011 will see increased supply negatively affecting revenue growth. Medium term revPAR shows marginal growth of 0.6%, whilst long term growth is 1.9%, this represents a downgrade to prior expectations.

MELBOURNE

In 2010, Melbourne recorded significant revPAR growth of 4.6% and well above our forecast 1.2% decline as a result of lower than expected supply and improved demand. Our revised forecasts for RevPAR growth are: RevPAR Forecast HF2011

Short 2011 4.0%

Medium to 2013 5.6%

Long to 2019 3.9%

Real RevPAR avg change to 2018 12.4%

Unexpected strong demand and a slight delay in supply has seen Melbourne absorb the recent influx of new hotels, and maintain occupancies in excess of 75%. This should mean previously expected rate pressure should not eventuate in the short term. Medium term revPAR growth of 5.6% represents a significant upgrade to prior expectations. Long term average revPAR growth has also been upgraded to 3.9% for the period to 2019, with the overall forecast up by a high 12.4%.

PERTH

In 2010, Perth recorded revPAR growth of 5.9% above our forecast for a 1% decline, driven by stronger demand and ARR growth.


Short 2011 10.2%

Medium to 2013 7.5%

Long to 2019 2.6%

Real RevPAR avg change to 2018 13.2% Perth has fully recovered from a poor 2009, as a result of demand driven rate growth. The first half of 2011 indicates this trend will continue for the short to medium term, until significant supply is realised. Medium term average revPAR of 7.5%, driven by continued high occupancy, is a significant upgrade on prior forecasts. Long term average revPAR growth has increased to 2.6% with the overall forecast up by a high 13.2%.

SYDNEY

In 2010, Sydney recorded significant revPAR growth of 10.8% slightly below our 11.5% forecast.


Short 2011 10.7%

Medium to 2013 8.9%

Long to 2019 3.3%

Real RevPAR avg change to 2018 6.8% Sydney hoteliers are set to benefit from the lack of new supply in the short term fuelling rate growth in 2011. Occupancy topping 85% in the medium term should drive annual revenue growth of 8.9% to 2013. As major supply comes online from 2015 rate growth should stabilise with long term forecast for an revPAR growth of 3.3% to 2019, this represents a real revPAR upgrade of 6.8%


MARKET TRENDS

HOTEL TRANSACTIONS

In 2011 Australian hotel transaction volumes remained high, estimated in excess of $1 billion and on par with 2010. The transactions comprised a significant proportion of bank instructed sales and some portfolio rebalancing, continuing the trend of 2010. Offshore buyers continued to dominate, including private Asian investors and US investment funds who perceive Australian hotels as stable long term investments with strong fundamentals. Many assets offered remain on the market with sellers unwilling to meet the market (where values have not fully recovered to pre-GFC levels) and with supply far exceeding demand. Again a significant proportion (estimated at around 20%) is distressed assets under administration, with the majority of these in leisure based/resort destinations. Values in 2011 have partially recovered to pre-GFC levels due to a combination of improved capitalisation rates, profit outlook and general supply constraints. The recovery of the corporate and MICE markets has contributed to improved profit levels in 2010/2011. Capitalisation rates have decreased since the 2009 peak but remain around 1-2% higher than pre-GFC levels. Full value recovery is unlikely to be achieved in the immediate short term due to the tempered recovery in general trading conditions, with soft domestic leisure demand and a high Australian dollar. 2011 has also seen increased corporate activity and consolidation of operators, with the takeover of Oaks Hotels & Resorts by the Singaporean Minor Group, sale of Constellation Hotels to the Singaporean private investment firm Nadathur Fareast and the sale of Mirvac Hotels to Accor. The Accor acquisition will consolidate its position as the largest operator in Australia, complements its mid range focus and brings a major international participant into the management rights sector at the higher end hotel range.

HOTEL DEVELOPMENT

The outlook for limited hotel supply continued throughout 2010-11. Net new supply across the major markets limited to 0.7% for 2010, with 4 markets experiencing a reduction in supply. Melbourne was the only major city with significant supply increases. Projects continue to be delayed as a result of a lack of funding, alternate uses providing higher levels of return on capital and ongoing uncertainty in global markets. Construction activity reduced from 3,800 rooms to 1,700 rooms as more projects were completed than started. Proposal activity is higher than last year at approximately 4,300 rooms compared to 2,300 the prior year. Continued delays will see major hotel development pushed back at least 1-2 years compared with that forecast in Hotel Futures 2010.

Resort development was absent again this year with no noticeable developments and several closures as a result of major weather events and poor performance. In light of the lack of supply in markets where new stock is desperately required governments are continuing to take a more active approach in stimulating hotel development, proposing generous incentives to include short term accommodation components in new developments. Absent new hotels entering the markets, existing market participants are looking to capitalise on strong market fundamentals by undergoing major refurbishments. The trend is most noticeable in the Sydney market with no fewer than 7 major international luxury hotels upgrading and modernising existing room stock and facilities. The largest of these being the $60m refurbishment of the Park Hyatt which saw the Hotel closed for much of 2011.

THE FUTURE

The outlook for hotel investment and operation remains very strong in most Australian capital city markets. The supply threat remains distant and minor, and existing occupancy levels are high enough to embolden rate growth, well above inflation over the medium term. The demand growth outlook continues to deteriorate and feels more constrained over the long term than at any time in the last decade. This poses a threat to smaller and more regional markets which have lower occupancy levels however have limited effect on the major markets as any supply threat gets pushed further away. The major eastern markets of Sydney and Melbourne as well as Perth in fact have a stronger mid term outlook as a consequence which is completely counter intuitive with long term revenue streams anticipated to be 10% higher with a consequential effect on risk and value.

Above: Dransfield’s Relaunched Website - www.dransfield.com.au


BACKGROUND TO FORECASTS

In producing Hotel Futures, Dransfield have committed to making available to investors long term historical information and one view of what the future might look like. Investors now have available to them forecasts of key demand drivers, published by Tourism Research Australia (TRA), and a number of other government and private sources. Supply information is provided by local and state governments as well as private organisations. Hotel Futures seeks to interpret the impact of these expectations on hotel revenues, when combined together in a supply/demand equation. In presenting a market forecast it is important for readers to accept that individual hotels will be influenced by the market, but will not behave in an identical manner. The market forecast is therefore a guide against which the past and future performance expectations for any particular hotel may be reviewed.

AUSTRALIAN HOTEL CYCLE

In previous editions of Hotel Futures, we have identified and considered the likely length and volatility of hotel cycles in the Australian hotel market. This was to determine the impact of significant increases in supply and the point at which individual markets might peak or trough. That analysis identified a typical cycle of between eight and ten years, and confirmed that the major influence on the level of volatility in any market was generally supply levels. A graphical analysis of the past cycle, together with our view of the future is presented on page 6 Total Australian Major Cities (Weighted) – Hotels, Motels and Serviced Apartments. In the early 1990’s supply increases were extreme against a small base of room stock. This promoted a significant reduction in occupancy with rate decline for the three years to 1993. Demand has typically been much more stable, generally demonstrating consistent and reliable growth patterns. This has not been the more recent experience with greater volatility in demand than supply. The financial crisis has again introduced volatility on the demand side. Demand outcomes are fluctuating between cities due to varying international and leisure

content levels and localised marketing and supply. Some of the smaller cities are experiencing higher levels of supply boosting average quality, capacity and demand. Most markets reached their cyclic peak in 2007 following long periods of limited new supply which provided strong rate growth opportunities over the previous five years. This created a longer six-year up swing. The GFC eliminated the potential supply threat and as a consequence there was a very short two-year down swing to 2009. The fall was also very contained with the market dropping by 11%, and half the level of earlier down cycles. Going forward we expect the market to build towards a peak in about 2014, reducing to the next trough in approximately 2017 and following an evenly matched eight year cycle. The level of real growth on the upswing is forecast to be 19% and less than prior cycles from the much higher 2009 base and with lower demand growth prospects. A summary of the most recent Australian hotels cycles and our forecast is presented in the table below.

AUSTRALIAN HOTEL CYCLE

High Low Growth Fall High Low Total

1988 1992 $128.45 $94.01 n/a 27% 5

1992 2002 $124.23 $98.87 32% 20% 4 6 10

2002 2009 $125.27 $111.37 27% 11% 5 2 7

2009 2017 $132.29 $121.58 19% 8% 5 3 8

Volatility Cycle LengthReal revPAR

Actual

Forecast

Year



DEMAND

In our analysis, the TFC visitor forecasts and customer market mix in individual states are blended and adjusted to reflect historical differences between these key drivers, actual results and the impact of additional supply. Supply often stimulates demand growth and there are differing expectations for individual city growth rates compared to the whole state. Historically, actual performance and our forecasts for a city’s demand growth have exceeded ‘melded’ growth rates (combined International and Domestic forecasts) based on TFC data for larger geographic areas, sometimes quite substantially. Our demand forecasts are partly based on international and domestic visitor forecasts published by Tourism Research Australia (TRA) through the Tourism Forecasting Committee (TFC). They also require a level of subjective judgement. In November 2011, TFC released revised forecasts updating those issued in November 2010 relied upon in the 2010 edition of Hotel Futures. A summary of the key changes in forecasts overtime is:

AUSTRALIAN DOMESTIC AND INTERNATIONAL VISITOR NIGHTS FOR 2010 TO 2013

VolumeGrowth

RateVolume

Growth

Rate

Vol Δ From Jul

VolumeGrowth

RateΔ From

Dec'09

Vol Δ From

Nov'10

2010 450,659 2.3% 456,254 3.0% ▲ 456,541 3.3% ▲ ▲

2011 461,777 2.4% 464,714 1.9% ▲ 457,747 0.2% ▼ ▼

2012 473,512 2.7% 473,789 2.2% ▲ 464,130 1.4% ▼ ▼

2013 484,905 2.4% 483,604 2.0% ▼ 472,403 1.9% ▼ ▼

Dec-09 Nov-10

Forecast

Issue

Nov-11

Note: 2010 figures in the November 2011 Forecast are actual and shaded grey

These forecasts are an overall downgrade in 2011. There are multiple indicators of future demand for the major cities considered in Hotel Futures. The TFC publishes a range of related actual and forecast national statistics including: � International Arrivals; � International Visitor nights; � International Visitor nights in Hotels, Motels, Guest Houses and Serviced Apartments (HMGSA); � Domestic Visitor Nights and � Domestic Visitor nights in Hotels, Motels, Guest Houses and Serviced Apartments (HMGSA). International visitor forecasts are now undertaken on a state by state basis, similar to what has historically been provided for the domestic forecasts. We have undertaken correlation testing on each of the above demand indicators and found varying degrees of correlation to actual results in different years. None of the individual indicators have a very strong historical correlation with the Room nights occupied in the cities that Hotel Futures reports on. This is partly due to the differing proportions of international and domestic visitors in each city though we do take regard of the known changes in market mix. It is also due to the differing geographic boundaries of the indicators and the subject, for example, using the international forecast for the whole state has only an indirect relationship with an individual city. Changes in the level of supply in each city also alter travel patterns as room availability improves. The difficulty in using raw statistics is demonstrated by considering the lack of growth in International arrivals in 2009 compared to the 5% increase in International Visitor nights and 6% reduction in International Visitor Nights to Hotels. The demand figures estimated in Hotel Futures therefore require a significant subjective assessment. The table below shows the average growth rates forecast for each indicator and Dransfield’s forecast for demand growth.



HOTEL FUTURES VS. TOURISM FORECASTING COMMITTEE

ABS/Dransfield

Demand Int ArrivalsInt Vis

Nights

Dom Vis

Nights

Int Vis Nights

in HMGSA

Dom Vis Nights

in HMGSA

2010 4.9% 5.4% 6.1% 1.1% 2.5% 1.8%

2002-2010 2.6% 2.2% 5.0% -1.1% 1.5% -0.6%

2005-2010 2.2% 2.1% 6.2% -2.1% 1.7% -2.0%

Hotel Futures Forecast

2011-2013 2.8% 2.4% 2.3% 0.2% 2.1% 0.4%

2011-2019 2.9% 3.2% 3.0% 0.3% 3.2% 0.8%

Tourism Forecating Committee Nov 11

Actual

Forecast Forecast by Tourism Forecating Committee Nov 11

In 2010 the TFC data reveals that in Australia: � 5.885 million people visited Australia from overseas � The average length of stay for an international visitor is 33.5 nights up from 33.3 in 2009. � 12.7% of the international nights spent in Australia are spent in HMGSA, down from 12.9% in 2009. � Australians spent 259.5 million nights away from home visiting other areas of Australia, up from 257 million in 2009. � 28.2% of the domestic nights away from home were spent in HMGSA The actual demand performance in major city hotels is typically higher growth than most indicators.

NATIONAL DEMAND

In 2010 demand increased by 4.9% (forecast 4.7%) across the 10 cities covered by Hotel Futures which represents the highest level of annual growth since 2004. The regional centres of Cairns (-0.4%) and Hobart (0.5%) were the only cities to experience a decline in demand. The major east coast cities of Melbourne (8.4%), Sydney (6.8%) and Brisbane (6.6%) experienced the strongest levels of growth, benefiting from the increased number of international visitors from Asian markets. Aside from Melbourne the growth across the major markets was not supply induced and despite high levels of occupancy. In the first half of 2011 there has been a slowdown in major city demand growth. The national average was 1.7% (1

st half 2010 demand growth of 4.4%) led by

Melbourne with growth of 9.4%. Canberra, Darwin and the Gold Coast have all had reductions in demand. In 2011, Dransfield has forecast demand growth of 2.6% and well above the 0.8% fall forecast by TFC. Medium term, we expect an average growth of 2.8% over the 3 years to 2013 and long term 2.9% growth. This represents a downgrade on our previous short, medium and long term growth rates.

TFC INTERNATIONAL

In 2010, international visitors accounted for 25.5% of total visitor nights spent in hotels, motels, guesthouses and serviced apartments in Australia, in line with 2009. In capital cities the international content tends to be higher than the national average and is estimated by the TRA at 33%. This increases for hotels higher up the price/quality spectrum. This is why expected demand growth rates for city hotels more closely relate to international, rather than domestic, change profiles.

According to the TFC, international arrivals to Australia increased 5.4% during the 12 months to December 2010, to 5.885 million visitors. International visitor nights increased by 6.1% to 197 million with international visitor nights in HMGSA also growing albeit at a lower 2.5%. 2011 has seen a slowdown in the number of visitors with YTD arrivals to October remaining relatively flat experiencing a 0.2% decline to 4.681 million, slightly below forecasted annual growth of 0.4% 5.907 million. Visitor nights are forecast to increase by 0.8% to 199 million. Long term, visitor nights represent a downgrade compared with prior forecasts with average growth of 3% expected in the period 2010-2020, compared with 3.6% in November 2010. The downgrade is as a result of much weaker short term forecasts, in particular in 2011 and 2012 effectively creating a 1 year lag in the expected level of total visitor nights. The effect of strengthening tourism from China can be seen in the change in mix of visitor nights compared with the December 2009 forecasts. Actual total nights were 17.8% higher than forecasts for 2010. China’s proportion of total visitor nights has also increased from 13% to 16% for the forecast period to 2018.

TFC DOMESTIC

In 2010 the domestic sector accounted for 74.5% of total visitor nights in hotels, motels, guesthouses and serviced apartments in Australia, in line with 2009. In 2010, domestic visitor nights increased by 1.1% and domestic visitor nights in HMGSA increased by 1.8% to 73.1 million visitor nights.



The November 2011 forecast for long term domestic visitor nights was slightly upgraded from the November 2010 forecast. Domestic visitor nights are now expected to reach 267.2 million by 2020 (previously 266.7 million). Long term forecasts for domestic visitor nights in hotels have however significantly decreased to 78.6 million from the November 10 forecast of 86.8 million visitor nights. The average annual growth expectations were downgraded from 1.6% to 0.74% from a lower base, due to 2010 performance. The share of total visitor nights in hotels is also forecast to fall from 32.6% to 29.4%

OUTBOUND TRAVEL

Outbound travel is expected to increase at the expense of domestic hotels. The TFC has forecast a 9.2%, increase in short term departures in 2011 compared to its earlier forecast of 7.7% published in November 2010. This is consistent with recent ABS figures showing resident departures for the September quarter up 10.3% compared to the same quarter in 2010. Year to date departures have increased 10.3%. This is mostly due to the continued strength of the Australian dollar. Whilst the dollar has softened over recent weeks, overseas holidays are booked weeks or months in advance and should not be significantly affected for the remainder of the year.

INTERNATIONAL SHORT TERM VISITOR ARRIVALS TO AUSTRALIA BY MONTH

300,000

350,000

400,000

450,000

500,000

550,000

600,000

650,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2008 2009 2010 2011

Left: Sea Temple, Surfers Paradise Below: Quay Grand Suites Sydney



SUPPLY

In calculating short-term supply expectations, projects recently completed, under construction and those proposed are taken into account. Probability estimates have been used for sites where construction has not started and may not start or could be delayed. In several markets, many sites are mooted as possible hotel projects. Our forecasts recognise that not all project proposals will proceed. Each time a project is generally perceived as going ahead, the likelihood for other proximate developments reduces. Remaining proposals are delayed as financiers and investors take into account the impact of additional supply. In 2010, Australian capital city hotel supply increased by 0.7% (approximately 570 rooms). This was below expectations of a 2.1% increase mostly due to delayed or cancelled projects. Melbourne recorded the largest supply growth with 5.2% increase in room stock. Four cities recorded a contraction in supply (Cairns - 2.5%, Canberra – 2.5%, Gold Coast – 1.2% and Perth 0.5%) and Sydney recoded virtually no supply growth with an increase of just 0.3%. This is only the 5

th time in the

history of Hotel Futures that Australian Capital cities experienced supply growth of less than 1%. Supply is expected to increase by an average of 2.1% across all cities in 2011. The overall increase is in line with the 2.2% previously expected. Melbourne (7.5%),

and Adelaide (9.1%) are expected to record the highest supply growth. The reduced availability of funding, much stricter bank requirements and lower LVR’s have slowed construction activity and pushed out the completion of many projects by an expected 1-2 years. Supply increases are expected to recover somewhat through the period 2014-2015, as the delayed supply cycle re-emerges. Supply expectations remain low. There are currently 1,700 rooms under construction and forecast to come online between 2011 and 2014. A further 4,300 rooms have been proposed to come on line between 2011 and 2015. After factoring in a probability weighting to each city and project, 45% of these proposed rooms or 1,900 rooms, are expected to materialise, representing 4% of the current market. This is an upgrade from proposal expectations held last year. In the medium term to 2013 supply will grow at an average of approximately 2.4% with the room count at some 3% below expectations held a year earlier Our national long term forecast is for an increase in supply of 3.0%, and consistent with forecasts in Hotel Futures 2010.

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Occupancy

Annual Room Nights (000s)

Australian Major Cities (Weighted)Demand, Supply and Occupancy


Supply

Aust Occupancy

Supply

Aust OccupancyDemand Demand

ACTUAL FORECAST


ADELAIDE

BACKGROUND

Adelaide’s hotel market can be reviewed by analysis of the Adelaide City statistical area, which contains 42 hotels, motels and serviced apartments. The larger Adelaide Tourism Region also incorporates Port Adelaide and Glenelg as well as the Inner City. Dransfield focuses on the Adelaide City Region for our analysis of hotel performance.

ADELAIDE REGIONS – DECEMBER QUARTER 2010

December Quarter 2010

Adelaide Regions Establishments Rooms Occupancy ARR RevPAR

Adelaide City 43 4498 76.4% $146.28 $111.76

Adelaide Tourism Region Hotels/Motels

Hotels 31 3,698 77.2% $151.10 $116.65

Motels 49 2,063 66.2% $101.38 $67.11

Serviced Apartments 21 1,270 76.7% $147.97 $113.49

Total Adelaide Tourism Region 101 7,031 73.9% $137.44 $101.57

Star Grading Establishments Rooms Room Rev ($000s) Occupancy ARR RevPAR

5-star 5 n.p. n.p. n.p. n.p. n.p.

4-star 39 3,727 $38,650 77.7% $147.61 $114.69

3-star 39 1,407 $8,295 65.7% $93.68 $61.55

Other 18 1,897 $18,742 73.1% $146.95 $107.39

Total 101 7,031 $65,686 73.9% $137.44 $101.57


Source: Australian Bureau of Statistics / Dransfield. Figures in Italics have been calculated. All figures are for establishments with 15 or more rooms; n.p. - not published

2010 IN REVIEW

In 2010 the Adelaide hotel market recorded a 3.1% increase in RevPAR, above the 0.7% decline expected. This was mostly due to delays in supply and demand which had growth of 3.2%. A good result reversing the decline in RevPAR in 2009, however the result is below the capital city average of 6.7%.

2010

FORECAST

ACTUAL

2010

RevPAR -0.7% 3.1% 3.8% ▲

Supply 4.7% 1.4% -3.2% ▼

Demand 4.0% 3.2% -0.8% ▼

Occupancy 74.8% 76.6% 1.8% ▲

ARR 0.0% 1.4% 1.4% ▲

Var

In the first half of 2011, Adelaide hotels recorded RevPAR decline of 2.8%, well below the national average and below the 4.5% growth expectations. This was based on slightly weaker demand and the arrival of delayed supply which saw a 7.4% increase in the first half. Rates increased slightly despite this.

SUPPLY

In 2010, Adelaide room stock increased by approximately 61 room equivalents, or 1.4%, below expectations and in

line with the prior year. 2011 has seen a much larger increase in supply, likely to exceed 9% for the full year. In 2011 there were several proposals for a further 600 rooms by 2014. We rate these a 50% prospect of progressing with one project being abandoned. Gross proposals are similar but timing is delayed. In the medium term, supply is forecast to average 5.1% growth p.a. to 2012, and similar to our previous forecast for total room stock. Over the full forecast period average supply is expected to increase by 3.0% p.a, which is 300 rooms behind prior expectations.

DEMAND

In 2010, demand increased by 3.2%, below the national average. Adelaide hotels’ domestic content remained at a high of 77% but down from 80% in the previous year. In 2011 to June demand is up by 3.7% enabled by the new supply. We expect this to continue, to record 4.5% growth for the full year. The TFC has forecast a 0.7% increase in domestic visitor nights in South Australia for the period to 2020, and a 2.5% increase in International visitor nights over the same period which is below the 3.1% national average. Combining the TFC forecasts for international and domestic visitor nights to South Australia, the weighted average growth in visitor nights in Darwin is expected to average 1.3% to 2020.


ADELAIDE

Demand growth is expected to average 3.2% over the three years to 2013, which is slightly above the national average. We expect long-term demand growth in Adelaide city to average 3.0% p.a. over the forecast period. Demand expectations represent a slight downgrade on previous short, medium and long term expectations.

CONCLUSION

Adelaide hotels have historically outperformed the market, however have had reduced confidence over the last two years and this is unlikely to continue in 2011. Occupancies have been strong and remain high in the range of 73-75%.

In 2011, rate growth will be constrained as new supply is introduced. Rate growth of 1.5% is expected over the next two years, to average 2.0% over the three years to 2013. Long term average rate growth of 2.7% is expected, and represents a downgrade from prior expectations. Adelaide reached its cyclic peak in 2008 and is likely to approach a gentle trough through to about 2015, as new supply is absorbed. RevPAR is forecast to decline by 3.2% in 2011, well below last year’s forecast. RevPAR is expected to recover in 2012 and record minor growth for the period to 2013. Long term, revPAR growth is expected to average 2.7% over the forecast period. This represents a 4.5% downgrade in average real revPAR due to the poorer 2011.

ADELAIDE – CITY

Room Room $2010

Year Night Rooms* % Night % ARR % RevPAR % Real Occ

Supply Chng Demand Chng Chng Chng RevPAR

2001 1,295,105 3,548 0.7% 884,143 0.9% $110.75 0.3% $75.61 0.5% $97.16 68.3%

2002 1,434,647 3,931 10.8% 977,641 10.6% $111.35 0.5% $75.88 0.4% $94.65 68.1%

2003 1,539,229 4,217 7.3% 1,009,790 3.3% $112.62 1.1% $73.88 -2.6% $90.03 65.6%

2004 1,630,413 4,467 5.9% 1,091,351 8.1% $113.66 0.9% $76.08 3.0% $90.36 66.9%

2005 1,598,289 4,379 -2.0% 1,137,056 4.2% $113.19 -0.4% $80.53 5.8% $93.04 71.1%

2006 1,535,126 4,206 -4.0% 1,182,532 4.0% $121.79 7.6% $93.82 16.5% $104.98 77.0%

2007 1,502,273 4,116 -2.1% 1,171,627 -0.9% $132.24 8.6% $103.13 9.9% $112.09 78.0%

2008 1,521,821 4,169 1.3% 1,176,334 0.4% $142.27 7.6% $109.97 6.6% $115.27 77.3%

2009 1,541,528 4,223 1.3% 1,160,842 -1.3% $139.92 -1.6% $105.37 -4.2% $108.17 75.3%

2010 1,563,662 4,284 1.4% 1,197,879 3.2% $141.84 1.4% $108.66 3.1% $108.66 76.6%

Actual Average 1988-2010 3.3% 4.1% 2.4% 3.3% $99.23 67.1%

2011 1,705,209 4,672 9.1% 1,251,784 4.5% $143.26 1.0% $105.17 -3.2% $102.10 73.4%

2012 1,730,787 4,742 1.5% 1,276,819 2.0% $146.13 2.0% $107.80 2.5% $101.37 73.8%

2013 1,812,691 4,966 4.7% 1,315,124 3.0% $150.51 3.0% $109.20 1.3% $99.69 72.6%

Average 2011 - 2013 5.1% 3.2% 2.0% 0.2% $101.05 73.2%

2014 1,905,162 5,220 5.1% 1,367,729 4.0% $153.52 2.0% $110.21 0.9% $97.69 71.8%

2015 1,962,317 5,376 3.0% 1,408,761 3.0% $156.59 2.0% $112.42 2.0% $96.74 71.8%

2016 1,981,940 5,430 1.0% 1,451,023 3.0% $161.29 3.0% $118.08 5.0% $98.65 73.2%

2017 2,001,759 5,484 1.0% 1,487,299 2.5% $166.13 3.0% $123.43 4.5% $100.12 74.3%

2018 2,021,777 5,539 1.0% 1,524,481 2.5% $172.77 4.0% $130.28 5.5% $102.59 75.4%

2019 2,041,995 5,595 1.0% 1,562,594 2.5% $179.68 4.0% $137.50 5.5% $105.13 76.5%

Average 2014 - 2019 2.0% 2.9% 3.0% 3.9% $100.15 73.8%


HISTORICAL

FORECAST

Source: Australian Bureau of Statistics / Dransfield. *Room numbers are annualised. Note: Growth rates for 2003 have been adjusted as advised by the ABS following the break in the time series


ADELAIDE

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'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

Occupancy


Adelaide - City Demand, Supply and Occupancy


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RevPAR ($)

Adelaide - City Real Room RevPAR 1988 - 2019


Demand

Supply Supply

Demand Occupancy

Aust Occupancy

Occupancy

Aust Occupancy

ACTUAL FORECAST

RevPAR Real RevPAR RevPAR Real RevPAR

Avg Real RevPAR Aust Real RevPAR Avg Real RevPAR Aust Real RevPAR

ACTUAL FORECAST


BRISBANE

BACKGROUND

The hotel area of Brisbane City Core comprises: City - Inner, City - Remainder, South Brisbane, Kangaroo Point and Spring Hill. The larger Brisbane Tourism Region also incorporates Fortitude Valley and Ipswich. Dransfield focuses on the Brisbane City Core Region for our analysis of hotel performance.

BRISBANE REGIONS – DECEMBER QUARTER 2010


Brisbane Regions Establishments Rooms Occupancy ARR RevPAR

TOTAL Brisbane City Core 73 8,233 79.9% $168.51 $134.65

Brisbane Tourism Region Hotels/Motels

Hotels 32 4,261 79.1% $184.79 $146.17

Motels 92 3,994 68.3% $124.85 $85.27


Total Brisbane Tourism Region 194 13072 75.4% $156.48 $117.99


5-star 8 1,833 $30,161 83.1% $215.19 $178.83

4-star 78 7,041 $81,611 77.9% $161.79 $126.04

3-star 93 3,735 $27,465 68.3% $117.00 $79.91

Other 15 463 $2,624 63.9% $96.35 $61.60

Total 194 13,072 $141,860 75.4% $156.48 $117.99


Source: Australian Bureau of Statistics / Dransfield. Figures in Italics have been calculated. All figures are for establishments with 15 or more rooms

2010 IN REVIEW

In 2010 Brisbane hotel revenue increased by 9.7%, slightly above the 8.0% high growth forecast. Growth was mostly due to a 6.6% increase in demand supported by a 3.9% rate increase. The improved demand was surprisingly from an 8.6% increase in domestic visitors, coupled with a 6.0% increase in international visitors to Brisbane. The visitation pattern was quite different to the balance of Queensland which recorded a 2.6% decline. Brisbane’s demand growth has kept pace with the increase in supply, averaging 4.9% annual growth over the past 5 years for both.

2010

FORECAST

ACTUAL

2010

RevPAR 8.0% 9.7% 1.7% ▲

Supply 0.6% 1.1% 0.5% ▲

Demand 6.0% 6.6% 0.6% ▲Occupancy 78.7% 78.8% 0.1% ▲

ARR 2.5% 3.9% 1.4% ▲

Var

In the first half of 2011, Brisbane hotels recorded revPAR increases of 6.2%, with a very strong second quarter recovering from the flood affected first quarter. This was due to large 6.4% increases in rate with hoteliers making use of the high occupancy environment.

SUPPLY

In 2010, Brisbane room stock increased by 1.1% or approximately 84 rooms and slightly ahead of expectations. Supply growth for 2011 is expected to be a low 1.5% consistent with our previous forecast. There is limited construction activity; however proposal activity has increased throughout the year and by over 800 rooms to 1,600 rooms. We expect 60-70% of these

proposals to proceed given the high quality of the proponents. This level of supply can still be comfortably absorbed, given current market conditions. We expect supply to grow by 3.5%% in the medium term, a 200 room downgrade on last year’s expectations due to later commencements. Over the full forecast period, average supply increases of 3.6% are expected, a slight upgrade of 600 rooms as the strong fundamentals encourage midterm supply. The Brisbane market is still trading near capacity and is well positioned to absorb any new supply

DEMAND

In 2010, demand increased by 6.6%, in line with expectations. The international content in Brisbane marginally decreased to 27.5% (previously 28.1%). For the six months to June demand growth is 2.6% and above the TFC forecasts for a 0.1% decline. We expect 3% for the full year 2011. The TFC have forecast an increase in domestic visitor nights in Queensland of 0.2% and a higher 0.4% increase in nights spent in Brisbane over the period to 2020. International visitor nights to Queensland are presently forecast to grow by an average of 3.5% to 2020 with a slight decline for 2011. Combining TFC forecasts for international and domestic visitor nights in Queensland, the weighted average growth in visitor nights in Brisbane to 2020 is expected to be 1.2% p.a., previously 1.5%, and slightly below the current national average of 1.3%.


BRISBANE

Medium term demand growth is expected to be 3.3% as supply contributes from 2013. This represents a downgrade from last year’s expectations, as nationally demand growth expectations have tempered and is presently constrained by the lack of supply in Brisbane. Long term demand growth is expected to average 3.0% to 2019. This represents a downgrade from the 3.8% expectations held last year.

CONCLUSION

Brisbane continues to perform well achieving demand growth despite poor international and national demand conditions. This continues to enable revenue growth. Average rates have started moving as expected, and are likely to achieve 6% in 2011. Rate growth averaging 4.7% is expected in the medium term and could well be

exceeded. Long term average rate growth of 3.1% p.a. is forecast over the period to 2019. Rate expectations have lifted with the strong 2010 base and YTD performance. Brisbane reached a cyclical peak in 2007 but is expected to peak again in 2012 due to the economic crisis pushing out supply. RevPAR is forecast to increase by 7.6% during 2011, following a high 9.7% in 2010. We expect revPAR will grow by an average 4.68% over the next 3 years to 2013. Long term revPAR growth of 2.6% is expected over the forecast period. This represents a small downgrade in real revPAR expectations from 2010, due to the softer demand environment. There remains scope for this to be exceeded if rate is pushed.

BRISBANE – CITY CORE

Room Room $2009



2001 2,303,751 6,312 -3.7% 1,621,505 5.2% $101.99 3.1% $71.79 12.6% $92.25 70.4%

2002 2,241,007 6,140 -2.7% 1,612,857 -0.5% $103.80 1.8% $74.71 4.1% $93.18 72.0%

2003 2,213,271 6,064 -1.2% 1,685,470 4.5% $110.34 6.3% $84.03 12.5% $102.39 76.2%

2004 2,245,072 6,151 1.4% 1,779,189 5.6% $115.32 4.5% $91.39 8.8% $108.54 79.2%

2005 2,344,224 6,423 4.4% 1,849,656 4.0% $128.49 11.4% $101.38 10.9% $117.14 78.9%

2006 2,478,693 6,791 5.7% 2,003,979 8.3% $140.83 9.6% $113.86 12.3% $127.40 80.8%

2007 2,580,976 7,071 4.1% 2,103,133 4.9% $151.97 7.9% $123.83 8.8% $134.59 81.5%

2008 2,845,311 7,795 10.2% 2,231,608 6.1% $160.58 5.7% $125.94 1.7% $132.01 78.4%

2009 2,939,183 8,053 3.3% 2,196,175 -1.6% $154.08 -4.0% $115.13 -8.6% $118.19 74.7%

2010 2,970,141 8,137 1.1% 2,341,863 6.6% $160.14 3.9% $126.27 9.7% $126.27 78.8%

Actual Average 1988-2010 3.9% 4.1% 2.3% 2.9% $106.01 71.0%

2011 3,014,693 8,259 1.5% 2,412,119 3.0% $169.75 6.0% $135.82 7.6% $131.87 80.0%

2012 3,074,987 8,425 2.0% 2,484,482 3.0% $176.54 4.0% $142.64 5.0% $134.13 80.8%

2013 3,286,570 9,004 6.9% 2,583,862 4.0% $183.60 4.0% $144.35 1.2% $131.78 78.6%

Average 2011 - 2013 3.5% 3.3% 4.7% 4.6% $132.59 79.8%

2014 3,496,601 9,580 6.4% 2,713,055 5.0% $187.27 2.0% $145.31 0.7% $128.79 77.6%

2015 3,713,344 10,174 6.2% 2,848,708 5.0% $191.02 2.0% $146.54 0.8% $126.10 76.7%

2016 3,915,971 10,729 5.5% 2,905,682 2.0% $194.84 2.0% $144.57 -1.3% $120.78 74.2%

2017 3,994,291 10,943 2.0% 2,934,739 1.0% $198.74 2.0% $146.02 1.0% $118.44 73.5%

2018 4,034,233 11,053 1.0% 3,022,781 3.0% $204.70 3.0% $153.38 5.0% $120.78 74.9%

2019 4,074,576 11,163 1.0% 3,053,009 1.0% $210.84 3.0% $157.98 3.0% $120.78 74.9%

Average 2014 - 2019 3.7% 2.8% 2.3% 1.5% $122.61 75.3%


HISTORICAL

FORECAST



BRISBANE

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

Occupancy


Brisbane - City CoreDemand, Supply and Occupancy


$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

RevPA

R ($)

Brisbane - City CoreReal Room RevPar 1988 - 2019


Demand

Supply Supply

Demand Occupancy

Aust Occupancy

Occupancy

Aust Occupancy

ACTUAL FORECAST



ACTUAL FORECAST


CAIRNS

BACKGROUND

A summary of the Cairns area (including Palm Cove) and Tropical North Queensland (TNQ) hotel, motel and serviced apartment markets for the December 2010 quarter follows. Dransfield focuses on the Cairns City and Suburbs Region for our analysis of hotel performance. This area includes Palm Cove but does not include Port Douglas.

CAIRNS REGIONS – DECEMBER QUARTER 2010


Cairns/TNQ Hotels Establishments Rooms Occupancy ARR RevPAR

Cairns – City & Suburbs 96 7,515 $110.04 $0.00

TNQ (Tropical North Queensland) Tourism Region

Hotels 40 4,480 61.4% $128.54 $78.92

Motels 60 3,121 56.5% $97.08 $54.85


Total TNQ Tourism Region 180 11,475 55.7% $118.43 $65.97 Source: Australian Bureau of Statistics / Dransfield. Figures in Italics have been calculated. All figures are for establishments with 15 or more rooms

2010 IN REVIEW

In 2010, Cairns revPAR increased by 0.8%, slightly below the 1.5% forecast. This was primarily due to a reduction in demand which declined by 0.4%, compared to 2.0% growth expectations. Supply decreases were larger than forecast which also helped, however this was offset by room rate decline.

2010

FORECAST

ACTUAL

2010

RevPAR 1.5% 0.8% -0.7% ▼

Supply 0.5% -2.8% -3.3% ▼

Demand 2.0% -0.4% -2.4% ▼Occupancy 59.7% 60.3% 0.6% ▲

ARR 0.0% -1.6% -1.6% ▼

Var

In the first half of 2011, Cairns hotels recorded a revPAR increase of 3.3% against a slightly stronger 5.6% forecast. This was due to an increase in demand of 3.6% coupled with a further decrease in supply. This was partly offset by a 1.0% reduction in ARR.

SUPPLY

In 2010 Cairns room numbers declined by 2.8% or 216 room equivalents, where a slight increase had been expected. In the first half of 2011 there has been a continuing reduction in supply, 0.9%, as poor returns promote better use. There is almost no construction or proposal activity given recent performance and low prevailing occupancy. Medium term supply is expected to be stable to 2013. This reflects a 450 room reduction compared to last year’s forecast for the period to 2013. Longer term, supply expectations remain low. Our supply expectations have also been downgraded over the full forecast period.

Average annual increases of only 1% are expected to 2019 compared to the Australian capital city average of 3.0%.

DEMAND

In 2010 the trend of declining demand continued with a 0.4% drop in room nights. Since the 2004 peak of demand with almost 2 million room nights the Cairns market has experienced a 14% decline. In 2011 demand is up and is likely to reach 3% for the full year. This is well above the national average which is below 2%, however this is from a very low base. Demand characteristics are changing with a 10% reduction in domestic visitors (6% in visitor nights), greater than the 1% reduction in international visitors. Despite this reduction in visitations higher demand has been recorded in hotels. The TFC have forecast an increase in domestic visitor nights in Queensland of 0.2% over the period to 2020. International visitor nights to Queensland are presently forecast to grow by an annual average of 3.5% to 2020, and above the national average. Combining TFC forecasts for international and domestic visitor nights to Queensland, the weighted average growth in visitor nights in Cairns to 2020 is expected to be 1.6% p.a., above the national average of 1.3% and compared to 1.9% forecast last year. Demand expectations have declined for Australia, Queensland and Cairns. We expect the recovery to continue, however at a reduced 2.5% rate in the medium and long term. We expect demand growth in Cairns hotels to average 2.7% p.a. over the forecast period to 2019. This is a sight downgrade over the last year.


CAIRNS

CONCLUSION

The Cairns market has turned with all important air access improving and being supported by increases in passenger and visitor volume. Occupancy rates are expected to improve in 2011, the second year running. Occupancies remain low, however, have broken through the 60% barrier and are not adequate to support high levels of rate growth or supply. Rates have declined slightly in the first half however there are opportunities to grow rate in the second half which is peak season and showing improved demand. This should see rates break even for 2011.

Rate growth of 2.3% is expected over the three years to 2013. This represents a minor downgrade on medium term rate expectations. Average rate growth over the forecast period of 3.1% is expected as recovery takes place.

Cairns hotels reached their cyclic peak in 2006. Unusually this was caused by a collapse in demand rather than an increase in supply. It appears that 2010 may have seen the trough. Over the 3 years to 2013 revPAR is forecast to increase by an average 5.4%. Long term revPAR growth is expected to average 4.8% annually, to 2019, as the market recovers from a very low base. This represents a 7.2% downgrade in real revPAR caused by the lower demand growth profile. There remains scope for further improvement.

CAIRNS – CITY AND SUBURBS

Room Room $2010



2001 2,572,552 7,048 1.9% 1,678,929 2.6% $98.11 0.0% $64.03 0.7% $80.16 65.3%

2002 2,559,120 7,011 -0.5% 1,695,148 1.0% $100.01 1.9% $66.25 3.5% $80.50 66.2%

2003 2,678,032 7,337 4.6% 1,795,861 5.9% $99.51 -0.5% $66.73 0.7% $79.21 67.1%

2004 2,782,531 7,623 3.9% 1,944,179 8.3% $105.26 5.8% $73.54 10.2% $85.09 69.9%

2005 2,737,112 7,499 -1.6% 1,931,690 -0.6% $110.83 5.3% $78.22 6.4% $88.03 70.6%

2006 2,688,693 7,366 -1.8% 1,907,141 -1.3% $117.58 6.1% $83.40 6.6% $90.91 70.9%

2007 2,768,206 7,584 3.0% 1,871,317 -1.9% $120.95 2.9% $81.76 -2.0% $86.56 67.6%

2008 2,816,837 7,717 1.8% 1,742,982 -6.9% $119.80 -0.9% $74.13 -9.3% $75.69 61.9%

2009 2,828,018 7,748 0.4% 1,663,247 -4.6% $110.57 -7.7% $65.03 -12.3% $65.03 58.8%

2010 2,749,107 7,532 -2.8% 1,656,522 -0.4% $108.76 -1.6% $65.53 0.8% $63.84 60.3%

Actual Average 1988-2010 4.6% 4.2% 2.2% 2.2% $85.40 66.8%

2011 2,721,616 7,456 -1.0% 1,706,218 3.0% $108.76 0.0% $68.18 4.0% $64.48 62.7%

2012 2,721,616 7,456 0.0% 1,757,404 3.0% $112.02 3.0% $72.33 6.1% $66.26 64.6%

2013 2,748,832 7,531 1.0% 1,810,126 3.0% $116.50 4.0% $76.72 6.1% $68.22 65.9%

Average 2011 - 2013 0.0% 3.0% 2.3% 5.4% $66.32 64.4%

2014 2,776,320 7,606 1.0% 1,855,379 2.5% $121.16 4.0% $80.97 5.5% $69.91 66.8%

2015 2,804,084 7,682 1.0% 1,901,764 2.5% $126.01 4.0% $85.46 5.5% $71.64 67.8%

2016 2,832,124 7,759 1.0% 1,949,308 2.5% $131.05 4.0% $90.20 5.5% $73.41 68.8%

2017 2,888,767 7,914 2.0% 1,998,041 2.5% $134.98 3.0% $93.36 3.5% $73.77 69.2%

2018 2,946,542 8,073 2.0% 2,047,992 2.5% $139.03 3.0% $96.63 3.5% $74.13 69.5%

2019 3,005,473 8,234 2.0% 2,099,192 2.5% $143.20 3.0% $100.02 3.5% $74.49 69.8%

Average 2014 - 2019 1.5% 2.5% 3.5% 4.5% $72.89 68.7%


HISTORICAL

FORECAST

Source: Australian Bureau of Statistics / Dransfield. *Room numbers are annualised. Note: 1988 to 1995 Cairns City, 1996 to 1998 & Forecasts Cairns Statistical Division Note: Growth rates for 2003 have been adjusted as advised by the ABS following the break in the time series


CAIRNS

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

Occupancy

Annual Room Nights(000s)

Cairns – Statistical DivisionDemand, Supply and Occupancy

Source: Australian Bureau of Statistics / Dransfield. Note: 1988 to 1995 Cairns City, 1996 & Forecast Cairns Statistical Division

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

RevPAR ($)

Cairns - Statistical DivisionReal Room RevPar 1988 - 2019

Source: Australian Bureau of Statistics / Dransfield Note: 1988 to 1995 Cairns City, 1996 & Forecast Cairns Statistical Division



ACTUAL FORECAST

Demand

Supply Supply

Demand Occupancy

Aust Occupancy

Occupancy

Aust Occupancy

ACTUAL FORECAST


CANBERRA

BACKGROUND

Analysis of the Canberra Tourism Region by standard of accommodation for the December 2010 quarter follows. This region encompasses the entire ACT.

CANBERRA REGIONS – DECEMBER QUARTER 2010


Canberra Hotels/Motels Establishments Rooms Occupancy ARR RevPAR

Hotels 16 2,272 73.7% $164.51 $121.25

Motels 20 1,399 70.6% $117.81 $83.17


Total Canberra Tourism Region 53 4899 73.3% $153.24 $112.32


5-star 3 n.p n.p n.p n.p n.p

4-star 32 3,083 $34,368 77.7% $155.93 $121.16

3-star 15 1,135 $8,280 67.2% $119.64 $80.40

Other 3 681 $42,183 415.2% $162.18 $673.29

Total 53 4,899 $50,463 73.3% $153.24 $112.32


Source: Australian Bureau of Statistics / Dransfield. Figures in Italics have been calculated. All figures are for establishments with 15 or more rooms

2010 IN REVIEW

In 2010, Canberra hotels recorded significant revPAR growth of 11.1%, slightly below the very high 13.1% forecast. The fall off was mostly due to weaker demand experienced in the second half. This was partially offset by a reduction in supply against forecast 2.2% growth. Canberra experienced a very strong first half of 2010 recording growth of 17.2% off the back of a strong events calendar.

2010

FORECAST

ACTUAL

2010

RevPAR 13.1% 11.1% -1.9% ▼

Supply 0.3% -2.5% -2.8% ▼

Demand 8.0% 4.8% -3.2% ▼Occupancy 76.0% 75.9% -0.1% ▼

ARR 5.0% 3.4% -1.6% ▼

Var

In the first half of 2011 Canberra recorded RevPAR decline of 3.6%, this is by comparison to the extremely strong 1

st half of 2010. Demand for hotels has decreased

by 10.5%, however remains similar to 2009 levels.

SUPPLY

In 2010, Canberra room stock decreased by approximately 129 room equivalents or 2.5%. Unexpected withdrawals exceeded the small level of new supply. Construction activity has not changed on a net basis with 240 room equivalents due 2011-13. There have been

several withdrawals replaced by newer projects of similar size and timing. There has also been a slight increase in proposals. The stock reductions of 2011 and poorer performance in the 12 months to June 2011 have reduced midterm supply expectations to average 2.1% to 2013, a reduction of nearly 600 rooms. Long term, average supply increases of 2.3% are expected over the forecast period to 2019. This is a slight 500 room downgrade to our previous long term supply forecast.

DEMAND

In 2010, Demand for Canberra city hotels grew by 4.8% and below the expected 8%. In the first half demand has reduced by 10.5% however in September quarter an improvement of 2009 and 2010 was recorded. For the first time China became the top international source market. The TFC forecast an annual average 1.0% decline in domestic visitor nights in the ACT for the period to 2020, as a result of a 15.2% decrease in 2011. Growth in international visitor nights to Canberra is forecast to average 2.8% to 2020. Combining TFC forecasts for international visitor domestic visitor nights in ACT over the period to 2020, the weighted average decline in visitor nights in Canberra is expected to average 0.5%, below last year’s 1.8%, and the national average of 1.3%.


CANBERRA

We expect demand to fall by 5% in 2011 and breakeven in the three years to 2013, thereafter growth should return to more normal levels averaging 1.8% to 2019. This represents a substantial downgrade on our short, medium and long term expectations.

CONCLUSION

Canberra’s trading pattern has been very different to expectations in 2011. Despite this rates have grown and are expected to record full year growth of 4% exceeding 2% expectations and enabling revPAR to be consistent with modest expectations.

The market has peaked in 2010, and is likely to slowly decline with moderate supply likely to outstrip low demand growth. In the medium term revPAR is expected to breakeven to 2013 and average 1.8% over the full forecast period as the market recovers. This is a 2011 downgrade followed by an upgrade on all other years compared to the prior forecast and averaging 6% to 2019.

CANBERRA – TOURISM REGION

Room Room $2010



2001 1,870,515 5,125 2.0% 1,157,700 5.1% $100.78 1.1% $62.37 4.1% $80.16 61.9%

2002 1,884,132 5,162 0.7% 1,186,800 2.5% $100.06 -0.7% $63.03 1.0% $78.61 63.0%

2003 1,842,837 5,049 -2.2% 1,221,428 2.9% $104.44 4.4% $69.22 9.8% $84.35 66.3%

2004 1,796,148 4,921 -2.5% 1,205,630 -1.3% $106.08 1.6% $71.20 2.9% $84.57 67.1%

2005 1,805,685 4,947 0.5% 1,252,105 3.9% $110.64 4.3% $76.72 7.7% $88.64 69.3%

2006 1,826,070 5,003 1.1% 1,321,222 5.5% $118.07 6.7% $85.43 11.4% $95.59 72.4%

2007 1,814,395 4,971 -0.6% 1,318,167 -0.2% $130.90 10.9% $95.10 11.3% $103.36 72.7%

2008 1,864,132 5,107 2.7% 1,292,164 -2.0% $148.88 13.7% $103.20 8.5% $108.17 69.3%

2009 1,851,593 5,073 -0.7% 1,307,420 1.2% $146.04 -1.9% $103.12 -0.1% $105.86 70.6%

2010 1,804,599 4,944 -2.5% 1,369,952 4.8% $150.95 3.4% $114.59 11.1% $114.59 75.9%

Actual Average 1988-2010 2.5% 3.4% 3.1% 4.1% $86.89 63.7%

2011 1,764,652 4,835 -2.2% 1,301,454 -5.0% $156.23 3.5% $115.22 0.6% $111.87 73.8%

2012 1,833,327 5,023 3.9% 1,340,498 3.0% $159.36 2.0% $116.52 1.1% $109.57 73.1%

2013 1,920,565 5,262 4.8% 1,367,308 2.0% $159.36 0.0% $113.45 -2.6% $103.57 71.2%

Average 2011 - 2013 2.1% 0.0% 1.8% -0.3% $108.34 72.7%

2014 1,978,182 5,420 3.0% 1,422,000 4.0% $160.95 1.0% $115.70 2.0% $102.55 71.9%

2015 2,057,309 5,636 4.0% 1,464,660 3.0% $164.17 2.0% $116.88 1.0% $100.58 71.2%

2016 2,098,455 5,749 2.0% 1,493,954 2.0% $169.10 3.0% $120.38 3.0% $100.58 71.2%

2017 2,140,424 5,864 2.0% 1,523,833 2.0% $174.17 3.0% $124.00 3.0% $100.58 71.2%

2018 2,172,531 5,952 1.5% 1,561,928 2.5% $179.39 3.0% $128.97 4.0% $101.57 71.9%

2019 2,205,119 6,041 1.5% 1,600,977 2.5% $184.78 3.0% $134.15 4.0% $102.57 72.6%

Average 2014 - 2019 2.3% 2.7% 2.5% 2.8% $101.40 71.7%


HISTORICAL

FORECAST



CANBERRA

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

500

1,000

1,500

2,000

2,500

3,000

'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

Occupancy


Canberra – Statistical DivisionDemand, Supply and Occupancy


$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

RevPAR ($)

Canberra - Statistical DivisionReal Room RevPar 1988 - 2019




ACTUAL FORECAST

Demand

Supply Supply

Demand Occupancy

Aust Occupancy

Occupancy

Aust Occupancy

ACTUAL FORECAST


DARWIN

BACKGROUND

Dransfield focuses on the Darwin Tourism Region. A summary of the key performance indicators for the quarter ended December 2010 is below.

DARWIN REGIONS – DECEMBER QUARTER 2010


Darwin Hotels/Motels Establishments Rooms Occupancy ARR RevPAR

Hotels 15 1,768 68.9% $122.66 $84.51

Motels 14 668 54.7% $90.38 $49.44


Total Tourism Region 43 3726 63.8% $124.66 $79.54


5-star 2 n.p. n.p. n.p. n.p. n.p.

4-star 19 2,474 $20,542 68.3% $132.18 $90.28

3-star 11 504 $2,051 51.8% $85.47 $44.27

Other 11 748 $4,668 57.1% $118.87 $67.83

Total 43 3,726 $27,261 63.8% $124.66 $79.54


Please Note: The Darwin accommodation market has strong seasonality with highs in the June and September quarters. Source: Australian Bureau of Statistics / Dransfield. Figures in Italics have been calculated. All figures are for establishments with 15 or more room; n.p. - not published

2010 IN REVIEW

Darwin hotels recorded revPAR growth of 1% in 2010 in line with our forecast. This was as a result of demand growth of 2.4% against the backdrop of a 1.5% increase in supply. Despite the improved demand hoteliers remained cautious with rates declining 0.9%.

2010

FORECAST

ACTUAL

2010

RevPAR 1.0% 1.0% 0.0% ▲

Supply 3.0% 1.5% -1.5% ▼

Demand 4.0% 3.4% -0.6% ▼

Occupancy 69.9% 70.6% 0.7% ▲

ARR 0.0% -0.9% -0.9% ▼

Var

In the first half of 2011, Darwin hotels recorded revPAR growth of 3.8% driven by a 5.6% increase in rate and above the 1.9% expectation. This was partially offset by a 2.9% decrease in demand.

SUPPLY

In 2010 Darwin room stock increased by 1.5% following a 30% increase in supply over the past 2 years. No change is expected in 2011, and below prior expectations. There are proposals for approximately 300 new rooms for completion in 2013 and 2014. We have rated the prospects of these proceeding at 50%.

The medium term forecast is for a 2.5% increase in supply to 2013 which produces a slightly lower room total to that expected 12 months ago. We have also reduced our later expectations based on the poor outlook for 2011.

DEMAND

In 2010 demand for Darwin city hotels grew by 3.4% following the large supply increases of 2008 and 2009. Darwin hotels still have a high 75% domestic content, however this has dropped from 80.2% in 2019. The TFC forecasts domestic visitor nights in the Northern Territory to decrease by an average 0.3% for the period to 2020 as a result of a forecast 9.2% decline in 2011. Growth in international visitor nights to Northern Territory is forecast to average 2.1% to 2020 again affected by a large decline in 2011. For the year to September 2011 Northern Territory visitors have declined 10% and visitor nights 8.9% with full year expectations of a 3% reduction in demand for room nights. Combining the TFC forecasts for international and domestic visitor nights to the Northern Territory, the weighted average

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121223 Hotel Futures 2011cdn0.blocksassets.com/assets/dransfield/hotel-futures/... · 2013. 9. 6. · 4 DRANSFIELD HOTEL FUTURES 2011 SUMMARY This is the fifteenth edition of Hotel