China Boom Good for Far North's Economy

Just a quick post to update on a "hot topic" in the Far North at present - the recent introduction of direct flights from China. As someone on the ground speaking with buyers each day this topic comes up in every conversation involving the outlook for the local economy and property markets. And for good reason; the largest industry in Cairns is tourism with agriculture worth only half that in total gross domestic product. Needless to say when international conditions deteriorated post-GFC the economy in Cairns suffered - for better or worse, tourism is our life-blood.

Click to Enlarge

With further direct flights from China now confirmed by Cathay Pacific Airlines the extent to which Cairns is able to take advantage of this emerging international market is of increasing speculation. Without doubt there will be further news to come!

China boom is good fortune for Far North's tourism industry
Article printed by The Cairns Post 6th September 2012

THE number of Chinese travelling to the Far North is expected to double to nearly 190,000 a year within 12 months of three new services coming on stream from next month.

That’s the prediction of Cairns Airport chief executive officer Kevin Brown after Cathay Pacific Airlines yesterday announced changes to its arrival and departure times from Hong Kong to link to its flights from mainland China.

It comes as Chinese visitor numbers to the Far North continue to soar with the latest figures showing a 27 per cent jump on 2011 figures to 94,000 in the year ended June 30.

China Eastern flights arrive from Shanghai in October, China Southern flights from Guangzhou in December and the changes in Cathay’s daily schedule to connect with flights from Shanghai, Beijing, Guangzhou and other cities are from November.

Mr Brown said he expected the 3500 seats a week to be full.

"Passenger numbers could double within a 12-month period."

"Passenger numbers could double within a 12-month period," he said.

Mr Brown said the airport would be working with key organisations such as Advance Cairns, the chamber of commerce, Tourism Tropical North Queensland, James Cook University and the convention centre to ensure the success of the trial flights, to make them permanent, increase the frequency and to enhance the Cathay services.

"It’s not just tourism, but business, corporate, education and academia travel as well," he said.

Cathay’s Queensland business development manager Howard Field said the airline’s changes were to ensure smooth connection to flights between Hong Kong and eight cities in China and to prevent overnight stays in Hong Kong.

"We expect Chinese numbers to grow by 25 per cent," he said.

Tourism Tropical North Queensland chief executive officer Rob Giason said the flights meant the Far North was on target to reach 200,000 Chinese holidaymakers visiting the region by 2015. "But that could very well accelerate," he said.

Mr Giason said as well as the direct flights the industry expected to maintain the high numbers coming to Cairns from other cities such as Brisbane and Sydney.

According to Tourism Research Australia’s international visitor survey overall international visitors were down 6 per cent to 616,000 while spending was up $35 million to $800 million.

Cairns is the third most popular destination in Queensland for the Chinese after the Gold Coast (412,000, up 18 per cent) and Brisbane (109,000, up 35 per cent).

The survey also found the number of Japanese visitors was 87,000 (down 11 per cent), the UK 76,000 (18 per cent), the US 75,000 (down 1 per cent), NZ 44,000 (up 19 per cent) and Germany 41,000 (down 13 per cent).

Mr Brown said he treated the IVS figures, particularly Japan and Europe, with "a degree of caution".

"I don’t think they are as bad as that. I deal with actual passenger numbers not sample survey sizes," he said.

Mr Brown said he believed the Japanese figures were far better.

"I’ve been speaking to many tourism operators who have said they haven’t seen so many Japanese in a long time. It’s still a very strong market."

Peter Musso licensed real estate agent at Ray White Smithfield selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica, Kamerunga and surrounds.

Hotel Room Rates Set to Rise

Recent media coverage of the room rates for accommodation in the Far North has provided some hope to owners of holiday-style apartments. Throughout the past 3-4 years domestic tourism arrivals figures have maintained trend growth however in order to remain competitive many hotels have been forced to reduce their room rates by considerable amounts ultimately affecting the profitability for apartments and unit owners well-below historical returns. 

With holiday occupancy rates now showing considerable improvement local operators are now able to increase their room rates in order to restore profitability. A recent study suggests that hotel occupancy rates in Far North Queensland should return to pre-GFC levels within the next 3 years with the price of rooms to rise by 4.5 per cent.

Article text: The Deloitte Access Economics Tourism and Hotel Market Outlook released today shows average annual room occupancy rates in the Far North have improved to 58.1 per cent, but are still 5.5 per cent lower than they were five years ago.

The report said the average room rate would rise by 4.5 per cent to reach $132 by the March quarter of 2015, while the revenue per available room would also rise by 9.1 per cent.

"While growth in room rates and yields are expected to be relatively strong over the forecast period, they will remain considerably lower than the levels prevailing in the capital cities and broadly similar to other regional destinations," the report said.

Mercure Cairns Harbourside general manager Shane Edwards said there had been a noticeable increase in visitors since May.

"Occupancy has been quite strong certainly for the last three months and we’re more optimistic than this time last year," he said.

The Far North’s lower room prices will also help increase occupancy.

"Occupancy rates are forecast to reach 66 per cent by the March quarter 2015, driven among other things, by room rates which are considerably below those witnessed in other parts of the nation," the report said.

Mr Edwards agreed, saying room prices were still well below other Australian cities.

"If I look at average rates in 2005 they’re certainly nowhere near what they were back then," he said.

"I think if volume is consistent then rates will slowly start to increase in line with other cities."

The direct flights from China along with November’s solar eclipse have also given hotels confidence they will stay full beyond the traditional high season.

"With the extra people coming in it can only get better and we’re quite excited about it, usually when you see a dip we’re hoping that occupancy levels will stay high," Mr Edwards said.

Tourism Tropical North Queensland chief executive Rob Giason said the past six months have seen good growth and sustained occupancy.

Article posted by The Cairns Post - August 30th 2012

Peter Musso licensed real estate agent at Ray White Smithfield selling property in Cairns' beautiful northern beach suburbs including Trinity Beach, Kewarra Beach, Clifton Beach, Palm Cove, Trinity Park, Smithfield, Yorkeys Knob, Holloways Beach, Machans Beach, Caravonica, Kamerunga and surrounds.