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TOURISM INVESTMENT MONITOR 2017 TOURISM INVESTMENT MONITOR 2017 October 2017 Tourism Research Australia Austrade GPO Box 2386 Canberra ACT 2601 Email:
[email protected] Web: www.tra.gov.au Publication date: October 2017 This work is licensed under a Creative Commons Attribution 3.0 Australia licence. To the extent that copyright subsists in third party quotes and diagrams it remains with the original owner and permission may be required to reuse the material. This work should be attributed as Tourism Investment Monitor 2017, Tourism Research Australia, Canberra. Enquiries regarding the licence and any use of work by Tourism Research Australia are welcome at
[email protected] Cover image: Aurora Melbourne Central Developed by UEM Sunrise . mailto:tourism.research%40tra.gov.au?subject= http://www.tra.gov.au http://creativecommons.org/licenses/by/3.0/au/deed.en mailto:tourism.research%40tra.gov.au?subject= TOURISM INVESTMENT MONITOR 2017 TOURISM RESEARCH AUSTRALIAi CONTENTS ABOUT THIS REPORT ...........................................................................3 AUSTRALIA’S TOURISM ENVIRONMENT .................................................5 TOURISM INFRASTRUCTURE – AUSTRALIA’S ACCOMMODATION MARKET 2016 .......................................................................................7 INVESTMENT CATEGORIES AND THEIR PERFORMANCE ..........................8 STAND-ALONE ACCOMMODATION ................................................................................... 9 MIXED-USE ACCOMMODATION ..................................................................................... 11 ARTS, RECREATION AND BUSINESS SERVICES INFRASTRUCTURE ............................... 14 AVIATION INFRASTRUCTURE ........................................................................................ 15 TOURISM INVESTMENT MONITOR 2017 TOURISM RESEARCH AUSTRALIA2 ABOUT THIS REPORT Tourism Research Australia’s (TRA) Tourism Investment Monitor 2016–17 reports on the number and value of significant projects (valued at over $20 million) in Australia’s tourism investment pipeline in 2016–17. TOTAL INVESTMENT PIPELINE $37.8b 204 PROJECTS PROJECTS Aviation $10.1b n 19 airport infrastructure projects Arts, Recreation & Business Services $17.0b n 83 infrastructure projects Accommodation $10.8b n 102 accommodation projects n 19,730 new rooms DISTRIBUTION n Capital cities accounted for 11 projects valued at $9.5b. n Regional airports accounted for 8 projects valued at $610m. n Capital cities accounted for 64 projects valued at $14.8b. n Regional areas accounted for 19 projects valued at $2.2b. n Capital cities accounted for 77 projects valued at $9.2b. n Regional areas accounted for 25 projects valued at $1.6b. Mixed-use, which sits outside the pipeline, was worth $35.9b with the potential to add 19,910 rooms to accommodation supply. CHANGES TO THE METHODOLOGY The results in this report are based on a different methodology to previous reports, and as such, this report is not comparable with previous editions. Changes include the following: n State government agencies have been consulted to ensure that the pipeline is as comprehensive as possible n There has been a shift to financial year reporting to make this report consistent with other TRA publications n Aviation Fleet has been removed from the tourism investment pipeline due to significant volatility in the data caused by a reliance on average exchange rates n Accommodation transactions have been removed as they represent a changing of ownership, rather than an expansion of the accommodation supply. For further information regarding the methodology, please see Appendix 1. https://www.tra.gov.au/ArticleDocuments/255/Appendix%201%20-%20Tourism%20Investment%20Monitor%202016-17.docx.aspx 3 KEY FINDINGS There were 204 projects in the tourism investment pipeline in 2016–17, valued at $37.8 billion: n Arts, recreation and business services accounted for the most value – $17.0 billion n Aviation infrastructure projects accounted for $10.1 billion n Accommodation projects were valued at $10.8 billion, with the potential to add an additional 19,730 rooms to the accommodation sector. Investment remained strong in each of the three main sectors in the tourism industry: Arts, recreation and business services contributed 83 projects to the investment pipeline. These projects were worth a combined $17.0 billion, with $2.2 billion worth of investment set for regional areas. Large sporting projects continued as the main driver in this category, with 35 projects worth $7.6 billion in the pipeline for the development of new sporting facilities and upgrading of existing infrastructure. The aviation infrastructure pipeline had 19 projects worth $10.1 billion. While much of this was due to the proposed Western Sydney Airport at Badgerys Creek ($5.3 billion), almost half of all aviation investment projects were at smaller regional airports. Australia’s geographic isolation from the rest of the world, plus its large land mass makes aviation infrastructure the main component of Australia’s tourism transport network, and the main recipient of investment. However, in response to increased visitation and increased consumer expectations, there is a continued push for cities to upgrade their seaports. This type of investment is evident, with the $1 billion upgrade to the Spirit of Tasmania and terminals currently under construction. Accommodation continued to be a focal point for investment, with a push to provide more accommodation for visitors, especially given the high occupancy rates in a number of capital cities. In 2016–17, there were 102 stand-alone accommodation projects worth $10.8 billion. These projects have the capacity to add 19,730 rooms to accommodation supply. This is in addition to the 18 projects that opened in the period, adding 2,650 rooms to supply. The trend towards mixed-use projects continued to bolster the accommodation pipeline, with 90 projects containing an accommodation component. While these projects sit outside the pipeline due to a majority of the $35.9 billion in investment not being tourism related, they have the potential to add 19,910 rooms to short-term accommodation, thus taking the potential number of rooms in the pipeline to 39,640 rooms. The strength of the investment pipeline is supported by continued interest from foreign investors in Australia, particularly around accommodation projects. This complements the work of all three levels of government and their focus on facilitating the development of sporting and aviation infrastructure. Image: Gold Coast Airport Image courtesy of Gold Coast Airport TOURISM INVESTMENT MONITOR 2017 TOURISM RESEARCH AUSTRALIA4 AUSTRALIA’S TOURISM ENVIRONMENT Tourism continues to be a standout performer in the Australian economy, providing an attractive environment for investors. Evidence of this strong performance in recent years (between 2011–12 and 2016–17) includes: n Nights spent in hotels, motels and serviced apartments – up 21% since 2011–12 to 120 million nights in 2016–17 n Inbound passengers on airlines – up 36% to 20.2 million passengers n Passengers on domestic flights – up 7.8% to 59.3 million passengers n Total tourism spend in Australia – up 29% to $110.2 billion. Off the back of this increased demand, there has been a substantial increase in room supply, with research by Colliers suggesting that since 2010, approximately 23,000 rooms have entered the market in capital cities. The industry continues to thrive in the cities, with accommodation establishments in Sydney, Melbourne and Hobart operating at average rates of above 80% occupancy (STR Global, 2017). FIGURE 1: OCCUPANCY RATES FOR KEY MARKETS AND PERFORMANCE FORECASTS 2011 2016 2017 2018 2019 SYDNEY 80.0% 89.0% 89.0% 89.2% 89.2% MELBOURNE 75.3% 87.6% 87.6% 87.0% 86.3% AUSTRALIA 65.3% 69.7% 70.3% 70.7% 70.8% Source: ABS, Survey of Tourist Accommodation and Deloitte, Tourism and Hotel Market Outlook. FORECASTS Future investment prospects for the industry are also promising, driven by predicted strong demand from international visitors. Tourism Forecasts (TRA, 2017) suggests that tourism expenditure will continue to grow at a rate of 6.3% per annum to reach $224.8 billion (nominal terms) by 2026–27. The growth in visitors is expected to create demand for: n more than 29 million inbound available seats on airlines – 44% more than in 2016–17 n more than 174 million nights in hotels, motels and serviced apartments – 45% more than in 2016–17 n more than 933,000 short-term places for international students