While Australia’s tourism sector is doing very well from international tourist arrivals, it’s not all good news. There may be an increase in international tourism arrivals each year (of around 2% p.a. since 2001), but there has not been a significant increase in hotel beds. In some parts of the country this is becoming, and has already become, a major problem.
Queensland, New South Wales, and Western Australia are worst hit by this problem, which is being exacerbated by high accommodation demand, particularly from the mining industry.
Problems in Perth
Perth is repeatedly in the news because of demand outstripping supply, and as a result the city is losing out on revenue it could be making. Being the capital of Western Australia this is the go-to destination for corporate tourists, conference and business travel; a very strong market that could really boost tourism revenue in the city. The ‘Tourism Industry Facts and Figures At A Glance’ report highlights the potential from this market, as during 2010 travel to attend a conference or convention was up by 19.5%, and business travel was up by 13.7%. But Perth cannot attract this market if there are not enough hotel rooms to cater to these visitors.
Despite demand being high, and room rates having increased significantly over the past few years, there is still a lack of development in new hotels. The factors contributing to this problem are cited as: high land prices, high construction prices, high labour prices, and labour shortages, but also strong competition from overseas investors, however, if the last factor was a current problem, surely a number of overseas investors would be building hotels in Perth right now.
What are the Solutions?
The most obvious solution is to build more hotels, but without being able to attract investors this is easier said than done. The WA Government is trying to help, and has offered a number of incentives that will be granted on a project-by-project basis. This includes releasing Crown land; granting longer term Crown leases; concessional lease payments for use of Crown land; and allocating funds to upgrade infrastructure, amongst others.
A solution that will certainly help to ease the problem is to provide alternative accommodation for those people working in mining, and this is already being actioned to a certain extent. At Rio Tinto two contracts have been awarded for accommodation building projects. The same needs to be done elsewhere though, not just in Western Australia.
Looking to other temporary solutions, the number and size of caravan parks could be increased as an option for mining accommodation, however, this poses a problem in itself as there are already staff shortages in caravan parks, and indeed in hotels. This goes to show that the industry is looking at a much larger, intertwined problem that is going to take some years, lots of planning, and a lot of investment to quell.
