2016 Dransfield Hotel Futures report was recently released. As always it’s difficult to know how much credibility to give to reports of this kind and haven’t delved into the detail. It does though include a good deal of information and commentary on the Cairns & Port Douglas hotel accommodation market.

We know tourism numbers have been positive recently so rather than demand the comments on supply are what matter more:

Supply Forecasts • Supply forecasts to FY2023 represent a small absolute downgrade, with delays appearing as Market Response hasn’t occurred • Dransfield’s supply forecast is for 1,550 new rooms to enter the market over the next 9 years (20% of current stock) at an average annual growth rate of a low 2.0%
– We expect the low level of anticipated supply to be fully absorbed over the life of the forecast, and for the development trigger (70% + Occupancy) to switch on towards the middle of the forecast
– The potential large scale Aquis project will also inhibit developers from undertaking scoping exercises until more certainty is reached • Supply growth in the medium term to FY2018 is expected to average a low 0.3% growth p.a (just 79 rooms)
– Proposal activity has slowly started to recommence as market performance improves and occupancies edge towards 70%. At this stage most proposal activity appears in its infancy
– The tiered nature of the market, with large and branded properties substantially outperforming smaller independents may cause some of these smaller properties to fall out of the market as new supply comes online increasing the competitive environment

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