Olympics leaves its mark on Sydney’s hotel industry

Corporates, CBD hoteliers and tourism among the winners

Games organisers and corporate-sponsored spectators comprised the majority of Olympic-related hotel guests in the Greater Sydney area during the Games, leaving independent leisure travellers scrambling for alternative accommodation, according to a PricewaterhouseCoopers survey.

The Olympic Period Accommodation Review, carried out by the PricewaterhouseCoopers hospitality and leisure practice, shows that eight out of ten Olympic related travellers staying in Sydney hotels were associated with the business of running the Games and/or corporate entertainment packages. Independent and group leisure travellers visiting Sydney specifically to see the Games represented only 15 per cent of the city’s hotel guests in September.

“Clearly, the Olympics was a corporate event for Sydney’s hoteliers,” said Kieron Ritchard, associate director of hospitality and leisure, PricewaterhouseCoopers.

A 62 per cent growth in international hotel guests materialised in September 2000 over September 1999 hotel performance statistics. Room nights sold to American and European visitors doubled during September 2000 in comparison with September 1999. The lower-yielding domestic market gave way to the temporary influx of international visitors, contracting by 28 per cent during the month of the Games.

“As in previous Games, this enormous event displaced demand from traditional market segments and disrupted normal travel patterns during September. As a result, despite a September spike, room occupancy performance from August to October actually remained flat in comparison to last year.”

Three to five star hotels achieved a well-deserved increase in average room rates during the entire Olympic period (August to October), recording 34 per cent growth. Not surprisingly, 82 per cent of respondents reported above average to very high operating profits for the period.

PricewaterhouseCoopers hospitality and leisure’s econometric model, developed for the Greater Sydney hotel market, forecasts a decline in revenue per available room (RevPAR) of approximately seven per cent for 2001 followed by a return to RevPAR growth in 2002 and 2003.

“The Sydney hotel market is expected to enter a short term supply and demand imbalance in 2001, when demand growth will lag the sharp pre-Olympic increase in hotel rooms,” said Mr Ritchard.

“Properties associated with strong brands and global sales and marketing distribution channels will be best placed to counter this imbalance and will stand up among Australia’s hotel investment winners.

“Weaker properties will be last to fill in a market now spoilt for choice of quality hotels at competitive rates.”

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Notes :

1. The PricewaterhouseCoopers Olympic Period Accommodation Review surveyed 35 hotels in the Greater Sydney area on their bookings for August, September and October 2000.

2. The PricewaterhouseCoopers Sydney econometric model accounts for the influence of macroeconomic and local economic drivers on hotel demand as well as the sophisticated relationships between supply and demand in the lodging industry.

3. PricewaterhouseCoopers’ model can estimate future changes in market-wide room occupancy, average daily rate and revenue per available room.

4. PricewaterhouseCoopers’ econometric model prepared for Sydney is anchored to the Australian Bureau of Statistics Greater Sydney statistical division.

5. The PricewaterhouseCoopers Global Hospitality and Leisure Group has more than 700 specialists around the world dedicated to hospitality and leisure industry clients. The practice offers business advice to owners, operators and investors globally and across the region, with hospitality specialists located in Singapore, Hong Kong, China, Indonesia, India, Japan and Australia. PricewaterhouseCoopers formed a partnership with Smith Travel Research in 1998, and provides lodging market summaries worldwide.

6. PricewaterhouseCoopers is the world’s largest professional services organisation. Drawing on the knowledge and skills of more than 150,000 people in 150 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world.

7. PricewaterhouseCoopers refers to the member firms of the worldwide PricewaterhouseCoopers organisation.

8. The name PricewaterhouseCoopers is one word, with upper case P, upper case C, and all other letters in lower case.