Tourism and Hotel Industry of Australia

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Table of Content • Introduction – Australia

Background

• Services offered in Tourism & Hotel Industry

• Market Value of Tourism & Hotel Industry

• Competitors in Hotel Industry

• SWOT Analysis for a new hotel to enter into this hotel industry

• Barrier to entry for a new hotel

• References

Introduction – Australia Demographics

• Capital: Canberra

• Largest City: Sydney

• Population: 24,007,900 (2016 estimate)

• Area: 7,692,024 km2

• Prime Minister: Malcolm Turnbull

• Governor General: Peter Cosgrove

• National Language: English

• Currency: Australian Dollar (AUD)

• Prehistoric Australian Aborigines: These are the native individuals who are in Australia as hunters & gatherers. There exists approx. 300 clans, 250 languages ad 700 different dialects. All of them impart Dreamtime belief.

• Discovered by Dutch in 1600.

• Englishman James Cook in 1770 claimed it for Great Britain

• GB used Australia as a penal colony for placing convicts

• In 1901, Australia came under one constitution and emerged as the Commonwealth of Australia that is a dominion of the British Empire

Introduction – Australia History

Introduction – Australia states & Territories

• Australia is the 6th biggest country of world

• It is an island that is surrounded by water

• It is the smallest continent of the world

• It has six states, New South Wales (NSW), Queensland (QLD), South Australia (SA), Tasmania (TAS), Victoria (VIC), Western Australia (WA) abd two mainland territories, ACT – Australia Capital Territory nad NT – Northern Territory.

Introduction - Australia • A country with cultural diversity

• Australians are warm & intimate hence love scuba diving, swimming, sports such as water surfing, cricket, football etc.

• Typical animals are Koala Bear, Kangaroo, platypus etc.

• Other famous attractions include Boomerang, didgeridoo musical instrument played by aborigines

Introduction – Australia Tourist Attractions 1. Uluru (Ayers Rock) is the world’s largest

monolith. It is a sacred place for Aborigines. It is popular tourist attractions as it has bright and beautiful colors and they go for trekking.

2. Sydney Opera house & Sydney Harbour Bridge are famous tourist attraction

3. Bondi Beach , Jim Jim Falls Kakadu National Park NT

4. The great barrier reef including Reef and Island, Coral and undersea life and divers in coral

Services offered in Tourism & Hotel Industry

• Australian Tourism industry is segregated into two areas.

– International tourism

–Domestic tourism

• The famous Australian tourist destinations include the coastal cities of Sydney & Melbourne. The high profile areas of Queensland and Gold Coast, the world’s largest the Great Barrier Reed. Australian outback, Tasmanian wildlife, Uluru etc.

Services offered in Tourism & Hotel Industry

• Australian Tourism industry provides services,

–Hotel / accommodation industry

– Travelling / Transport industry

– Food Industry

–Development of tourist places / Heritage sites

Market Value / Market Share of Tourism Industry

• Tourism plays a vital role in Australia’s economy. In the financial year 2010/11, this industry shown a 2.5% of country’s GDP that comes to a value of AUD 35 billion approx. to the country’s national economy that comes to adding AUD95.9M daily to economy where domestic tourism where this plays a key role of adding 73% to the total direct tourism GDP

• By end April 2015, 7.1 million visitor arrivals were recorded in Australia.

• In 2010-11, the Australian tourism industry helped to provide jobs for 513,700 individuals out of which 43.7% are the individuals worked as part-time.

• In 2010-11, the Australian tourism industry funded 8.0% of the Australia's total export earnings.

Market Value / Market Share of Tourism Industry

• There were 898,000 tourists / visitor arrived in Australia during the month of December 2015, that is an increment of 11.2% relative to the same period of the previous year.

• It is estimated that by end Dec 2015, 7.43 million tourists / visitor entered Australia that is an increment of 8.2 % relative to the previous year 2014 depicting an additional 561,000 tourists / visitors than previous year.

• Leisure arrivals (Holiday + VFR) were continued with tremendous growth and shows an increment of 8.9% over the last 12 month time.

• On the other hand the business travel shows a decrement of 5.1% for the same time

Market Value / Market Share of Tourism Industry

• In Nov 2010, Australian Government issued “2020 Tourism Industry Potential” that valuates by end 2020 the Australian tourism industry will be a worth up to AUD 140 billion.

• This growth is expected due to China as an emerging market that is the large economic contributor by 2020 to the Australian tourism industry.

• Chinese tourists number doubled from 2006 till 2012 and attained a peak of 626,400 in 2012

• The year 2013 data shows China as the Australia's promptly growing tourist market as the Chinese spend highest in comparison to other tourists in Australia .

Market Value / Market Share of Australian Tourism Industry

Monthly short term visitor / tourist arrived in Australia since 1976

Monthly long term visitor / tourist arrived in Australia since 1976

Market Value / Market Share of Australian Tourism Industry

International Tourist breakup country-wise source: Australian bureau of statistics

Market Value / Market Share of Hotel Sector

• According to Deloitte access economics outlook 2015, the domestic overnight travel and hotel staying increased in 2014 by 5% -6.7% approx.

• NT and Victoria were assessed as the most beneficent areas incase of hotel overnight staying

• On the other hand international tourists from China, give a growth of 14% to the hotel industry

Year on year growth city-wise Australia 2013-2014

• In 2014, Australian hotel sector observed healthy growth in occupancy as well as in ADR (average daily rates) growth by 2.2% and Rev PAR 4.4%

• In Sydney and Melbourne the occupancy was 90% above last year.

Market Value / Market Share of Australian Hotel Sector

• Hotel sector provides jobs to 270,000 individuals or more.

• An average Australian hotel gives job to approx. 34.7 people.

• Hotel sector on annual basis spends AUD515.6 million on their venue security annual basis.

• Hotel sector on annual basis shares AUD75 million or above in sports and community activities.

• Hotel sector on annual basis spend AUD70 million or above on staff training and development.

• This sector hosts approx. 250,000 live music performances annually that focuses on the development of local music talent.

Hotel Sector in Sydney & their Competitors

• Approx. 6,807 hotels in Australia that generate $14.4billlion (2008)

• Occupancies in Sydney and Melbourne continued to track higher, posting averages of 87% and 86%, respectively. Room rate growth was solid, but below what such elevated occupancies would suggest.

• Sydney and Melbourne will continue to lead trend room rate growth, forecast to be positive in all markets, albeit suppressed in some cases by large amounts of supply (i.e. Perth), or subdued demand (i.e. Canberra)

• There are many hotels that are close to the harbour, Sydney Opera House, Sydney Harbour Bridge and Circular Quay

Competitors in Hotel sector – Sydney Australia

• The hotel sector competition is intense in many parts of the world and concentrated within the strategic groups that are subjected to growth of this sector.

• Incase of 5 star category; strong competition exists between hotels based in Sydney like Amora Hotel Jamison, Four seasons Hotel , Hilton, Intercontinental , Sir Stamford Circular quay, The Langham, Shangri-La Hotel, The Westin, Sheraton on the park, Sydney Harbour Marriot etc.

• Incase of 4 star category; competition is observed among The Menzies, Dulcis Domus Broadway serviced apartments, Novotel, Crowne Plaza, The Tank stream, Holiday Inn etc.

Competitors in Hotel sector – Sydney Australia

• Incase of 4 star category; competition is observed among The Menzies, Dulcis Domus Broadway serviced apartments, Novotel, Crowne Plaza, The Tank stream, Holiday Inn etc.

• Incase of 3 star category; competition exists among ibis airport, Macleay, Park Regis city centre, Aspire, Metro marlow, Leisure inn, springfiled lodge etc.

• At Bondi beach; hotels like Meriton serviced apartments, Hotel Bondi, noahs, QT Bondi, Ultimate apartments etc.

SWOT analysis

• More than 500 classified hotels in Sydney with room availability of approx. 10,000 or more rooms

• All 5 star, 4 star, 3 star, 2 star, apartment type, backpackers and hostel type, bed & breakfast and holiday homes all are available

• International brand names such as Sheraton, intercontinental, The Langham etc. are available in the market that meet the international tourists needs

• Low labor cost gives better profit margins to hotel owners

• High growth potential due to healthy increase of international tourists coming to Sydney - the biggest city of Australia

• Rich with key attraction places / beaches /cultural heritage

Strength

• High seasonal dependency due to weather changes during the year.

• Low barrier sector for restaurants, bars and café’s as there are many star-ups and failure SME business that erodes profit margins

Weakness

SWOT analysis • Sydney enhances number of tourist attraction places

• Sydney has a distinctive and versatile geography that makes it an ideal tourist destination

• Increased international tourists such as from China and domestic tourist / visitors

• Australian Government focus and tourism industry plan 2020 implementation to support hotel sector / tourist industry

• Availability of high quality human resource for hotel sector

• Decrease in other resource prices

• Regulatory changes

Opportunity

• Weakening of Australian dollar against US dollar creating decrease in economic growth

• Environmental factors to impact hotel sector

• Strong strategies focused by other tourism based countries like Singapore, India, Malaysia.

• Mergers and acquisitions of different hotels

Threat

Barrier to Entry – Hotel Sector Sydney Australia

• Australian tourism and hotel industry is developed on the support of their government

• Globally the hotel sector of tourism Industry is significantly characterized as an industry that incurs high capital costs and then a high proportion of fixed costs to the total costs involved.

• The economies of scale are substantial in the Sydney’s local hotel sector.

• The capital costs are high that entail the managing of a hotel project to attain a cost effectiveness by using all kind of resources properly such as the construction cost, hotel furnishing and equipment installation costs, the expenses related to pre-operation.

• It is considered that the initial investment pertaining to the hotel sector makes a barrier to entry to this tourism industry. It must be noted that some barriers to entering the hotel market are decreased due to the utilization of internet such as it moderates upstart marketing costs.

• Another substantial barrier to this industry is “differentiation”. A hotel having a differentiation due to its location, or by its provision of services, or by availability of amenities or other quality has a possibility to attract and potential to retain its clientele.

Barrier to Entry – Hotel Sector Sydney Australia

A third barrier to entry can be stated as “expertise”. Unfortunately, there exists an employee turnover in every industry globally and same is the case of hotel sector. The employees switch jobs, leave one hotel and work in another on small benefits and henceforth take expertise and experience with them.

It is noted that both these areas of “expertise” and “differentiation” where a hotel can create the utmost influence on its clientele and thereby on its profitability.

In a metropolitan city like Sydney the growth and development of a new hotel is very much limited due to the availability of most suitable locations that has the tourist attraction.

This sector demonstrates an increased entry barriers thus restricts the new entrants, predominantly due to the combined aspects related to economies of scale, excessive capital cost of entry, along with the narrow supply of appropriate locations.

References • ABC News, (2013). Australia targets China for tourism boost. [online] Available at:

http://www.abc.net.au/news/2013-06-04/china-tourism-boom/4732668 [Accessed 25 Feb. 2016].

• Abs.gov.au, (2016). Population clock. [online] Available at: http://www.abs.gov.au/ausstats/abs@.nsf/94713ad445ff1425ca25682000192af2/1647509ef7e25faaca2568a900154b63?OpenDocument [Accessed 25 Feb. 2016].

• Aha.org.au, (2016). Australian Hotels Association | Representing Australia's hotel industry since 1839. [online] Available at: http://aha.org.au/industry-data [Accessed 25 Feb. 2016].

• Anon, (2016). [online] Available at: http://aha.org.au/wp-content/uploads/2011/04/PWC-Hotel-Industry-Report-20092.pdf [Accessed 25 Feb. 2016].

• Australia, T. (2016). Visitor Arrivals Data - Research - Tourism Australia. [online] Tourism.australia.com. Available at: http://www.tourism.australia.com/statistics/arrivals.aspx [Accessed 25 Feb. 2016].

• Australia.gov.au, (2016). European discovery and the colonisation of Australia | australia.gov.au. [online] Available at: http://www.australia.gov.au/about-australia/australian-story/european-discovery-and-colonisation [Accessed 25 Feb. 2016].

• Huntsman, L. (2001). Sand in our souls. Carlton South, Victoria, Australia: Melbourne University Press.

• Online, S. (2016). Sydney Hotels & Accommodation. [online] Sydney Hotels & Accommodation. Available at: http://www.sydney.com.au/hotels.htm [Accessed 25 Feb. 2016].

• Smh.com.au, (2016). Opera House wins top status - Travel - smh.com.au. [online] Available at: http://www.smh.com.au/news/travel/opera-house-wins-top-status/2007/06/28/1182624058781.html [Accessed 25 Feb. 2016].

• Taylor, T. (1943). Australia. New York: E.P. Dutton & Co.

• Tra.gov.au, (2016). Tourism Research Australia - Home. [online] Available at: http://www.tra.gov.au [Accessed 25 Feb. 2016].

Tourism and Hotel Industry of Australia

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