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Australian hotels struggling to deal with growing number of Chinese tourists

Massive growth and a massive market, says Qantas

Chinese tourism has been at a record high in Australia for the past year, and with already more than 300,000 visiting in January and February earlier this year, travel companies can definitely expect a strong year ahead.

 

  •  Qantas Airways, one of Australia’s most renowned carriers, says it’s seen a boon from Chinese travellers flying to and domestically within the country.
  • According to Qantas, Australia drew in over 1.2 million Chinese visitors last year. In 10 years, that number could snowball to 4 million if projections bear out, says Qantas CEO Alan Joyce. “The numbers are just phenomenal, it’s massive growth and a massive market.’’

 

 

Implications of record high tourism

With the increase of Chinese travellers however, comes the implications of losing significant Chinese market share due to an inadequate hotel supply.

 

  • Matt Bekier, CEO of Star Entertainment Group says, “It’s fascinating that while we’re high-fiving each other about how great we are in getting the Chinese tourists to come to Australia, we’re losing market share”.
  • More flights from China from carriers such as Qantas and a 10-year trial visa program have influenced Chinese travelers in booking trips faster than some hotels can keep up, said Bekier. “And that’s one of the main reasons for us to invest so much money and build up our hotel capacity as quickly as possible,” he said. “If you don’t have the hotel product to accommodate people, you can’t monetize the opportunity.”

 

Fortunately, some have already taken the initiative:

 

At the time of writing, Australia has about 4,500 hotel rooms under construction that are scheduled to open by January 2019 compared to the more than 144,000 already online throughout the country. But will that be enough?

 

  • According to Deloitte, hotel occupancy rate will reach 71.3% by 2018 and even higher in Sydney (more than 90%) which is a major gateway for Chinese travellers.
  • Furthermore, room nights sold are projected to grow three percent per year during the next three years, outpacing hotel supply growth by 1.4 percentage points.

 

 

What to expect of hotels in the near future?

According to Bekier, hotels will need to ensure their customer service models are aligned with Chinese travellers’ expectations.

 

  • “If you look at Chinese tourists, many of them are spending in the four and five-star category for accommodation and that’s where we actually need the capacity,” he said. “We need to get a lot more product up to that level where we’re competitive with the best product in Hong Kong, London or New York.”
  • Gold Coast has plans to open the five-star Jewel Luxury Resort in December 2018, with Cairns, Australia in Queensland opting for a more wide approach with eight five-star, luxury resorts near the Great Barrier Reef in 2020.

 

Given Australia is a relatively more affordable long-haul destination than the U.S. or Europe, and with more direct flights and cheaper airfares, arrivals from China will likely keep trending up in the long-term however regardless of the fact, hotels definitely need to take it to the next level, or risk losing a significant portion of Chinese tourists travelling to Australia in the coming years.

 

 


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