The Dreamworld theme park tragedy has hit the local hotel sector, with ‘s largest listed resort and hotel operator Mantra Group reporting “challenging” conditions on the Gold Coast, although the group’s net profit was still up nearly 23 per cent on the previous year to 45.6 million.
Mantra Group chief executive Bob East revealed a strong overall performance with a 1.8 per cent increase in occupancy and revenue growth of 13.7 per cent to $689 million driven by a large portfolio of new acquisitions.
“The greatest momentum for our business this year has been in capacity building in new pipeline acquisitions for FY18 and beyond,” Mr East said.
But Mr East singled out the Dreamworld tragedy, “sluggish” markets in Perth, Brisbane and Darwin and a “surprisingly” flat Melbourne market as areas of concern.
The Gold Coast – which accounts for nearly a quarter of Mantra’s accommodation business (5000-plus rooms) – was an “under-performer”.
“That can most probably be related to the tragedy at Dreamworld and the flow-on effects of that,” he said. “It’s been a challenging market.”
Growth in revenue per average room (RevPAR) – the industry’s income metric – on the Gold Coast was just 2.1 per cent, “quite significantly below where we thought Gold Coast would be at the outset of the year”, he said.
By contrast, Mantra’s strongest leisure market was the Sunshine Coast, where RevPAR growth was up 11.7 per cent. Strong domestic and Asian tourism were the key drivers.
Mr East said the outlook for the Gold Coast was improving, particularly with the imminent arrival of the Commonwealth Games early next year.
“It’s not a market we are nervous about in any shape or form. We’re very positive about the outlook looking forward,” he said.
Mantra Group’s existing hotel portfolio covers 128 properties with more than 21,500 rooms under management in , New Zealand, Indonesia and Hawaii under the Peppers, Mantra and Breakfree brands.
In the CBD markets, Sydney’s RevPAR rose 6.5 per cent and Canberra was a particularly strong performer with RevPAR jumping 10 per cent.
“The biggest surprise was the Melbourne market [being] flat for the year,” he said.
The lack of significant major events resulted in flat RevPAR despite Melbourne’s occupancy running at close to 90 per cent, he said.
Perth, Brisbane and Darwin were all experiencing cyclical downturns.
“We see those markets as continuing to be sluggish,” he said.
Mr East said the group was focusing on establishing the Peppers brand in all of ‘s capital cities, integrating its $52.5 million purchase of the Art Series Hotels, which it finalised in August, and bedding down the acquisition of the Ala Moana resort in Hawaii.
Mantra will retain the Art Series Brand despite a policy of aligning acquisitions under one of its three umbrella hotel brands.
Mr East said the seven luxury lifestyle hotels named after contemporary n artists had enough scale and consumer awareness to stand alone.
“We were able to form a plan that will protect existing positioning in the market,” he said.