Perth's hospitality market set for a 'facelift' with arrival of top hotel brands

Perth's hospitality market set for a 'facelift' with arrival of top hotel brands
Perth's hospitality market set for a 'facelift' with arrival of top hotel brands

The arrival of some of the world’s top hotel brands in Perth is set give the ageing market a shake-up, forcing upgrades of existing stock and boosting the five-star options in the city.

The impending shake-up was revealed in Colliers International's Between the Flags – Hotels Research and Forecast report which found that almost two thirds of hotels in Perth’s CBD were either built or converted from other uses prior to 1990, with only a handful of new developments in recent years.

With a slew of prominent luxury operators now lining up to put their stamp on the WA capital, "Perth’s hospitality market is in for a facelift", the report said. 

Last week, the Ritz-Carlton announced its plans for a 204-room luxury hotel at Elizabeth Quay. It comes as Crown Towers earmarks a new hotel at Burswood, the Westin at the FESA site on Hay Street, while the old Treasury buildings redevelopment on St George’s Terrace is all slated for hotels of five stars or above. Hilton Hotel has also signalled plans for Perth. 

The arrival of the luxury hotels is expected to significantly boost it the city's five-star options.

Colliers puts the number of five-star hotels in Perth at seven, which combined make up about 1,937 rooms and account for 26% of the city's available hotel accommodation. 

Hotels graded between three and three and a half stars account for 24% of Perth’s accommodation, while four and four and a half star hotels make up the remaining 50%.

“As it stands today, the market in Perth is fairly evenly divided between four groups of ratings – three to three and a half star, four star, four and a half star and five star, which all account for roughly a quarter of available accommodation each, give or take a few percentage points,” said Colliers International director of investment services, Wayne Lawrence.

“However, if we have a look at the calibre of some of the operators and projects in the pipeline in Perth for the next few years, with the likes of the Ritz-Carlton, Westin and Crown, we are going to see that balance become more skewed towards the top end of town and that luxury market.”

Mr Lawrence said that was also likely to have a flow-on effect to Perth’s existing hotel stock.

"The Perth market was marked by a prevalence of old stock, which was below international hotel standards, but with the strength of the corporate market and the limited supply of rooms there wasn’t really a lot of pressure for operators to address that,” he said.

However, with the resurgence of the tourism market and the introduction of these high-end premium operators to the city, he said we’re getting some new life in the sector and that would provide motivation for some of those existing operators to look at refurbishing and upgrading their facilities.

The transition taking place between the corporate and tourism markets was also explored in the report.

Colliers manager of research and urban economics, Michael Knight, said that high levels of corporate travel associated with the resources boom had seen Perth’s hotel market consistently leading other Australian capitals in occupancy and revenue benchmarks in recent years.

Corporate activity peaked in 2012, with the average occupancy rate exceeding 90 per cent in Perth. Last year, he noted, that the occupancy rate sank over the course of the year to an average monthly rate of 83.5% as resources-related spending began to drop off.

However, Mr Knight expects that the tourism market was likely to be a winner from the easing in corporate travel.

“We had a situation for a while there where corporate occupancy of Perth hotels was at a level where tourism struggled to get a look in,” he said.

“With that market now pulling back, we should see hotel vacancy rates and room rates move to a point where they are more appealing to the general tourism market – and it’s worth noting that the general leisure market has shown signs of increasing over the past 12 months.”

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