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David Cartwright

Construction - 9 min read

Increased Australian Tourism Allowing for Hotel and Development Opportunities

David Cartwright

Senior Product Marketing Manager

Nov 4, 2019 12:44:10 PM

The hotel and tourism sector comprises a significant portion of Australia's GDP. Both local and international visitors generate revenue for hotel chains when they travel to various parts of the country for tourism and leisure. In 2018, travel expenditures had risen by 21.3%, increasing from $107.9 billion to $130.9 billion. This expansion has provided a unique opportunity for builders, estimators, and construction companies in general. With more demand for hotel and holiday accommodations, builders can access and tender for  lucrative projects that generate revenue and improve their bottom lines. 

But things weren't always this way within the hotel and tourism sector. Just a few years ago, a strong dollar caused the market to struggle under plummeting demand and low occupancy rates. Indeed, local and international tourists opted for alternative destinations that were cheaper and more aligned to their needs.

Furthermore, a weak economy during this period (2014) limited travel opportunities for tourists around the country. The good news is that things have changed since then. A weaker dollar and a more robust economy have attracted tourists and increased demand for hotel accommodations.


Growth in the tourism sector 

Between 2014-2017, there was significant growth in hotel reservations and occupancy rates. The Tourism Research Australia (TRA) found that domestic night visitors rose by 14%, while international night visitors rose by 22% within the same period. Higher occupancy has also translated into higher hotel rates and revenues. By 2022, international visitors spending the night are expected to increase by 6.4%. 

Growth in the hotel and tourism sector has been a welcome sign for builders. With more projects available to complete, construction companies are busy designing and building structures that travellers can spend their holidays occupying. In fact, the approval for short-term accommodation buildings rose by 10.7% between 2017 and 2018. The dollar value for these projects stood at $3.455 billion, signifying the growth that builders have experienced since the lapse in 2014. 

Growth in the hotel and tourism sector can be attributed to competitive dollar prices, Free Trade Agreements, and the expansion of aviation. With dollar prices trending at slightly below US dollar value, Australian tourism openings appear more attractive to travellers around the world. The stronger economy is also a magnet for both corporate and leisure visitors. 

Another reason why the Australian hotel and tourism sector has grown in recent years is because of negotiated trade agreements. Free trade with China, South Korea, and Japan has led to an influx of goods and travellers in recent years. The Trans-Pacific Partnership with 11 additional nations has also further expanded travel within the tourism and hotel sector.  

Development opportunities for construction companies 

While this growth in hotels and tourism is exciting news, what does it mean for construction companies moving forward? The obvious benefit is more projects. Hotel chains (and new industry players) are looking to increase capacity and generate revenue from this high demand. In Melbourne, the CBRE forecasts an increase in 6000 rooms to be built by 2022. Sydney is also forecasted to build an additional 5000 rooms (equivalent to a quarter of its current stock) within the same period. 

Therefore, construction companies can expect to take on many projects over the next 3-5 years. Upward growth isn't projected to become stagnant anytime soon, giving builders a lucrative market for generating revenue and expanding their operations. 

Demand for projects will vary depending on the city you're in. For example, Brisbane will be a hot market for hotel construction owing to increased corporate demand, an affluent market, and leisure travel. 

This means that builders will be faced with the challenge of expanding capacity to take on more projects while delivering quality products that fall in line with client expectations. 


Developing a plan for hotel construction

As a builder, being aware of market trends will be critical when planning for upcoming projects. Indeed, you'll be able to devote resources to the right places and optimise your operations for the right clients. The hotel and tourism sector is now ripe for construction takeover. 

With more clients looking to erect structures in hot markets, your company will need to develop a proactive plan for hotel construction. Such a plan should involve being aware of zoning requirements, land use plans, construction best practices, and high standard of safety.

If you're new to hotel construction, here are critical steps you should take when preparing for upcoming projects. 


1. Financial planning 

Hotel construction is a capital-intensive process. Whether you're designing the exterior, interior, or both portions of a building, you'll need to have the financial capabilities in place to deliver quality plans and sketches to your clients.

Furthermore, hotels require attention to detail. Every wall, plumbing fixture, and paint colour will affect the ambience and ROI of your structure. This is why you should be prepared to handle unexpected expenses that may arise even after submitting a detailed materials estimate. 


2. Preparing your employees accordingly 

The rise in demand for hotel construction will require highly qualified personnel. Take a look at your workforce and determine if you're ready to handle increased capacity. If not, consider recruiting top talent and training current workers so they can learn the skills necessary to support your operations.

Such training should include safety, performance, and technical training to ensure that you can handle evolving client expectations. 


3. Getting the right tools and equipment 

Hotels around the country are looking to expand their room availability and attract travellers. Therefore, builders will be tasked with designing high-quality structures that are comfortable, stylish, and competitive to both local and international tourists.

To achieve this goal, you’ll need to invest in the right equipment. You should be prepared to use quality tools and machines that can build structures your clients and their customers will love. 


4. Staying on schedule 

With the recent rise in hotel demand, clients are looking to have their projects completed in as little time as possible. Therefore, builders will be faced with the challenge of staying on schedule and delivering reliable plans. This means that you can't afford to become inaccurate or ineffective when completing projects for your clients. 

As a construction company, strictly adhering to building schedules will be critical when managing workflows for multiple clients.


How construction software can help boost productivity

Whether you're a builder, estimator, contractor, or surveyor, using construction software will be critical to taking advantage of the rise in Australian tourism. Construction software allows your business to handle multiple projects at once, increase accuracy, and save time when estimating costs and projects.

Going digital is also an excellent way of cutting costs and expanding client outreach. Not only will you be able to submit more tenders to win more bids, but you’ll also deliver higher quality services in a timely fashion. Simply put, using construction software is the best way builders can benefit from the boom in hotel development across the country. 

Cubit is a natural estimating software that can help improve your revenue in the country’s growing Hotel and Tourism sector. 

This innovative solution allows builders and estimators to determine construction project costs more quickly and accurately than ever before. By increasing the speed of your estimating, the most laborious part of the construction process, you’ll be in a position to tender for more jobs, win more work, and become more profitable. 

Cubit seamlessly integrates your takeoff and estimate in a process called Natural Estimating, enabling builders to see their estimate populate in real time. With interactive 3D models, the ability to create detailed price lists, and professional reporting, Cubit can make your workflows more efficient and productive; setting you up to attract more hotel and tourism clients.


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