MARKET OVERVIEW
72
ANNUAL REPORT 2015
FRASERS HOSPITALITY TRUST
ADR for 1H 2015 was A$207.27
(USD160.92), 4.5% higher than the
same period of 2014 according to
STR. Due to currency fluctuations,
this is a steep 11.3% decrease in US
dollar terms.
Driven by occupancy and
particularly strong ADR growth,
the RevPAR for Sydney for 1H 2015
was A$175.34 (USD 136.013), a 6.9%
increase from the same period of
2014. However, again, in US dollar
terms this is a 9.3% decrease on 1H
2014.
From 2013 to 2014, there was a 1.1%,
3% and 3.2% increase in occupancy,
ADR and RevPAR respectively in
local currency terms. Compared to
this, 1H 2015 growth of 2.3%, 4.5%
and 6.9% is encouraging.
Existing Supply
According to Destination NSW
statistics for YTD June 2015,
there are approximately 349
accommodation properties
including hotels, motels and
serviced apartments with 38,124
rooms, totalling 3.5 million room
nights available in the Greater
Sydney area, of which there are 144
hotels with 22,352 rooms, totalling
2.03 million room nights available in
Sydney City.
Notable rebranding and reopenings
include the 98 rooms and suites
Langham Sydney at the Rocks
in December 2014 (previously
the Observatory Hotel). The
InterContinental Sydney Double
Bay also opened its doors after a
multi-million dollar refurbishment
of the former Ritz Carlton property.
The Amora Hotel Jamison Sydney
completed a A$12 million (USD8.5
million) refurbishment of the 5-star
hotel.
As an investment landscape
Australian hotel assets remain
increasingly attractive to overseas
investors as the AUD continues to
fall. In the past two years, there has
been an active change of ownership
amongst the existing 5 star hotel
properties including Sheraton on the
Park, Westin, Four Seasons, Sofitel
Wentworth and Taj Blue.
Future Supply
Looking ahead to 2015, the designer
hotel, QT Bondi Beach set to open
in Q3 2015 will offer boutique
apartments on iconic Bondi Beach.
Australia continues to attract foreign
direct investments including those
in Sydney’s redevelopment projects.
There are approximately 21 hotel
investments in the pipeline which
have been announced and are
either under construction, have
development approvals or under
planning due to be delivered in the
next five years to 2020 with a total
of 3,147 rooms. This represents
an increase of 8.3% to the existing
room stock in Sydney.
Hotels currently in development
include the 350 room Crown
Sydney, covering 77,500 sqm as part
of the large scale Barangaroo South
development; the Sofitel Sydney
Darling Harbour opening in 2017
as part of the Sydney International
Convention Centre and the
expansion of the Four Points Sydney;
to smaller re-development sites
including Greenland’s acquisition
in Sydney’s CBD which will see the
large Chinese developer opening its
first hotel in Australia under its own
brand, Primus.
Hospitality Market Outlook
The Australian dollar (“AUD”) has
fallen 28% since the end of March
2013 when it was at parity to the US
dollar and since the end of March
2015, in October 2015 USD1 is
A$0.720. At this level the AUD is now
19.4% below the long-term average
(Jul-69 to Mar-15) of $0.893.
Given this currency depreciation
over the past three years, consumers
travelling to Australia are finding
more value and are benefiting from
lower fuel prices, lower airfares
and an increase of flight frequency
and routes. Fuel has continued to
fall since 2014 and was at A$70.30
(USD49.67) a barrel as of March
2015. The domestic travel market is
buoyant as a result of this continued
currency depreciation; Australians
are less likely to travel overseas with
a weaker currency. China will remain
a key inbound tourist market for
Sydney both for leisure and business
travel, especially given the new Free
Trade Agreement between Australia
and China which was announced at
the G20 in 2014, and planned to take
effect in 2015.
Looking forward, the hotel demand
outlook for Sydney remains positive.
Forecast growth in international
tourist arrivals remains robust and
Sydney benefits significantly as the
key gateway city. For the next few
years hotel occupancy is forecast
to remain above 80% with minimal
downward pressure as new hotel
developments will not be fully
operational until 2017-2018.
Given the current trends and market
dynamics, ADR for Sydney hotels
is forecast to continue above the
A$200 (USD141.32) mark in the next
few years, at an anticipated annual
RevPAR growth of 3%.
In making comparisons across
major international cities (Hong
Kong, Singapore, New York,
London and Dubai), it is observed
that despite the high occupancies
and hotel operating costs, Sydney
room rates have not reached the
same levels achieved in other
major cities around the world. This
suggests there is scope for further
ADR growth among the new hotel
developments and refurbished
products in the market.
