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Australia targets foreign hotel investors

Major project that needs funding: the Perth Waterfront development

BY JAMES WILKINSON

The Australian Government has for the first time brought together its three major tourism departments in a united effort to attract crucial investment dollars in the hotel industry from both domestic and international companies.

Under the Tourism 2020 Strategy, the Federal Government aims to double tourist expenditure within the next eight years and politicians know that can’t be done without additional hotel rooms funded by foreign investors.

Currently, Australia has around 75 projects that are proposed or “investment ready”, but without international funds, many will not get past the drawing board, something the Minister for Tourism, Martin Ferguson, acknowledged during the launch of the ‘Australian Tourism Investment Guide’ in Melbourne yesterday (May 2).

“Increasing investment in tourism is vital if we are to reach our goal of doubling overnight expenditure to $140 billion by 2020,” he said.

Ferguson has brought together Tourism Australia, the Department of Resources, Energy and Tourism and Austrade in an effort to drum up interest in the projects that span every state and territory in the nation.

“Investment means more capital city accommodation, rejuvenated accommodation in regional areas, new business event facilities and innovative leisure attractions to serve our key growth markets, such as Asia,” Ferguson said.

Tourism Australia, Austrade and the Government of Western Australia were out in force at the recent International Hotel Investment Forum (IHIF) in Berlin, Germany, during March in a sign that further co-operation wasn’t far away.

There, the Government of Western Australia’s Business Tourism and Investment Manager Kylie Sterling told HM the state was seeking investment in several projects, including the highly-publicised Perth Waterfront development and a range of regional eco-sensitive resorts.

Prior to that, at last October’s HICAP conference in Hong Kong, South Australian Tourism was talking up a number of proposed developments in Adelaide that were seeking funding, including one at Adelaide Airport.

Interestingly, that project hasn’t appeared in the Australian Tourism Investment Guide, also launched by Ferguson on May 2, which outlines AUD$42 billion of existing and proposed tourism developments.

“The Tourism Investment Guide and Monitor builds on work with the states and territories under Tourism 2020 to cut red tape and ensure adequate transport infrastructure – all of which is vital to attracting investment and ensuring Australia’s $35 billion tourism sector is competitive and continues to contribute to the Australian economy and provide jobs,” he said.

The Tourism Investment Guide hasn’t won unanimous support, however, with a number of touted projects being questioned by industry.

One such project is the Moonlight Head Hotel on Victoria’s Great Ocean Road, which received approval in 2003 to develop five lodges and 75 rooms, yet, a decade later, still hasn’t come to fruition.

Stephen Foley, a backer of the Moonlight Head development told The Age newspaper “it’s a no-brainer to build this, but we need the finance”.

Investment needed: Sydney's Barangaroo South

Melbourne’s historic Hotel Windsor is also listed inside the Investment Guide and it is noted that “investment partners are being sought for the $215 million redevelopment”, which is set to commence in late 2012.

That project has been talked-up by the operators of the property for the last four years and it appears this is the first time the hotel has publicly called for investment partners, only seven months out from the start of construction.

Down in Tasmania a number of opportunities exist for new developments, however, the Accommodation Association of Australia (AAA) is questioning the push for additional hotels when properties are expected to underperform in the coming months.

“Some operators in Tasmania are currently forecasting a further decline on last year’s winter of only 47% average occupancy,” said AAA Chief Executive Officer, Richard Munro.

“For operators of existing accommodation businesses, it is crucial that growth in room inventory is economically sustainable and does not compromise returns.

“The industry acknowledges that there are some parts of Australia which are in need of new hotels – notably the Perth CBD – however the Australian market is a patchwork quilt of accommodation performance,” he said.

Munro said across the board, the push from the Australian Government was welcome news for the industry, however, RevPAR and occupancy rate growth at existing properties must be at the forefront of thinking by tourism leaders.

“As the number of rooms increase, there should be a suite of measures to maximise the chances of these rooms being occupied, such as greater funding for marketing, better aviation access, a stronger commitment to major events and resources to attract more business events,” he said.

“Strong consideration should also be given to introducing measures similar to those in WA and NSW where concerted attempts are being made to boost accommodation rooms by making available government land and buildings respectively.”

While the Accommodation Association has thrown cautious support to the Australian Government’s plan, the Tourism and Transport Forum (TTF) has done the opposite, throwing its weight behind the release of the guide, saying it “underlines the importance of investment in accommodation needed in our major capital cities”.

“The joining together of Tourism Australia with Austrade to create this prospectus of hotel investment opportunities in Australia is to be commended,” said TTF CEO, John Lee. “Tourism Australia knows the market and Austrade has the network of international investors.

“Aggressive targets have been set in Tourism 2020 for growing the visitor economy [and] these targets cannot expect to be met without additional accommodation particularly in our capital cities.

“Occupancy is already running above 80% in Perth and Sydney, which effectively means hotels are full mid-week with limited breathing space,” he said.

The Tourism Investment Guide was created in conjunction with state and territory tourism organisations and thanks to the Federal Government’s push, some lingering projects – such as Perth’s Waterfront development and Sydney’s Barangaroo South – could finally receive the investment required for them to be developed.

“The Australian Government is hanging out the ‘open for business’ sign, and demonstrating our very real commitment to attracting investment in the tourism industry,” Ferguson said.

“The Australian Tourism Investment Guide makes clear to international and domestic investors that Australia is not only a great place to visit, but a great place to invest.”

At the International Hotel Investment Forum, Sterling said interest was “extremely positive” for projects across Western Australia and on the back of that response, reported on www.hotelmanagement.com.au, HM understands that several more tourism organizations and state governments are looking to attend the 2013 event in Berlin and further champion mooted developments.

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