Hotel Industry in Australia

Define and Describe the Industry 

Size 

One of the major factors playing a critical role in determining the characteristics of an industry is the size. The hotel industry in Australia is highly sizeable. There are about 624 business entities in this industry in the form of hotels and resorts seeking to satisfy the needs and expectations of the consumers. In terms of market share, there is low concentration. For example, following the research on the industry, the four largest operators in the hotels' industry in Australia account to less than 40 percent of the revenues in the collective industrial context. In the assessment of the market size, there are the diversities in the structure, as the operators tend to vary substantially in terms of ownership.

There are owner-operators, as well as the entities operating on the lease management. In the past decade, there has been substantial increase in the number of leasing and management arrangements in the hotel industry in the context of Australia. This is major because of the perception by the major operators to go against owning hotel property while focusing or concentrating on the management of the hotels because of the cost-effective decisions in the managing process (Pavlatos, 2015). The approach is ideal in creating room for the operators to maximize the revenues while reducing the costs of operation at the end of each operational period. For the dominant concentration in the industry, major players must account for more than 70 percent of the revenues in the industry.

Nonetheless, in the case of Australia, as mentioned in the above illustration, the top four players in this industry account to less than 40 percent, thus, low concentration of the market share. In spite of this, the market size of the hotel industry makes it key in the development and growth of the Australian economy. As the nation continues to grow and develop, the hotel industry will remain positive; thus, the chance for short-term and long-term success or growth. For example, according to Tourism Investment, there is the potentiality of the room nights’ occupancy to increase at about 2.7 percent per year with the national occupancy climbing on the positive side to about 70.8 percent. This is because of the substantial increase associated with the international arrivals, as well as the domestic travels contributing to the positive influences on the employment sector. There are more than 90,000 employees in the hotel industry in the context of Australia. In terms of revenue, the industry has over $13 billion in returns with the 3.4 percent annual growth for the past five years (IBISWorld, 2019).

Industrial Overview in Tabular Form (IBISWorld, 2019) 

Key Competitors 

Notably, in the Australian hotel industry, there are only four major players. There is AAPC Limited, which operates as Accor Asia Pacific with about 7.1% of the market share, thus, the chance to optimize brands such as Sofitel, Mercure, Ibis, and Pullman. In the industry, there is the Event Hospitality & Entertainment Limited, which is an Australian public company operating from the headquarters in Sydney with about 3-4% of the market share. This corporation has brands in the form of ATURA, Rydges, and QT. Other than these two entities, there is the United States-based global entity in the form of Marriott International Inc, as a worldwide hotel and resorts operator. The company operates about 20 accommodation properties in the context of Australia with diverse brands such as Sheraton, Westin, Marriott, and Ritz Carlton with the market share of about 2-3% as a major operator in the industry. Finally, the fourth major corporation in the competitive market is the Hilton International Australia Pty Limited. The company incorporates Hilton hotels concentrating on the business clientele, as well as the influence of the Double Tree, focusing mostly on the tourism market. Other major institutions in the hotel industry in the case of Australia include the Crown Metropol, Four Points, and Jupiters Hotel & Casino (CBRE, 2019).

There is minimal differentiation among the hotels making the level of competition to be stiff. Nonetheless, business entities in the industry focus on the adoption and implementation of the relevant strategies to ensure that they remain competitive in pursuit of the revenues and profit levels at the end of each fiscal period. Based on the number of the international arrivals, as well as increased cases of the domestic travels, the industry continues to grow creating room for the different businesses to achieve their set goals and targets at the end of the operational period (González-Rodríguez, Jiménez-Caballero, Martín-Samper, Köseoglu, & Okumus, 2018).

Products and Services 

For the larger hotels, the main source of income relates to the sales or marketing of the meals and beverages emanating from the onsite restaurants in the context of Australia. In most cases, these hotels in Australia focus on the promotion of their respective restaurants, as well as the dining establishments as forms of the major attraction (Jogaratnam, 2017). One of the perfect examples of a major hotel utilizing this model is Sofitel. In this aspect, Sofitel enjoys an attachment to the high-end restaurants and other food-service options to the guests with onsite distribution associated with the dining options.

Other products and services in the hotel industry in the case of Australia include marketing of the souvenirs, as well as items in the hotel stores or the valet parking. In certain instances, the hotel industry offers rooms for the meetings and conventions generating revenues inclusive of the offered meals and liquor, especially at the receptions (Patiar, 2016). There are also guest rooms for travelers seeking to satisfy their desires to explore the tourism industry in the global context. The products relate to luxury accommodation, food and beverages, conferences, and meetings.

Geography 

Geographically, most of the hotels are in urban centers or cities as opposed to rural entities. This is major because of the enhanced infrastructures for the connection and interaction, as well as attractive designs for international visitors and more domestic travelers. For example, major hotels with diverse rooms are in the Melbourne and Sidney cities as they seek to tap into the growing number of international travelers seeking to satisfy their desires in the tourism sector. There are also hotels in other locations such as Perth City, Gold Coast, Brisbane City, Hobart, and Adelaide, among others (McLaughlin, 2019). These entities use the geographical location for effective positioning in the achievement of the set goals and targets. Geographically, NSW has the biggest number of hotel establishments in the context of Australia with a share of 30.5 percent of the establishments across the nation. Other locations with the different establishments across Australia include Queensland, Victoria, and WA with 26.5%, 16%, and 10.9% respectively.

References

CBRE, (2019), “CBRE release their 2019 hotel market outlook research report,” Hotel Conversation, https://www.thehotelconversation.com.au/news/2019/02/06/cbre-release-their-2019-hotel-market-outlook-research-report/1549441109 

González-Rodríguez, M. R., Jiménez-Caballero, J. L., Martín-Samper, R. C., Köseoglu, M. A., & Okumus, F. (2018). Revisiting the link between business strategy and performance: Evidence from hotels. International Journal of Hospitality Management , 72 , 21-31.

Hospitality Tech, (2016), “Hotel Industry faces Increased Competition as Airbnb Revenues hit $6B Globally,” Smarter Hotels & Restaurants, https://hospitalitytech.com/hotel-industry-faces-increased-competition-airbnb-revenues-hit-6b-globally 

IBISWorld (2019), “Hotels and Resorts: Australia Market Research Report,” IBISWorld, https://www.ibisworld.com.au/industry-trends/market-research-reports/accommodation-food-services/hotels-resorts.html 

Jogaratnam, G. (2017). How organizational culture influences market orientation and business performance in the restaurant industry. Journal of Hospitality and Tourism Management , 31 , 211-219.

McLaughlin K., (2019), “Australia’s biggest hotels by number of rooms: The top 18 biggest,” Traveler, https://www.traveller.com.au/australias-biggest-hotels-by-number-of-rooms-the-top-18-biggest-1muxg8 

Patiar, A. (2016). Costs allocation practices: Evidence of hotels in Australia. Journal of Hospitality and Tourism Management , 26 , 1-8.

Pavlatos, O. (2015). An empirical investigation of strategic management accounting in hotels. International Journal of Contemporary Hospitality Management , 27 (5), 756-767.