Tourism helping boost Adelaide's accommodation industry
Adelaide’s hotel market continues to perform strongly in 2019 with occupancies averaging 80.6 per cent as demand continues to outstrip supply.
Colliers International hotels director Karen Wales said the market had been performing well during the past three years, with revenue per available room (or RevPAR) increasing at an average 2.7 per cent each year.
“For the first time in Adelaide’s history, occupancies in the city averaged above 80 per cent in 2018, underpinned by strong tourism demand and few additions to accommodation supply,” Ms Wales said.
“This increase in demand has been supported by growth in white-collar employment driven by defence, professional services, health, IT and communication sectors. Investment in ’10 Gigabit Adelaide’ and increased mining activity is also expected to underpin accommodation demand over the medium term.”
Major accommodation brands have been clamouring for good opportunities in the Adelaide market over the past 18 months and this trend, while easing slightly, was still continuing, Savills director of hotels Adelaide Rob Williamson said.
“Some proposals are in construction or about to commence such as the Crowne Plaza hotel, the Sofitel hotel and the Hotel Indigo by IHG. Other projects have been announced and yet to start and some are in planning stages,” Mr Williamson said.
The growth of the luxury hotel and boutique branded hotel were probably the fastest growing segments and many of the proposals for Adelaide concentrated on this, he said.
“There is a strong focus on accommodation in and around the central market/Chinatown district and around the Rundle Street precinct. The other hotspots to watch for North Adelaide and regional plays such as Victor Harbour, McLaren Vale, Barossa Valley, and Kangaroo Island,” Mr Williamson said.
CBRE hotels senior director Scott Callow said competition would see room rates fall marginally and no new major room supply was likely until 2020.
“The 2020 to 2022 period will see a further 2700 rooms added. Further new hotels will include the Sofitel and additional rooms at the Adelaide Casino along with Hotel Indigo, the Westin. This will be the peak of new supply at this time,” Mr Callow said.
LJ Hooker Adelaide Commercial sales and leasing manager Romualdo Cicchiello said major companies, bureaucracy and research divisions coming into Adelaide and working on large-scale projects was bolstering room occupancy.
“The challenge for the hotel market is delivering new CBD product,” Mr Cicchiello said.
“New hotel openings have been restricted in the CBD. Land along North Terrace, for example, is commanding $10,000 a square metre. Other CBD strips like Grenfell Street will soon push into that price range.”
