Almost all Queensland tourism and accommodation markets are coming off a record financial year performance with 2023 being one of, if not the best, 12 months of trade recorded.  Strong occupancy coupled with substantial increases in Average Daily Rate’s (ADR) has produced sharp rises in RevPAR levels across the board.

The numbers are big!  In terms of RevPAR for 2023 vs pre-pandemic levels of 2019, STR reported growth in Brisbane (47%), Gold Coast (35%) and Cairns (18%) with all markets also up in ADR on both 2019 & 2022 levels.

Given the current challenging macro economic conditions, particularly around discretionary spending, there are some questions around the future performance of tourism assets over the next 6-18 months. However, based on improved ADR’s overall in Queensland, performance would be coming off a strong base.

The 2023 calendar year has seen a substantial increase in corporate travel budgets which helps to underpin demand and bring increased depth to the market for operators.  This is expected to continue for the balance of the year with operators citing strong enquiry and forward bookings for conferences and events.

One of the new challenges is outbound Australian travel restricting domestic travel spend, but inbound tourism is expected to improve sharply in 2024 which would backfill and perhaps exceed this spend and room night stays lost.

Overall, even if performance conditions do soften – Queensland is seen as a fantastic growth opportunity given the lower per key prices and higher yields versus New South Wales and Victoria.

Since the pandemic, it is clear that the Queensland accommodation and tourism industry is currently experiencing a halcyon period. Australians have seen more of Australia than ever before over the past 12-18 months and they just can’t seem to get enough of Queensland.

The big question is just how long will this last?

Whilst many are pointing to a potential softening, operators are still reporting strong occupancy and solid forward bookings.  FNQ and Cairns are in peak season and the numbers point to comparable trade to 2022, which was a record year for many.  The Brisbane market is the standout performer and is holding firm for now.

Locally preferred outbound international beach and tropical destinations from Australia, including Bali, Phuket, Fiji & Vietnam are still in a recovery phase themselves and most are yet to “re-open” to capacity and return to normalised trade.

The increase in domestic tourism has led to improved cashflow of hotels, motels and other accommodation assets which is also helping to replenish depleted savings for operators, as well as paving the way for potential upgrades/refurbishments which will likely see further re-investment back into the sector.

Clearly there are macro-economic headwinds on the horizon with an increased interest rate environment and inflationary pressures however, assuming demand continues to be strong, operators and hotel/motel owners will be in a strong position to service any debt they carry.  Whilst there is expected to be a squeeze on discretionary spending in the overall Australian economy and a “tightening of the belt”, it is highly unlikely we will stop holidaying locally. In fact, this will surely reduce the number of Aussies headed abroad and rather point Australians towards the direction of destinations in their own backyard. 

The Cairns and FNQ region are already starting to experience the first trickle of international inbound holiday makers and this looks set to grow over the FY24.  Cairns’ airport is set to benefit from the return of increased direct routes to Japan, Singapore, New Zealand and Bali.  Australia is such a popular international inbound destination and with drawcards such as the Great Barrier Reef and Daintree Rainforest, Cairns and FNQ always attracts its fair share of international tourists. Whilst the area is currently missing the influx of Chinese guests, the area seems to be adapting and learning to live without them, for now.

Despite questions on what level trade will stabilise at looking forward, there are many positive signs that point to ADR’s and subsequent RevPAR levels holding at these strong post pandemic levels in the Queensland tourism and accommodation market.  Overall, Queensland looks like a sound bet for the future, and with the 2032 Olympics on the horizon, it’s hard to see how this market will not continue to prosper.