Sydney’s average hotel room rates are growing faster than those in any other Australian city, according to recent industry analysis*. With five-star hotel occupancy rates soaring above 95%, these figures have implications for companies looking to book Sydney accommodation during 2017.
Key factors driving demand
Sydney has experienced strong, sustained demand for accommodation over the past few years, with rates surging by 8.7% in the first quarter of 2017 compared with the same period in 2016. During this quarter, average nightly rates in Sydney were at A$270, while occupancy levels were at 90.1%, the highest they have been since 1996.
This now places Sydney among the highest occupancy levels in the world above those of New York, London and Hong Kong. These current increases are spurred by:
• 14% growth in visitor nights by domestic business travellers and 5.4% growth in international overnight business visitors for the year ending December 2016
• A boom in tourism and leisure travel activity, including a 6% increase in passenger numbers through Sydney Airport and more international travellers booking 5 star hotels due to the weaker Australian dollar
• A surge in large events, particularly following the reopening of the International Convention Centre in Sydney’s Darling Harbour last year
• A current lack of accommodation supply. Sydney has a pipeline of properties under construction or expansion – including the new Sofitel Sydney to open in November 2017, an upgrade to the InterContinental Sydney and a capacity increase at Hyatt Regency – however it will be 2020 and beyond before these new developments open for business.
What this means for the corporate market
Companies will need to factor in rate rises during the remainder of 2017. They will also need to book their accommodation sooner – up to 3 or more months in advance – to secure rooms in their preferred properties. Companies wanting to avoid the increases may need to consider different types of accommodation, such as 3 and 4 star properties rather than 5 stars, and different locations to the CBD.
Airport hotels – an alternative to consider
The Sydney Airport Precinct, only a 9-minute train journey to the CBD, has emerged as a viable alternative to the CBD. The precinct has seen a growing number of hotels open their doors, including Pullman, Rydges, Ibis and the soon to open Mantra Hotel. These chains are among many others now located close to Sydney Airport, providing a diversity of well priced rates and services for large and small companies alike.