Hilton Melbourne South Wharf has been one of the Victorian capital’s long upper-upscale hotels since it opened in April 2009 and most of the credit can be attributed to General Manager Michael Bourne. The New South Welshman has been at the helm for the last three years this month and to find out how the standout property has been performing,
HM sat down with him recently.
BY JAMES WILKINSON
Michael, what are you expecting in 2011 across all market segments?
We are expecting corporate and convention business to be strong over the 12 months ably supported by corporate driven FIT business. Leisure however is a different story. With the strong Australian Dollar, interest rates possibly poised to move again, household saving up and retail spend down, this segment has already shown in 2011 that it has been impacted. We are anticipating this will ease as we move into the 2nd half of the year as consumer confidence returns.
According to Deloitte’s latest ‘Hotel Market Outlook’, the city is forecast to reach an average occupancy of 82% and a RevPAR of AUD$156 in 2011. What more needs to be done across the board to pick the levels up to Sydney, which is forecast to hit 87% and $171 respectively?
It’s really supply driven. Melbourne has a lot of new inventory and Sydney doesn’t. Melbourne however has also invested well in infrastructure and this will drive a steady increase in demand. The immediate upside for Melbourne is that we have availability and that travellers (leisure and business) can plan accordingly. Moving forward Melbourne is very well placed for sustainable long term growth whereas Sydney is reaching capacity.
What level of impact did the long-awaited opening of the convention centre extension at the MCEC have on business?
The new convention centre is a world class facility. It has been excellent for business, not just for us, but for the CBD hotels generally.
How is the MICE market looking this year?
We are very lucky in Melbourne in that we don’t just have a first class facility in the MCEC, we also have a dynamic and professional convention bureau. The MCVB does a great job. It has wide industry support and represents the city very well in the ultra competitive world wide market that is MICE. As a result the MICE market for Melbourne is looking strong now and we can look confidently to the future as well. One thing I have noticed in Melbourne is that nothing is taken for granted in the MICE market. The city is prepared to and expects to fight for every event. No illusions exist re the state of the market, it is highly competitive and it appears to be well understood that any over estimation of the city’s pulling power is a potentially fatal error that everyone wishes to avoid. This is a vital market for our city and our state and it needs to be given commensurate collective support by all the parties involved. It is refreshing that in Melbourne we truly understand this.
What other market segments are you expecting to be the strongest in 2011?
For us locally the corporate market is gaining momentum. This end of the city has attracted many new commercial tenants due to the easy access and good facilities. This market has shown excellent growth to date and we confidently expect it to continue.
What market segments could be better across the city in 2011?
Leisure definitely is a bit softer than expected however having said that we have to consider the new supply. This has made the market more rate competitive, which is a good thing for visitors. The local leisure market is really important for the majority of Melbourne hotels so it is good that there are some great deals on offer currently.
Given Melbourne is the Australian sporting capital – are you expecting sports travel to be strong in 2011?
The Australian Open was great for us this year and the grand prix also. Big time sporting events are very important for a city and we are thankful for the passionate support these are given in Melbourne. We have the President’s Cup to look forward to this year in November and I am sure the Spring Carnival will once again be a great event and a boost for the city.
Over the last 18 months, Melbourne has been a big winner with increased seat capacity and new airlines flying to the city – what level of impact is this having on the hotel, particularly from an international perspective?
Melbourne Airport has done an excellent job attracting new airlines. While we do not deal much in inbound leisure, if this segment is filling beds in the city we indirectly benefit. Despite this success overall however net arrivals have declined due to the increased number of Australians travelling offshore. So despite this past success we need more of it moving forward and of course the new airline deals need to continue to deliver. There is no doubt that in Melbourne Airport we have a great partner in this regard.
Flights from China are increasing to destinations across Australia. Are you expecting strong growth from the Chinese market or do you believe Melbourne needs to do more to win a share of it?
All the hotels I have spoken with in Melbourne are keen to see Melbourne become established in the Chinese market and for Victoria and Australia to do as much as possible to speed up the effective penetration of this emerging market. Tourism Australia, Tourism Victoria and the MCVB are very much onboard with doing as much as possible to understand this market and to attract increasing numbers. While there is an understanding that it won’t happen overnight and that we don’t want to put all our eggs in the one basket, there is no denying that China will be an increasingly big player in the inbound market and has the potential to be the biggest player. We of course need to capitalise on opportunities to engage with this market but at the same time take a long term view. It is also important as operators, and we have discussed this at our Tourism Accommodation Australia (AHA) meetings, that we recognise the different expectations this market has and react accordingly.
Last but not least, what are some of the other challenges facing Melbourne’s Hoteliers at present?
We have a new government in Victoria so we are keen to ensure we are engaging with the appropriate minister/s and reinforcing our views regarding the need for continuing infrastructure development, support of major events, support of the convention bureau and Tourism Victoria. I think we have all seen over the recent past the vital importance of the role state government plays in supporting and even stimulating demand growth in a sustainable fashion. It is a credit to this Victorian government and those previous that they are very open to this engagement and consultation process. The industry certainly appreciates it. This ongoing process directly relates to Melbourne’s competitiveness as a city across market segments. Melbourne’s hoteliers are keen to ensure that Melbourne not only competes well now, but that as a city destination we continue to compete strongly well into the future.