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Hotel squeeze creates more rooms

A development surge is expected to add almost 14,000 new rooms during the next three years because of the tight occupancy in Australian hotels.

Commonwealth Bank of Australia analysis suggests this is the result of hotel occupancy rates in Sydney hitting 95 per cent in January and 90 per cent in February this year.

Student accommodation providers such as Urbanest are seeing the opportunity and are now moving in on the space with plans to open up their facilities to hotel guests in summer when their usual occupants are on holiday.  

"With just one new hotel due for completion in central Sydney before next summer, the city looks set for another accommodation squeeze," Kevin Stanley, head of property strategy and research for the CBA's corporate financial services told the Australian Financial Review.

"We are monitoring 75 new hotel and serviced apartment complexes currently under construction in Australian city and country areas, which will add almost 14,000 new rooms over the next three years." 

While 87 per cent of these rooms will be added in the major state capitals of Sydney, Melbourne, Brisbane and Perth, there will be lots of development further afield with more than 1000 rooms are under construction in the smaller capitals – Adelaide, Canberra and Hobart.

Add to that another 1000 rooms in the pipeline for tourist and regional centres.

According to CBA, 234 approved or proposed projects are in the longer-term development pipeline.

CBA says the tourism market will be supporting the growth.

“As inbound flights, particularly from Asia, start to fly for the first time directly into Australia's smaller capital cities, as well as increasing flights into tourist centres, the uptick in demand for tourist accommodation is spreading to destinations previously dominated by domestic travel," Stanley told the Australian Financial Review.

"Over time, this will support local economic growth and the development of new tourism-related business."

by Leon Gettler, October 10th 2017