Monday, May 18, 2009

Australian hotel market ... struggling

A couple of signs that show you how much the Australian hotel market is struggling right now.

1. Adelaide didn't fill for the Clipsal
Usually this is a can't miss event for Adelaide hotels. They can charge what they like for rooms, they can enforce a 4 night minimum stay and they usually fill with a few weeks to go. This year, with a week to go almost all of the hotels still had plenty of rooms so they dropped their rates and their minimum length stay requirements. But it was too late and the city didn't get close to filling.

2. Melbourne didn't fill for the Grand Prix
Again, this is usually a very good event for us and the Melbourne hotels. They charge full rack rates and have a 3 night minimum stay. Some of the hotels filled this year but in the lead up to the Grand Prix you could've got a one night stay on the Saturday night (usually the biggest/most popular night) for less than $200 at a 4.5 star property.

3. Canberra didn't fill for Budget
This was probably the most surprising. Canberra has a lot less 4, 4.5 and 5 star hotels than most of the other cities and usually fills at the drop of a hat when Parliament is in session or there is any sort of event happening. Budget is usually the busiest night of the year for Canberra hotels yet this year most of the 4 star hotels and above didn't fill.

Its clear that hotels aren't making adjustments to the current state of the economy. Companies are being a lot stricter with their corporate travel and aren't willing to pay the exorbitant prices that hotels have demanded in the past. Adelaide and Canberra not filling for their biggest events is evidence of that. The motels and the cheaper hotels that don't add massive event surcharges are still filling, its the top end of town that isn't and needs to make adjustments accordingly.

The next big event on the calendar is the State of Origin. I hope the hotels don't expect to get the rates they have been able to in previous years and start to price their hotel rooms more realistically. Looking at what's currently being asked, I'm afraid they will realise this way too late again ...

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