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Matthew Smith has been a business and financial journalist for more than a decade. He previously worked with the Financial Times Group, reporting from New York on company buyouts and refinancing in the wake of the Global Financial Crisis. He started his career reporting on the funds management industry in Sydney.

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Hotel developments like Sydney’s Crown can’t come soon enough to meet demand: report

Published 28 February 2013 11:56, Updated 01 March 2013 08:08

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Hotel developments like Sydney’s Crown can’t come soon enough to meet demand: report

A digital rendering of Crown’s planned 350 room, six-star VIP gaming hotel at Barangaroo in Sydney. Photo: Crown

Planned hotel developments including the proposed Crown development slated for the Barangaroo site in Sydney can not come soon enough to alleviate record demand from visitors, according to Deloitte Access Economics’ Tourism and Hotel Outlook report.

Hotel occupancy rates have remained at or close to record levels in the last 12 months while the number of new hotel developments has remained static, the report says.

Hotel occupancy has been at or above 80 per cent in Perth, Sydney, Melbourne and Brisbane in the last 12 months, marking the strongest demand on record for Australia’s capital cities, the report finds.

While there are a number of hotel developments in the pipeline– 66 in all in varying stages – the continued expected growing demand among visitors is likely to lead to even higher hotel occupancy levels in the next three years.

“Demand remains forecast to outstrip supply in major capital city markets,” Deloitte tourism, hospitality and leisure leader, Lachlan Smirl says.

Smirl says sustained growth in business travel, improved conditions for domestic leisure and strong expected growth in international arrivals from emerging Asian economies as driving this.

The anticipation of iconic developments currently on the drawing board will further stimulate demand in coming years, he says.

In the pipeline

In Sydney, Crown has announced plans to develop a 350-room six star VIP gaming hotel at Barangaroo subject to approval.

Also in Sydney, Destination Sydney, was recently chosen as the preferred developer for the new Sydney International Convention and Exhibition Centre and has plans to build a hotel on the site with up to 900 rooms.

Meanwhile, the Four Points Sheraton in Darling Harbour has proposed a 231-room expansion and at Circular Quay the City of Sydney recently approved the construction of a new residential tower encompassing serviced apartments.

A number of major developments have also been announced in Brisbane including the 246-room Four Points Sheraton hotel in Mary Street and a refurbishment of the Chifley Hotel which will add another 150 rooms to the existing site.

In Perth, BGC was selected as the preferred hotel developer for the FESA House site in November which will add to the proposed Old Treasury Building and Crown Towers developments in the pipeline.

Difficulties in obtaining finance during the global financial crisis, coupled with higher relative return to other land uses such as residential developments and office space, has kept hotel developments on the back burner in recent years, says Smirl.

Nevertheless, he says, the growing capital city pipeline suggests that both developers and governments are beginning to respond to record occupancy demand.

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