Perth hotels fight to survive

There are more hotels in Perth than ever before but visitors are spending less money and staying for a shorter amount of time, government figures show.

Entrance of the Alex Hotel in Perth. Photo: Elena Morabito

A report by Tourism WA recorded a 10 per cent decrease in the total number of nights visitors spent in Perth.

Hotels were forced to reduce their rates to stay competitive in an expanding market, the March report found, but visitor numbers were set to grow over the coming years.

According to the Australian Hotels Association WA, 3807 rooms were created in 34 hotels and service apartments since 2012.

They were built as a result of the WA State Tourism Strategy 2020 to meet the demand of the mining boom, back when Perth had the most expensive hotels in the country.

Tourism Minister Paul Papalia said the strategy was created at a time when there were few, and low-quality hotels, but the demand exceeded capacity.

Mr Papalia said the strategy was not increasing the number of visitors and was abandoned in 2017, replaced by the new action plan.

As new luxurious hotels arrived post the boom, their rates were low to attract scarce customers. 

“They were very affordable because most arrived at the top end of the market and they were pushing down the price for all hotels,” the Minister said.

The rates of these new hotels have stayed low to ensure customers came to their hotels.

A June 2019 report by Tourism WA noted a 1.9 per cent decrease in occupancy, a 3.6 per cent decrease in revenue per available room and a 1.7 per cent decrease in international visitor spend.

Mr Papalia said even though the occupancy was slightly decreasing, there were thousands of hotel rooms being filled.

He said Western Australia was growing international holiday makers at twice the national average, which would increase the visitor numbers, both at an interstate and international level.

Alex Hotel manager Sanni Bebbington said when the boutique hotel opened in 2015, they did not have much competition.

But many boutique hotels with a similar style have opened since, which had negatively impacted the hotel’s occupancy.

“We’ve got lower occupancy, lower rates, but the cost of everything is still the same,” Ms Bebbington said.

She said even though many accommodations were similar to the Alex Hotel, most of them were part of a bigger group imitating the boutique style in a “cookie-cutter method”.

Ms Bebbington said the strategy moving forward was to nurture their relationship with customers to ensure they came back rather than contending for new ones.

According to the AHA WA, 14 hotels and serviced apartments with 2742 rooms are currently under construction or set to be built in the near future.

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