Australia's major hotel markets continue to perform strongly with RevPAR levels reaching all time highs.

Newly released, Australian Bureau of Statistics (ABS) tourist accommodation performance data for the June quarter 2006 indicates that following a 5.6% increase in ADR (Average Daily Rate) to $118, hotels around Australia recorded their highest ever average RevPAR result of $72.

"All major markets except two, which are coming off exceptional periods in 2005, have continued to record RevPAR growth," said Mr Gus Moors, Senior Vice President, Jones Lang LaSalle Hotels.  He added, "The hotel industry is currently benefiting from a sustained upswing whereby demand growth is generally outpacing supply increases, giving hoteliers an opportunity to drive room rates higher."  During the June quarter 2006 Adelaide recorded the highest RevPAR growth of 20.5%, with Melbourne (12.2%) and Perth (9.9%) also recording exceptional growth.

"Occupancies in Australia have remained relatively stable throughout the quarter at 60.9% (up 2.0%) however each major market, except Darwin which remained flat, managed to increase ADR," said Mr Michael Clarke, Senior Vice President, Jones Lang LaSalle Hotels.  Demand growth (room nights occupied) increased by 3.6% during the June quarter.  "With moderate declines in international arrivals throughout 2006 and a relatively flat domestic market, hotel investors are still generally upbeat about future performance," added Mr Clarke. 

The Sydney hotel market, compared to other markets remains a concern for the industry, however occupancy is good and ADR is the highest in the country.  "This market, particularly in the five star category is still absorbing recent supply increases and is perhaps the hardest hit by soft visitor arrivals to Australia," said Mr Moors.  With the proportion of international tourists visiting NSW dropping to a five-year low, the Federal Tourism Minister recently claimed Sydney "threw away the welcome mat" after the Olympics, losing international tourists to Melbourne and Brisbane.  The hotel industry is currently lobbying for a new convention centre that would assist to reinvigorate the Sydney market.  Mr Moors added, "We anticipate a stronger finish to the year for the Sydney market."  In Sydney, a 0.4% decline in occupancies coupled with a 3.7% increase in ADR, resulted in room yields increasing by 3.2% to reach $115.

The RevPAR level reached an all time high in Melbourne during the June quarter with growth of 12.2%.  This was achieved on the back of an 8.9% increase in room rates and a 3.0% increase in occupancy.  "Demand growth during the June quarter was better than the previous quarter, suggesting that visitors stayed on after the Melbourne Commonwealth Games to enjoy the cities attractions," said Mr Moors.  He added, "This is typically a quieter period for Melbourne and demand growth of 7.3% is outstanding." 

Despite the impacts of Cyclone Larry the Cairns hotel market performed well during the June quarter.  "Reportedly, hotels were boosted by insurance personnel and contractors working in the surrounding areas," said Mr Clarke.  Notwithstanding the negative press from the cyclone occupancy grew 2.8% to 66.5% for the June quarter and ADR increased by 5.2% to record $115. Consequently RevPAR in Cairns jumped 8.1% to $76.

The Brisbane hotel market continues to perform well.  "Brisbane is the only major market to boast an occupancy level above 80%, well above the national average," said Mr Clarke.  The increase in room supply following the opening of Saville Suites was offset by steady demand growth.  RevPAR increased by 6.8% to $109, placing Brisbane second only to Sydney as having the highest room yield.

Whilst occupancy was stable over the June quarter, room yields on the Gold Coast were assisted via a 6.9% increase in ADR.  "The Gold Coast has experienced a short period of declining supply and a decline in domestic demand however the hotel industry is generally performing very well relative to other markets," said Mr Clarke. 

Befitting from the surging local economy Perth has recorded another strong quarter with RevPAR growth of 9.9% - the highest level on record for this market.  "A small decline in room supply during the quarter helped boost relatively soft demand growth of 1.8%," said Mr Moors.  He added, "Despite ADR increasing by 6.4% during the June quarter to $112, it is coming off a relatively low base with no significant growth over the past seven years." 

Adelaide has been the stand-out performer with phenomenal RevPAR growth of 20.5%.  "Decreases in supply, strong demand, a major rise in both occupancy and ADR combined to provide tourist accommodation providers with some very pleasing room yields," said Mr Clarke.  Adelaide benefited from a busy event schedule in march with flow-on into the second quarter of 2006.

"For the six months to June 2006, the star RevPAR performers have been Adelaide (20.8%), Perth (13.3%) and Melbourne (11.3%)," said Mr Moors.  Mr Clarke added, "Two of these markets benefited from hosting major events however each market seems to be enjoying stable economies."