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Hotel Room Rates Crash

Hotel Room Rates Crash
Hotel Business
(4) marks: 2

Falling room rates and lower occupancies in 2009 has seen Australia’s top hotels lose out on an estimated $270 million in revenue.

Hotel research group STR Global has reported that the room rates have fallen by an average of $9 per night at Australia's 500 biggest hotels.

The slide came as hotels, such as the Cairns Sebel hotel controlled by Mirvac, were quietly offered for sale late last year, while the problem has seen other hotels be tipped into receivership in the wake of the industry downturn.

Hotel operators, in reporting their half year profits, are blaming room rate reductions for their bottom lines having been stripped of millions of dollars.

Industry sources said some hotels suffered a knee-jerk reaction by slashing room rates during the economic downturn, ignoring the fact that Australia already has some of the cheapest five-star hotel room rates in the world.

STR Global reports that the $9 room rates reduction, when taking into account an average occupancy rate of somewhere between 70 and 75 per cent between 2008 and 2009, would equate to an average of $739,000 per day or $270 Million for the year in lost income for hotels in Australian Cities.

Of that amount though, 65 per cent of the losses could be blamed on a reduction in room rates, while the remaining 35 per cent was attributable to a fall in occupancy. The numbers are based on information from 498 of the country's largest hotels.

Hotel room rates a year ago suffered around the country due mainly to the Global Financial Crisis reducing tourism numbers, hardest hit were the more tourism dependant destinations such as Cairns and Port Douglas.

Christopher Lamont

Date: 05/03/2010

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