Sydney’s average hotel room rates are growing faster than those in any other Australian city, according to recent industry analysis*. With five-star hotel occupancy rates soaring above 95%, these figures have implications for companies looking to book Sydney accommodation during 2017.
Key factors driving demand
Sydney has experienced strong, sustained demand for accommodation over the past few years, with rates surging by 8.7% in the first quarter of 2017 compared with the same period in 2016. During this quarter, average nightly rates in Sydney were at A$270, while occupancy levels were at 90.1%, the highest they have been since 1996.
This now places Sydney among the highest occupancy levels in the world above those of New York, London and Hong Kong. These current increases are spurred by:
- 14% growth in visitor nights by domestic business travellers and 5.4% growth in international overnight business visitors for the year ending December 2016
- A boom in tourism and leisure travel activity, including a 6% increase in passenger numbers through Sydney Airport and more international travellers booking 5 star hotels due to the weaker Australian dollar
- A surge in large events, particularly following the re-opening of the International Convention Centre in Sydney’s Darling Harbour last year
- A current lack of accommodation supply. Sydney has a pipeline of properties under construction or expansion –including the new Sofitel Sydney to open in November 2017, an upgrade to the InterContinental Sydney and a capacity increase at Hyatt Regency – however it will be 2020 and beyond before these new developments open for business.
For the first time in years, business travellers are now competing with leisure travellers for hotel rooms.
What this means for the corporate market
Companies will need to factor in rate rises during the remainder of 2017. They will also need to book their accommodation sooner – up to 3 or more months in advance – to secure rooms in their preferred properties.
Companies wanting to avoid the increases may need to consider different types of accommodation, such as 3 and 4 star properties rather than 5 stars, and different locations to the CBD.
Airport hotels – an alternative to consider
The Sydney Airport Precinct, only a 9-minute train journey to the CBD, has emerged as a viable alternative to the CBD. The precinct has seen a growing number of hotels open their doors, including Pullman, Rydges, Ibis and the soon to open Mantra Hotel. These chains are among many others now located close to Sydney Airport, providing a diversity of well-priced rates and services for large and small companies alike.
Rates at airport hotels are often up to 35 per cent lower – and in some cases even 50 per cent lower – than those of comparable inner-city properties.
The following snapshot of rates at four leading Sydney hotels, including two in the CBD and two in the Sydney Airport Precinct, demonstrates the savings airport hotels can deliver over CBD properties. The table below also shows that by booking now, rather than waiting until last minute, can provide further savings in both the airport and CBD hotels.
Rate comparison between Sdyney CBD and Airport
Rate as at 20 June 2017
|20 June||20 September|
Sydney CBD Hotels
|Adina Town Hall||$341 / night||$233 / night|
|Intercontinental Sydney||$510 / night||$410 / night|
|Adina Sydney Airport||$224 / night||$197 / night|
|Pullman Sydney Airport||$299 / night||$309 / night|
The hotels in the Sydney Airport Precinct are responding to business traveller needs with features including large car parks for fly-in and drive-out workers whose offices are not located in the city, and restaurants and cafes that can charge the bill back to the guest’s room at selected precinct hotels.
According to Andy Chang, Business Development Manager for Pullman Sydney Airport, business travellers are also looking for the following features in an airport hotel:
- Smart technology including high speed connectivity, live flight information, Apple TV etc
- Lifestyle elements such as local produce, local coffee roasters, seasonal menus and quality wines
- Flexible check-in and check-out policy and a day use policy
- Door-to-door airport transfer services.
A complimentary guest loyalty program that provides value adds, recognition and a ‘customer journey’ through different levels of benefits and rewards
“Pullman Sydney Airport Hotel has experienced healthy growth in corporate travel over the past 12 months. Approximately 70% of corporate bookings are coming from local companies and 30% from interstate and New Zealand businesses.
We have also seen an increase in bookings from transient corporates who are looking for conveniently located accommodation close to the airport and are commuting either towards the Sydney CBD or up to 15km north-west of the CBD,” Mr Chang said.
Book through one source
FCM Travel Solutions give you one booking source through which you can access more inventory in Sydney at the best value. We provide the widest choice of accommodation and ground transport options and rates, from fully flexible/negotiated rates to discounted rates and exclusive member offers. Our FCM SmartSTAY and FCM SmartDRIVE programs also provide up to three complimentary value-add services with every booking to give you improved value and comfort in your accommodation and car rental.
*Analysis of FCM Travel Solutions corporate booking data by 4th Dimension, the specialist business travel consulting division of Flight Centre Travel Group.