Whither the Global Tourism Hub
I have always found the annual Dransfield Hotel Futures report interesting which features a section on Cairns and Port Douglas. However, this year in response to events they have gone for a staggered approach with an initial release for Sydney and Melbourne.
There is though general introductory comment on demand, supply and rates with background data from STR which is the outsourced supplier to Tourism Research Australia who will publish the data a few months hence. Supply is where I want to look as these come through:
Supply will recalibrate and reduce to the new demand environment offsetting some demand losses. This will happen in three ways:
• Some hotels will close temporarily, some permanently • Construction and proposal activity will slow and in some cases cease. This will result in a reduction to the medium term supply pipeline • Additional projects allowed for in the long term forecast, but not yet conceived (Market Response), won’t eventuate at prior expectations (volume/timing) as development feasibility hurdles are tougher to reach The position in the supply development lifecycle will affect how fast a city may recover over the medium term • Those at the end of the supply cycle have limited capacity to flex down (Perth/Brisbane) • Those that have high levels of proposals and Market Response, and low levels of construction have the greatest capacity to recalibrate (Sydney and Adelaide) • Those which have large committed pipelines under construction and proposals will see much less change (Melbourne) Our core supply assumptions include: • 25% of supply under construction will be delayed by 12 months. At this time we have not made an assumption that any under construction projects stop however that will likely happen for some projects • We have assumed a circa 50% reduction in net proposal completion, compared to our pre-COVID-19 expectations (which were often based on 50% or below probability) • Market Response (MR) allowances have been scaled back as the occupancy/revenue development targets are not triggered. MR is now nominal over the next 5 years
My guess is that we would tend towards the end of the supply cycle anyway in Cairns given the now delayed opening of Crystalbrook Construction completions? Which raises the question of what happened to the Global Tourism Hub?
Tourism minister Kate Jones was agush back in July with a PR release spruiking an analysis from PWC which was never actually fully released as claimed despite requests.
The analysis in the PWC report released today is built on a low to high range of development of capital cost expected to range between $665 million and $815 million. The variation reflects the number of hotel rooms delivered – varying from a 600-room high down to 125. This could be offset by including additional residential apartments (up to 100) and commercial office space (up to 10,000 square metres).
An imminent 600 hotel rooms would appear courageous in current circumstances. Meanwhile, news on the project which was to be announced and signed off by Q12020 has gone very quiet *crickets*.
Note: removing the Cairns Yacht Club building and beach from this site was a mistake.
Leave a Reply