This was a key outtake from CBRE’s latest Hotels MarketView report for Q4 2017, which found the tropical holiday destination managed to fight off the challenge from second highest performing market, Canberra, that looked set to cause an upset after a strong year. 

The report states Cairns registered annual RevPAR increases of 9.5% to $128, while occupancy grew to 84.8% and ADR was up by 7.6%. Comparably, Canberra posted RevPAR increases of 8.2% off the back of 3.1% increase (76.9%) in occupancy and a 5% increase in ADR to $174. 

CBRE Research Manager Ben Martin-Henry said Cairns’ consistent performance throughout the year and strong increases across all major indicators (ADR, RevPar and occupancy) in Q4 secured its top spot.   

“Tourism is surging, and Cairns has become increasingly popular with both domestic and international tourists. Perhaps most importantly, Cairns tourism levels have received a major boost from direct flights from mainland China, and as a result the hotels market is reaping the benefits.”

“The city’s performance was also underpinned by a stable supply pipeline. Cairns hasn’t welcomed a new hotel in almost 20 years, but I think we’ll see a shift in 2018 as developers start looking to take advantage of the city’s strong performance and investment fundamentals.”

One of the first tests of the Cairns market in 2018 is the listing of Paradise Palms Resort for sale. CBRE’s Wayne Bunz, Danny Betros and Sharon Yang have been appointed to market the property, which is expected to attract strong local and international buyer interest. The offering includes the region’s most prestigious golf course, a 96-room resort and additional land with planning approvals for up to 1,487 apartments. 

On a national level, international visitor arrivals reached a record of 7.9 million, up 7% on 2016. Annual RevPAR for the year ending 2017 jumped 2.8% to $143, ADR grew by 1.8% to reach $187 and occupancy recorded 0.9% growth to 76.2%.

Mr Martin-Henry noted the two markets that joined Cairns in 2016’s top three performing markets, Hobart and the Gold Coast, fell to become the weakest performing markets at year’s end. 

“While visitor numbers remained robust, Hobart struggled to absorb stock from its increasing supply pipeline. Meanwhile, the Gold Coast was able to increase room rates but struggled with declines in occupancy. This could be an aberration though, as occupancy should increase significantly thanks to the 2018 Commonwealth Games,” Mr Martin Henry said. 

On the investment front, the MarketView found that despite more than $400 million worth of assets transacting in Q4, 2017 recorded the lowest sales volume since 2011 ($1.5 billion). However, CBRE Hotels National Director Wayne Bunz said the amount of activity the market has already experienced in the first month of the year points to a much stronger 2018. 

Recent transactions include the off-market sale of Brisbane’s Emporium Hotel to Ovolo, which was negotiated in just four weeks, and the ibis Mercure hotels which sold to Commerz Real for $77 million. 

“2018 is already shaping up to be a busier year for the national hotels market. The volume of capital seeking opportunities across the country is substantial and tourism is surging – so I predict a greater number of investors will shift their interest away from the tightly held markets of Sydney and Melbourne and start looking for quality assets in markets that are forecast to strengthen significantly in the next few years,” Mr Bunz said. 

“We are consistently fielding enquiry from major investors seeking opportunities in cities such as Brisbane and Perth, as confidence grows in these cities. Similarly, I expect northern Queensland markets, including Cairns and Port Douglas, will continue to experience strong interest from both overseas and Australian based owners who are looking to capitalise on inbound tourism from China,” Mr Bunz concluded. 

Click here to download the full CBRE Research report.

See also:

Sydney CBD's Park Regis Hotel expecting over $50m

Have your say on the Gold Coast Airport's new hotel

New Murrumbateman hotel just the beginning for Abode Group