Australian hotels hit by price crash

By Bridget Carter

AUSTRALIA'S top hotels lost out on an estimated $270 million in revenue last year on the back of falling room rates and lower occupancies. 
The room rates of Australia's 500 biggest hotels fell by an average $9 per night, according to hotel research group STR Global.
The slide came as hotels, such as the Mirvac-controlled Cairns Sebel hotel, were quietly offered for sale late last year, while others have been tipped into receivership in the aftermath of the industry downturn, The Australia reports.
In the past two weeks, listed hotel operators have blamed room rate reductions for the millions of dollars wiped from their bottom lines while reporting half year results.

Room rates of Australia's 500 biggest hotels fell by an average $9 per night. Source: The Australian

 

Industry sources said some hotels slashed rates as a knee-jerk reaction to the economic downturn - even though Australia already has some of the cheapest five-star hotel room rates in the Western world.
According to figures from STR Global, if you took into account an average occupancy rate of between 70 and 75 per cent between 2008 and 2009, and an average $9 room rate reduction over the year, hotel operators in Australian cities would have missed out on an average $739,000 per day, or $270m for the year.
Of that, 65 per cent of the losses could be attributed to a reduction in room rates, while 35 per cent was attributable to a fall in occupancy. The numbers came from 498 of the country's largest hotels.
Hotel room rates a year ago suffered around the country, particularly in tourist destinations such as Cairns and Port Douglas.
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The Australian

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Hotel operations are blaming room reduction rates for an explanation of why millions of dollars have been wiped from the bottom line in half year results. This shows a down turn in the industry altogether room rates went down for a reason in my opinion if the hadn’t maybe results would have been the same and occupancy levels less. It may have been just a ‘’knee jerk reaction’’ to reduce the room rates by buy so much but that is for good reason if these hotel operators thought that it would affect the profit why didn’t they speak up before the results were in clearly they had been thinking it for a while. I believe that they a just assuming they ‘’missed out’’ on profit even if room rates are to blame if not it would have been something else like occupancy or staff wages as the industry is in down turn.