Pub: Australian Financial Review
Pubdate: Monday 06th of July 2009


Hotel surplus sparks concern.
Lisa Carapiet

Sydney and Melbourne need to clean up their tourism acts, Australia's leading hoteliers say.
Melbourne is facing massive hotel room oversupply, says Horwath HTL, which says the Victorian capital will be inundated with 3150 rooms over the next two years.

Bruce McKenzie, chief executive of Intercontinental Hotels Group, said he was "extremely concerned" with the oversupply. "I hope I'm wrong, but bringing these sorts of room numbers into a market that's down as much as Melbourne is [a mistake]. We're erring on the side of caution with Melbourne."

Speaking at the Australian, New Zealand & Pacific Investment Conference in Sydney recently, Mr McKenzie compared Melbourne with the Shanghai and Beijing markets, where there is an accommodation oversupply, declining demand and an approximate 40 per cent drop in revenue per available room.

Chief executive of Eight Hotels, Paul Fischmann, said one room off the market is better than one room on the market.
"At the same time I think Melbourne knows how to stimulate demand. It gets brilliant business in and I think that then has an effect on rate," Mr Fischmann said.

He said hoteliers were generally more comfortable keeping rates up in Melbourne rather than in Sydney because of the many events that occur there, something that Sydney would need to work on.

"Sydney should stop spending money on fireworks and displaying the Harbour Bridge and the Opera House and start putting that money into cultural events really promoting what Sydney is outside of the prettiness," Mr Fischmann said.
"We should focus on the international market more in Australia in general. Most international markets love Australia but believe it's just too far away. Our focus should be to to show they can come to Australia and Sydney, particularly for a short period of time, and experience that city," he said.

Mr McKenzie agreed, saying Sydney had icons but really needed to figure out an events program that would lure international tourists. "It's wonderful having an opera house but isn't what's going on inside it more important?" he asked. "You've got to have a lot of admiration for what Melbourne and Victoria have done with their events program over the years," he said. "They have sustained it and they have built up international recognition without a harbour and without an opera house. Sydney has got a long way to go."

Mr Fischmann said there were opportunities to grow in Sydney, but the market was "on the bottom".
"There is a groundswell of discontent from operators in the industry as Sydney is not being as competitive as it should be," he said.

The Australian Bureau of Statistics Survey of Tourist Accommodation, released on Friday, shows the national accommodation sector in January-March collected $71 million less than in the year-earlier period. Seasonally adjusted occupancy rates also fell to 62.5 per cent from 63.6 per cent over the quarter.