Hotels and resorts in the industry can be segmented via star ratings, which are dependent on the quality of rooms, facilities and services. These star ratings are assessed by the national AAA organisation through the various state motoring organisations, such as NRMA, RACV, RACQ, RAASA, RACWA and RACT. Classification depends on the standard of both facilities and services provided by hotels and resorts.
Overall, the majority of the industry’s rooms are in the high-end range of four stars or greater. Four-star and five-star rooms are estimated to account for 56.9% of industry revenue and make up 79% of total hotel rooms in 2012-13. The largest segment in the industry is four-star rooms, which are estimated to account for 34.6% of the market, followed by five-star rooms with 22.3% of the market.
Most hotel operators derive over 30% of their revenue from sources other than accommodation, mainly from the sale of meals and beverages at their restaurants. Some of Australia’s major hotels are attached to entertainment complexes that aim to provide guests with the complete on-site experience – for these types of hotels, room tariff revenue almost becomes secondary to non-room revenue.
Other revenue streams include the sale of in-room food and beverages, management fees and charges, interest and the hiring out of function rooms for conventions and meetings. Total estimated revenue derived from conventions and meetings (which includes meals and liquor provided at these receptions) is estimated to make up 9% of total revenue.
The industry is expected to perform modestly over the next five years, constrained by a shaky global and domestic economic environment. While international tourist numbers are expected to increase, the European debt crisis, British recession and a slowdown in parts of Asia will continue to plague Australia’s main tourism markets. To some extent, domestic tourism will remain at the mercy of exchange rate movements; the Australian dollar – which has been the nail in the industry’s coffin over the past two years – is often unpredictable, but is expected to remain at high levels for at least the short term. IBISWorld forecasts that while revenue volatility will continue in the short term, revenue will increase by an annualised 1.8% over the next five years, to total $6.31 billion in 2017-18.
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