Western Australia hotels short a 1,000 rooms

Echoing a comment made recently to The Mole by Les Cox, MD of AAT Kings who said there was a desperate shortage of bed in WA, a report by Kate Campbell in the West Australian says that WA hotels should auction their rooms to the highest bidders to capture blue-chip customers and stimulate investment in an industry suffering a severe undersupply, says a leading national economist. 

Findings from a recently released Tourism WA report examining hotel investment has shown Perth needs 1000 extra hotel rooms by 2011. Up to 3000 will be required over the next decade and only 362 rooms are being developed. 

This news, coupled with the current occupancy rates of CBD hotels around 85 per cent, underpins the importance of projects such as the Old Treasury Building hotel plan, Mounts Bay redevelopment and Northbridge Link to go ahead quickly. 

According to the Tourism WA report, Perth’s average room rates have remained stagnant for the past decade. In 1996, the average rate was $177 a night, compared to the 2006 rate of $145 — which was also well behind other capital cities. 

A Tourism WA spokesman said room rates needed to increase 70-100 per cent to warrant new investment. Room rates had jumped to about $160 a night this year, he said. 

Access Economics co-founder Geoff Carmody told a tourism forum hosted by the Committee for Economic Development of Australia this week that dollars mattered more than people to WA’s tourism industry.

He said WA’s industry was leading other Australian tourism sectors in growth but was not yet ripe for strong global investment as earning capacity was more important than physical capacity. 

“If these hotels are physically at capacity but their room rates are still lower than required to generate an appropriate economic return on the investment in the hotel, then the first step is to consider raising room rates, if you like auctioning off the capacity to the highest bidder, until such times when room rates reach a level where it becomes viable to introduce new investments in hotels in WA,” Mr Carmody said. 

He said before new investors were secured, existing hotels had to upgrade their facilities and move towards more four and five-star accommodation, rather than two or three stars. 

“What do you want from tourism? “You want dollars, you don’t want people,” Mr Carmody said. 

He said WA could do without the conventional tourists on tight budgets and instead focus on rich, corporate travellers. 

WA’s tourism industry boasted a record $5 billion in expenditure this year, despite a 7 per cent drop in international visitors since 2001. The forum was told the industry was plagued with problems, notably staff shortages and questionable customer service. 

Tourism Minister Sheila McHale agreed the industry needed to hone in on high-yield travellers with large disposable incomes. “You don’t want thousands and thousands of people to come if they’re not going to spend,” she said. 

Ms McHale said the Government intended to release land for 20 new accommodation sites — 14 for new hotels — in WA by 2011. She said overseas investor interest was high in WA. 

She said higher spending visitors would demand better customer service. 

The forum was also told 1000 hospitality workers had left the WA tourism industry in the past four years.

Australian Hotels Association chief executive Bradley Woods said the AHA would not endorse any organised or collective room rate increases, which would breach the Trades Practices Act.

Mr Woods said Perth room rates had been in a depressed cycle for the best part of 10 years but the market was slowly picking up.

A Report by The Mole from The West Australian