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Corporate capitals tipped to see 2019 rates climb

New hotel supply is still a few years away from impacting hotel room supply and rates.

Growing international leisure visitation is tipped to impact corporate and business travellers through higher hotel rates in 2019, a new report from Flight Centre’s market analysis arm, 4th Dimension.

The ‘Accommodation Focus Report on Australia and New Zealand 2019’ showed factors such as higher leisure visitor numbers, cruise ship passengers and events/conferences will see prices increase by as much as 5 per cent in many Australia and New Zealand major cities.

The report aims to help businesses prepare potentially higher budgets for business travel to cater for these expected increases.

As occupancy levels continue to nudge closer to capacity, Sydney is expected to see the full price shift up 5 per cent, while Melbourne should anticipate a 3 per cent adjustment despite a slight drop forecast in occupancy. The Victorian capital will be hampered with a limited supply increase in 2019, the report said, while a strong pipeline will ease this in the near future.

Brisbane and Perth were expected to maintain current form into 2019, however the Queensland capital will see growth over the slightly longer term, moving from its current 72 per cent occupancy levels to potentially as high as 80 per cent over the next 2-3 years. This will be due to visitor numbers climbing faster than new rooms coming into the market. Room rates will remain steady in this time while occupancy levels grow, the report found.

Adelaide, Canberra, Hobart and Darwin were all tipped to record growth in ARR (Average Room Rate), all largely driven by slowing supply growth in the face of strong demand projections.

FCM Travel Solutions, Flight Centre’s corporate brand, General Manager Melissa Elf said room rate changes will be small – around $6-$8 – but results across the country would be mixed.

Across the Tasman, the 4th Dimension report found Auckland and Queenstown would see the biggest price shifts of 4 per cent and 6 per cent respectively. These factors were calculated despite forecasts of a slowdown in Auckland, which is likely to send occupancies down. Strong tourism demand in Queenstown, coupled with new interest among event planners, would impact regular corporate travellers with supply and availability to be lower than usual.

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