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Melbourne hotels predicted to face price war
MELBOURNE – The hotel sector in Melbourne is set for a “rollicking ride†in the year ahead as new hotel rooms coming on stream threaten to put strong downward pressure on rates.
Kent Davidson, Mantra group director of sales and revenue, speaking at AIME, said, “I’ve no doubt we will see a price war in the Melbourne market as the new rooms arrive; revpar in the CBD could drop by 10-15 percent.
“Rates fall away in a heartbeat and it takes months, sometime years to regain them.â€
Davidson thought 4-star hotels in the Melbourne CBD would feel most pain. “If a new 4-star opens with a $99 introductory rate, and keeps that rate for four months, the 4-star properties around it will have to respond.â€
He also predicted rate-cutting activity “in the 5-star market in the Crown neck of the woodsâ€.
The 658-room Crown Metropol will soft-launch in April, adjacent to Crown Towers and Crown Promenade.
The recently restructured Mantra Group – previously the Stella Hospitality Group – operates the Peppers, Mantra and Breakfree brands and currently has 144 properties across Australia and New Zealand.
Davidson said Melbourne was a resilient market due to its strong events calendar and he expected demand for both Sydney and Melbourne to pick up.
“Corporate business was weak last year because of restrictions placed on travel but with the relaxation of corporate travel policies demand is now above levels prior to the GFC.
“I expect companies to be more prudent with fewer lavish dinners and less team building – but face-to-face meetings will grow.â€
Davidson said the Mantra group was currently in the process of divesting a few of its hotels which didn’t fit the brands, “but we’re very interested in growing the portfolio, and we’re in a sound financial position to do that.â€
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