Dransfield declares Cairns (& Port Douglas) capital of North Queensland

Dransfield have posted a year end review of their 2016 Hotel Futures:

In FY2016, the Cairns & Port Douglas STA market was the highest growth Capital city market in the country, buoyed by resurgent international and domestic leisure visitors

• Significant RevPAR growth of 11.2% exceeded our already robust 9.2% expectations as Australian leisure markets continue to prosper

• Occupancy levels improved 3.3 points to 68.2%, facilitating rate movement. This is the highest level achieved in more than a decade

• Rates grew by a strong 5.8%, slightly above our expectations • The STR sample of generally higher quality hotels recorded similar RevPAR growth of 11.6%, with slightly higher occupancy growth than the ABS set

• Certainty surrounding the proposed Aquis development has not progressed, stalling prospective developers plans for additional development. It is unlikely that we will materially alter our low supply expectations

• Long term RevPAR expectations for 5.3% growth p.a are expected to be maintained in Hotel Futures 2017 off a slightly higher base.


While the accolade of Cairns as a capital city is appreciated the Dransfield review covers the top ten markets which also includes such as Gold Coast.

The comments on Aquis are consistent with previous comments in Dransfield reports that the uncertain bona fides of the proposal may have been a net negative for Cairns.


Vertigo hits Reef*

Reef Casino Trust (RCT) has announced the estimated distribution for 2H (2nd half year) 2016. Not an outstanding result anticipated:

With slightly more than 3 weeks’ trading to go before the end of the financial year, our current estimate of the distributable profit* for the full year 2016 is approximately $12.0 million, compared to 2015’s distributable profit of $14.96 million.
For the Reef Hotel Casino’s financial year to date, hotel operations have performed strongly. Table games performance was slightly up on last year.  However, the disruptions caused by our major renovations on the ground floor of our complex, including the reduction in entertainment, combined with increased local competition have had a greater impact on electronic gaming than anticipated.
Our major renovations will be largely completed by the end of the year and we can look forward to our new facilities on the ground floor of our complex providing an even more competitive product to our local and international patrons and customers

I would be more confident in the explanation here if it didn’t follow a softer 1H result when none of these factors were apparently relevant. Also uncertain what the increased local competition is?

The disruptions as I understand almost entirely related to the entrance area and previous Vertigo Bar, now creatively renamed and reopened as Bar36, with no direct impact on gaming facilities? Must drop by for a look while awaiting release of full results and commentary in February.

RCT reports on a calendar financial year with the 2H tourism season generally outperforming 1H:


That’s the lowest annual result since 2012 when the upper casino level was closed most of H1 for renovations. It’s the lowest 2H result since 2010. Results here in the graph have been adjusted to strip out one-off costs from the failed Aquis takeover in 2014.

Five year candlestick history from the depths of what was the bottom for RCT in 2012 with the ‘Aquis bump’ prominent:



Lots happening in the gaming sector. Ken Chapman has departed board of Aquis Entertainment which has been prominently noted in Cairns. All the big Australian & NZ casino operators have been significantly discounted following arrest of Crown marketing team in China.

Key RCT stakeholder Casinos Austria is also subject to a takeover offer in Europe. Trading in RCT was more active than usual since the open of trade yesterday even before the RCT announcement.

*Wikipedia: vertigo is a sensation of spinning while stationary.


Cairns rental gap

RTA rental data for the September quarter were generally consistent with the previous quarter. There may be some early signs that declines in Townsville and more so Mackay are stabilising. Mackay could be the earlier indicator to watch here after the extraordinary gains in coking coal (steel) prices over the last year.

However the Cairns premium gap remains in the largest sectors:


To graph that premium/discount directly for Cairns and Townsville in the mutually largest 3 bedroom sector:


Most of that gap in recent quarters has been the decline in Townsville. The median rent for a 3 bedroom house in Cairns has been flat since 2014. However in aggregate it amounts to a substantial sum diverted from alternative spending.

There are very significant differences between housing stock in Cairns and Townsville. The 1 bedroom unit sector is interesting. This has shown the highest rental growth of any sector over the last two years in Cairns. It is also a sector in Cairns which can be fluid between residential and tourism. The much smaller Townsville 1 bedroom rental sector is now at an equivalent median rental as Cairns. The only sector this happens and only a small discount to the Townsville 2br rental. I suspect this relates to more recent stock but a sector to watch.

Most recent building approvals commentary at Conus: Regional Building Approvals disappoint in Cairns but better in Townsville

Smooth flight path for Airport

While growth remains healthy the monthly passenger numbers for Cairns Airport have become almost boring in their recent consistency.


In September Domestic was  +4.9%; international +9.1%. International growth rate has come back somewhat in recent months but that is to be expected given it is no longer coming off the previous very weak period.

Good numbers also continue to be reported this week by Sydney Airport: domestic +3.9%;  international +8.6%. All charts and BITRE info will be updated imminently have been updated for most recent data at the Cairns Airport page.

Queensland labour force sample

The most recent labour force numbers for September from the ABS were out yesterday. There is plenty of commentary and the usual political use and abuse of different statistics. There is also an interesting note from ABS at Insights from the original data.

The incoming rotation group in Queensland in September 2016 was noticeably different in its labour force characteristics to the group that it replaced, and to the rest of the Queensland sample rotation groups, with a greater level of influence on the current month’s estimate and movement estimate than usual.

Through the Composite Estimation process the ABS has temporarily reduced the influence of this rotation group for September estimates and this is reflected in original, seasonally adjusted and trend estimates. This means that the remaining 7/8 of the Queensland sample will have a higher influence and contribution to the September estimates, with a marginal increase in standard errors for the estimates for this month.

The ABS will review this when October data for this rotation group are available. In the meantime, the ABS encourages users of the GM1 data cube to exercise caution in interpreting incoming and outgoing rotation group changes for Queensland, and, to a lesser extent, Australia.

There has been critical comment on the jobs data from a number of economists, including what this may mean for the Queensland data: Economists have taken aim at the reliability of Australia’s jobs data. May be interesting to see if and how that plays out across the regions next week also.

A perspective on backpackers tax

A recent post on a topical issue: How much tax should backpackers pay?

This analysis is very much based on farm labour and the Seasonal Worker Program rather than hospitality.



Note: “The figures in the graph are from government statistics. Consistent with the data, it is assumed that 90% of those applying for a second-year visa have worked on a farm. Backpackers who have worked on a farm but not applied for a second-year visa are not included in the graph, which therefore underestimates the number of backpackers working on farms.”

The Cairns Hospital Dichotomy

I posted this just a few short months ago: Cairns Hospital scores for efficiency

Now there is this: Cairns Hospital board resigns in response to questions from Health Minister over $80m deficit

Yes, the efficiency score is now two years old, the most recently available comparative data,  related to the period up to 2013-2014. However, somehow my faith in reliable data over politics is challenged by this situation.



Revisionism at the Cairns Post

I had wanted to move on from a previous virtual persona but have been challenged in the past week by this at the Cairns Post: Former Cairns developer and bank battler backs ombudsman review

I wont go into detail. It should be history and left behind. However it is significant for potentially repeating past mistakes in a future Cairns where collective memory, particularly at the Compost, is rather limited. This was my post at Loose Change in 2011: The rise and demise of CEC


Not a great graph as I acknowledged at the time but best I could do try and represent the rapid expansion of CEC post 2007 and subsequent implosion. The maroon bit is net. Assets in the last years included a material deferred tax assets component which is where the auditor ultimately had an issue. Best for my own mental wellbeing that I don’t rake over these coals. Anyone so inclined can search the ASX database on corporate releases from CEC notable for the serial failure to meet reporting deadlines.

However, surprised that after all these years this link still exists online: CEG – CommSec 2007 Emerging Companies Conference – Mr Roy Lavis, MD

Please reference the above graph but the key comment here comes just after 27 minutes in.

Roy Lavis: “I want to grow this company to a billion dollars very, very quickly”

Yep, It was the banks what done it I tell ya!