Hotel industry ‘coming of age’

Press, 24 September 1987, Page 9

Hotel industry ‘coming of age’

The New Zealand hotel industry is coming of age internationally, according to a Christchurch tourist industry analyst, Mr Murray Compton. Mr Compton, who heads the Tourism Services Division of a national accounting firm, Arthur Young, says the New Zealand industry has matured considerably in the last few years. This was highlighted by comparing the results of a survey of

the New Zealand hotel industry with those from the official Singapore Hotel Association survey of the Singapore industry.

“Our hotels have traditionally charged less for rooms than hotels in other developed countries, but we have now reached international levels,” Mr Compton said. The surveys showed that average room rates in New Zealand hotels for 1986 of $B9 now exceeded

those in Singapore, $75, for the first time since the first Singapore survey in 1984. This reversal was partly because of an oversupply of rooms in Singapore which caused an 18.6 per cent decline in average room rates, and also to a 23.8 per cent increase in New Zealand rates. The rates in 1985 were $97 in Singapore and $7l in New Zealand. The surveys also showed that the total

annual revenue per room for New Zealand hotels was $43,480 compared with $40,042 for Singapore hotels. The profitability of New Zealand hotels increased 2.5 per cent to 23.8 per cent of revenue ($10,362 per room) while in Singapore profit declined 2.5 per cent to 15 per cent of revenue (to $6004 per room). Mr Comptoin said the 1986 Singapore survey, which covered 38 hotels and was published in August, showed the continuing problems of the Singapore hotel industry. Average room rates had shown a steady decline — 11 per cent in 1985 and 18 per cent last year. The survey said that last year saw the first increase of more than 5 per cent in tourist arrivals to Singapore since 1981. However, the total number of hotel rooms in Singapore increased by 16 per cent from 1985, following the previous year’s 13 per cent increase. This growth caused a decrease of 3.4 per cent in average room

occupancy rates to 60.6 per cent. The oversupply in hotel rooms had caused an 18.6 per cent drop in average room rates, while revenue per available room decreased by more than 20 per cent. The survey painted a gloomy picture for the immediate future of the Singapore hotel industry. “Hotel rooms now under construction will again reduce the over-all room occupancy rate unless tourist arrivals increased by an additional 500,000 to 800,000," said the report. “The short-term prospect remains discouraging as the predicted excess in the increase of supply of hotel rooms over the increase in demand promises further downward pressure on room occupancy rates and room rates. The continuous decline in reported rate of return on the hotel dollar may require investors and financiers to carefully analyse the continuous financial viability oi’ the industry,” it said.