Property

Issue No. 30 - August/September 2006

Hotels provide good cheer

by Mr Kel Spencer

Licensed clubs, pubs and hotels play a significant economical role in our society, accounting for 9.4% of total national retail spending in 2005.

With tightening yields in other commercial asset areas the appeal of hotels and pubs continues to grow throughout Australia even with general falls in retail spending, the potential effects of new smoke free legislation and amendments to the gaming machine Bill.

Ownership of hotels is moving away from traditional family based organisations to large partnerships and retailers such as ING, Coles Myer and Woolworths (Bruandwo Group). Lease agreements are also changing with 25-year lease terms not uncommon.

Table 1 indicates the total amount of retail spending in Australian Hotels and clubs from January 2004 to January 2006.

ABS statistics indicate 5.48 million international visitors arrived in Australia between February 2005 and February 2006. This was an increase of 3.4% relative to the same period 12 months prior.

On the domestic front there was 69.9 million overnight trips taken in Australia by Australian residents aged 15 and over. This was down 5.8% from 74.3 million trips recorded in the previous 12 months. Increasing petrol prices are believed to be a major factor in the decline of domestic travel, 68% of room night demand is domestically sourced.

The average length of stay in Australian establishments with 15 rooms or more was 2.3 days in the December quarter of 2005. Smaller hotels and motels of less than 15 rooms had an average duration period of 1.8 days. Queensland recorded the longest average length of stay with 2.7 days, Tasmania the shortest with 1.9 days.

Table 2 displays the total performance of Australian Hotels, serviced Apartments, Motels and Guest Houses for the December quarter 2005.

Table 2 (% change is compared over the 12 month period from December 2004)