Industry divided on Sydney hotel supply

Industry divided on Sydney hotel supply
By admin

Experts remain divided on accommodation shortfalls in Sydney, with the peak accommodation body warning that additional supply could cause a boom and bust effect, similar to the 2000 Olympics.

Concerns over Sydney accommodation shortfalls were reignited this week by recommendations in the latest Visitor Economy Taskforce report which suggests significant capacity improvements are needed to reach the industry’s 2020 targets.

Noting that Sydney accommodation would become “increasingly more expensive and uncompetitive” unless capacity growth was found, it recommended “dramatic” action was needed to curb the trend.

Tourism & Transport Forum (TTF) chief executive John Lee applauded the report for recognising current shortfalls in the accommodation sector, noting that occupancy rates were currently sitting above 86%.

But Tourism Accommodation Australia (TAA) was less enthusiastic, stressing that dramatic capacity increases were likely to create an “artificial” stimulation of supply.

Speaking with The Nibbler earlier this week, TAA NSW director Carol Guiseppi welcomed the report findings, but stressed that Sydney’s need for new hotel rooms was “much less” than anticipated.

“We need to avoid another boom and bust cycle from the Olympics, which saw huge increases in supply result in massive declines in revenue performances for hotels,” she said. “It’s not just about supply. We don’t need that… we need demand driven by sustained investment.”

Instead, Guiseppi said the focus should turn to refurbishments and infrastructure improvements, particularly ahead of the Sydney Convention & Exhibition Centre redevelopment from 2013-16.

“There is a real need for the government to change the way it views the accommodation sector,” she said. “We need to ensure that demand is retained by sustained investment, rather than simply adding supply when it isn’t necessarily needed.”

Guiseppi said a hike in room rates was the most likely outcome from a spike in supply, adding that just 500 rooms per year to 2020 was sufficient to meet demand.

“We need to keep the momentum going while the SCEC closes its doors so that demand is sustained and rates are retained,” she said. “We can’t afford to send the wrong message out in the market.”

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