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The sky is the limit
The sky is the limit

29th March, 2017

The sky is the limit

Far North Queensland’s tourism industry is in the best shape it has been for many years.

 

Visitor arrivals – both domestic and international – are surging, assisted greatly by the influx of new air carriers and services into Cairns airport. While for some areas – especially those ravaged by the resources bubble burst – the recovery has been slow; for others, notably Cairns itself, growth is happening at quite a pace and looks likely to continue.

 

As Shane Mullins of Resort Brokers Australia says, “North Queensland is back in the market!”

 

Danny Adams, director of NQ Lending concurs: “FNQ is back to its best, and that’s not just my thoughts, it’s a reality.”

 

Tropical north’s tourism sector is worth an estimated $3.7 billion and well on track to reach a target of $4.2 billion by 2020, according to Tourism Tropical North Queensland chief executive Alex de Waal.

 

“Over the past 12 months, we have seen an additional 500,000 domestic visitors come to our destination. This represents an increase of 33.5 percent against Queensland’s aggregate growth of nine percent.

“We have now recovered from the impact of the global financial crisis and are building a stronger, more resilient platform for ongoing growth. With the prospect of direct services out of China and increasing demand for TNQ, the sky is the limit.”

Economist Bill Cumming said the latest available data from the national and international visitor surveys indicated the region’s tourism earnings had been moving up “very strongly over the last few years”.

“In calendar year 2015 it had reached $3.6 billion compared with an estimated $2.9 billion in the year ending September quarter 2014,” he said. “This indicates that an additional $800 million a year is flowing through the economy. More recent figures for the year ending March quarter 2015 are up again to about $3.7 billion.

“Based on standard economic modelling it could be expected that direct and indirect employment generated by tourism was now at about 30,000.”

 

A strategic planning meeting of far north tourism leaders set a goal to attract 1.2 million international and 2.4 million domestic visitors over the next four years, well above current figures of 860,000 and 2.043 million.

Tropical Tourism North Queensland chairman Max Shepherd said more flights to Cairns was key to improving international visitor growth. “Working on getting holiday resort destination [direct] flights out of China will be a big part of that,” he said. “We would like to think the regenerated demand out of Japan means Jetstar will increase flights out of that country, too.”

Cairns Airport recorded a higher growth rate (7.4 percent) in the first eight months of the year than any of the other 10 largest airports in the country. Internationally, the airport is serviced by Jin Air, Philippine Airlines, Air Niugini, SilkAir, Air New Zealand, Jetstar, Hong Kong Airlines and China Eastern Airlines.

 

Accommodation businesses are not only getting greatly improved RevPAR figures, sales of complexes are gaining momentum.

 

“The last 6-12 months has been exceptional with both enquiries and sales, with the recent three months exceeding all expectations with interested parties searching the northern markets for greater returns,” Shane Mullins of Resort Brokers Australia told Resort News. “Like old times, the enquiry is transitioning into real sales. Cairns is a real live hot spot!

 

“Resort Brokers Australia is firmly of the view that there has never been a better time to be in tourism. So much attention is now focused on the tourism industry, acknowledging the importance of Australia’s visitor economy.

“Demand for accommodation and visitor facilities is surging. International arrivals grew by 9.3 percent in FY16 and are forecast to grow by over 6.7 percent for the next decade. Domestic visitor nights grew nationally by 4.5 percent last year, and are predicted to continue to increase by more than three percent per annum through to 2024-25,” Mullins said.

 

“This is not just a cyclical tourism ‘boom’. This is Australia’s new tourism reality!” Mullins enthused. “And the impact is particularly evident in Tropical Far North Queensland.

 

“In 2014-15, the Cairns area hosted more than five million international visitor nights and 4.66 million domestic visitor nights. Latest figures from Tourism Tropical North Queensland show recent record growth for the region has delivered in excess of three million visitors. Domestic visitors grew 33.5 percent to 2.2 million and an additional 1.7 million visitor nights were recorded, up 19 percent to 10.5 million. Total visitors grew 11 percent to 830,000, reflecting the weaker Australian dollar, the safety of our destination, and aspirational appeal of TNQ with its dual World Heritage areas.”

 

The RBA broker is confident of sustainability for the future: “Consistent growth is the catalyst for renewed industry investment, including in new vessels to update and grow the Great Barrier Reef fleet, refurbished hotels to meet increasingly sophisticated needs of savvy travellers, and new products to broaden the tourism offering.

 

“A huge proportion of forecast market expansion is set to come from China where there is massive growth in access to travel. From 2011 to 2015, annual growth of Chinese visitors to Australia was 19 percent. By 2025, Australia is expected to welcome some two million visitors annually from China, with a potential economic impact of $140 billion,” Mullins says.

 

Tourism Events Queensland gives the Great Barrier Reef top billing among their five major focus areas. TEQ, in tandem with national agency Tourism Australia, is working overtime to inspire the world to experience one of the most amazing places on Earth. Exceptional worldwide exposure such as that delivered by Sir David Attenborough’s recent reef series is having an enormous impact.

 

Sales are stacking up well [see list below].

 

“Over $200 million of hotel assets have traded in the Cairns market since May 2015 highlighting investor confidence. New product and infrastructure is planned and will flow on into the market, ensuring continuing market confidence,” says Mullins. “Resort Brokers Australia recorded 21 sales each year for 2015 and 2016 financial years in FNQ with a further $60 million-plus in sold/settled and under contract for the first six months of 2017 financial year. This was across all property sectors and regions – Port Douglas, Hinchinbrook, Northern Beaches, Cairns and the far north,” Mullins told Resort News.

 

“Multipliers are property dependant and this covers aspects like location, age, presentation, unit versus business ratio, length of agreements, etc. If you want a higher multiplier plan for it, don’t expect it,” Mullins advises. “Market determines the price, factor in ROI (including manager’s unit). Buyers are smarter and more educated. Banks are all back in the market and their appetite is strong. Effect change by listing at the right price! Encourage buyers/agents to facilitate sales by using an industry finance broker, solicitor and accountant. The rights steps ensure successful sales without the drama and usually cost less.

 

“Buyers are coming from all areas, with mum and dad buyers still in the market, supported by strong overseas enquiry, corporate and high net worth individuals,” Mullins stresses.

Danny Adams, director of NQ told Resort News, “What a difference a year makes!

 

“Feedback from rights managers is inspiring, with great occupancy and equally strong room rates funnelling straight through to improved profits. No doubt we can attribute much of this to global currencies because certainly at around US75c to purchase an A$ then, yes, we are definitely more affordable to our overseas guests and similarly overseas departures for locals are no longer as attractive. That said I continually evidence changing practices amongst many managers to innovate and improve the way they are doing business,” Adams said.

 

“Whether it is embracing best practice, seeking out and developing niche markets or collaborating with others, there is activity that is leading to better bottom lines and with a clear view to sustainable futures. Let’s face it, one half of the world’s circa seven billion population now has access to the internet and nearly one half of those internet users are on our doorstep in Asia. Some may say none of this is news; however, standing out from the crowd and getting recognised, being at the front and staying there is a growing challenge,” Adams stresses. “Competition to entice that guest and then impress them suitably once they are here is paramount. Then building on that experience so they advertise for you on their social networks can have exponential power.”

 

What about banks and borrowing money?

 

“We really are back to normal again (up to 70 percent lending is available) and the Armageddon that Gallery Vie posed over a year ago, has almost become a faded memory (well nearly),” Adams counsels. “All of the preferred lenders are back on board and keen to look at new deals. In fact, even favourable refinance options are back on the table and rights managers should be asking the question of their existing financiers – ‘Is this as good as it gets?’ Seek out a lending professional and at least ask for a review and comparison,” Adams advises.

 

“In fairness, to move through what really accelerated to a very concerning issue mid-2015 to today has taken some time and created a lot of anxiety. However, as always, the industry is full of great professionals that have taken a charter to address any concerns, present workable solutions and get on with reinforcing a resilient and robust industry.”

 

Regarding sales and multipliers, Adams told Resort News, “Activity has improved on all fronts. The enquiry level is strong for both holiday and permanent let buildings. Interestingly there is no discrimination in price level either with enquiry one day on a $500,000 purchase price and $2 million the next. “The prospective buyers are coming from very diverse backgrounds, with some new to industry and others being experienced operators. Many have looked long and hard down south and found the higher multipliers too hard to accept, often commenting that they have snagged a bargain up here!

 

“Looking forward, I see very encouraging signs for the management rights industry in North Queensland,” enthuses Adams.

“Am I optimistic? Yes. Very!”

 

Cairns:

 

The Cairns hotel sector was the best performing in Australia in the 12 months to March 31, according to CBRE’s Australia Hotels MarketView.

 

Revenue growth at the city’s hotels was up 15.3 percent, ahead of second-placed Gold Coast (11.3 percent).

But the CBRE report warns that demand for rooms in the tropical north would soon outstrip supply.

CBRE Hotels’ research manager Benjamin Martin-Henry said Cairns and the Gold Coast were expected to remain the star performers of the Australian hotel market after recording double-digit increases in RevPAR as a result of record international and domestic travel numbers.

 

The big disappointment for Cairns was the (not unexpected) abandoning of the plans for the Aquis resort and casino. Developer Tony Fung has canned plans to build the $8 billion integrated casino resort largely due to delays in the approval process and instead wants to develop a $2 billion luxury hotel, apartment and villa complex at the Yorkey’s Knob site. Fung has spent more than $40 million on the Aquis GBR project as part of $200 million he has invested in Queensland, mostly on the Gold Coast. While Aquis still plans to build a substantial hotel and entertainment resort, the Queensland government has confirmed that Aquis had cancelled its casino application.

 

New developments on the horizon include: Frank Gasparin/Peter James’ plans for a $550 million, three-tower hotel scheduled to start construction this year and be operated by a yet-to-be-announced Singapore operator; new owner of the Rydges Tradewinds, Syrian billionaire Ghassan Aboud's GA Group Australia P/L plans to build a twin tower CBD rainforest hotel and apartments to be completed by early 2019; the first of the seven towers by developer World Class Global in the $550 million Nova City project will have 187 apartments; Noipo Investments P/L’s 20-storey Cairns Citi Tower opposite the city’s courthouse would provide 83 apartments and conference facilities; and the soon-to-be completed Cairns Aquarium will provide a new venue for conference and incentive groups.

 

Major refurb projects include: Paradise Palms Resort & Country Club at Kewarra Beach owned by Cairns accountant Darren Halpin with a group of investors who plan a $550 million redevelopment; The Hong Kong-based property tycoon Benny Wu’s Acacia Court is undergoing an $80 million transformation to increase the number of rooms from 136 to 407 and the building height from 10 storeys (34m) to 13 storeys (43m); as well as recent and planned upgrades to many of the top Cairns hotels.

 

There were a number of sales over the past year including: the 242-room Rydges Esplanade Cairns was sold by Abacus Funds Management Ltd to Mulpha Australia for $40 million joining that company’s already impressive stable including InterContinental Sydney, InterContinental Sanctuary Cove and One and Only Hayman Island; Abacus Funds Management sold the 246-room Rydges Tradewinds Cairns to GA Group Australia for $34 million – a major upgrade is planned; Shakespeare Property Group (that bought the Pulman Cairns International in 2015) acquired the Novotel Cairns Oasis Resort for $50 million; the 60-room Tropical Queenslander Motel was sold by Ebizco Australia P/L to a Chinese consortium for $6.3 million; while the Daintree Wilderness Lodge with seven eco-friendly cabins right in the heart of the rainforest remains on the market.

 

Port Douglas:

 

Tourism Port Douglas and Daintree executive officer Tara Bennett said visitor numbers continued to grow throughout this year, reaching the height of growth in the early 2000s across domestic and international markets. “For the first time in 10 years the Port Douglas region has reached more than 2.4 million visitor room nights up to June, an eight percent increase on last year’s growth, generating around $485 million for the local economy.

 

“The strongest market continued to be domestic with 359,000 visitors and 1.9 million room nights. This compares with the previous year’s figures of 329,000 visitors and 1.7 million room nights.”

International tourism grew by 5000 people to 97,000 from the previous year, while total room nights reached 533,000.

 

Port Douglas is enjoying a resurgence led by the $40 million overhaul of the town’s iconic Sheraton Mirage resort and the $85 million development anticipated to transform the waterfront. The Reef Marina apartment and entertainment precinct development is the largest investment in the region in 30 years, and is expected to contribute nearly $600 million in jobs, tourism and economic growth over the next 30 years. In June, Hemingway’s Brewery opened offering a selection of boutique brews made onsite with water from nearby Mossman Gorge as part of the marina’s resurgence.

 

Cooktown:

 

An influx of cruise ships this year to the little borough of Cooktown looks set to provide a massive business and tourism boost. The town welcomed French-built cruise liner Azamara Quest, MS Insignia and P&O Australia giant Pacific Eden in 2016.

 

Cooktown Chamber of Commerce president Mick Davies said about 600 people were greeted by markets which had extended trading hours to cater for passengers. “We’ve had two ships that couldn’t come ashore because they were washed out over the Christmas period, so it was positive to have people come and wander around and to head off on bus tours,” he said.

 

Townsville:

 

Townsville has been very hard hit by the mining downturn that has seen 10,000 jobs disappear in the past 12 months with 5500 of those being in fulltime work. The monthly figures for October revealed Townsville’s unemployment rate was at 11.5 percent with youth unemployment at 17.2 percent, by far the highest in the state.

 

This situation could see massive relief following the announcement that Adani’s Carmichael coal mine project, finally underway, with Townsville at the centre of the $21 billion development as the regional headquarters and make the city a fly-in fly-out hub for about 1500 workers.

 

Townsville Enterprise Tourism and Events executive manager Bridget Woods said, “Townsville has experienced an overall decline in visitor numbers driven primarily by the drop-in business travel; however, the region’s operators are reporting growth in visitors from the youth and adventure market particularly to Magnetic Island.”

 

The city still lags behind Cairns and would continue to struggle until international flights make their way to Townsville Airport. “The federal government’s decision to reinstate Townsville as an international airport is a huge win for this city and region, opening up potential for increased visitation and expenditure across both tourism and trade,” Woods said.

 

“The Bali flights with Jetstar commencing in September 2016 are just the start and within the next 18 months we hope to see additional international routes put in place.”

International visitation provided a $80.7 million boost to the local economy last year, via 102,000 visitors.

 

Townsville is actively marketing to the cruise market with 11 cruise ships due to call at the city in 2017, up from four in 2016. The White and Grey Ship-Attraction Committee has released a plan that targets at least 30 cruise ship visits to Townsville per year, and to extrapolate maximum tourism spend from visiting defence personnel on grey ships.

 

“Those 11 ships will be carrying almost 12,500 passengers and crew, and studies show that on average each passenger will spend up to $350 per destination,” said WGSAC chair Sharon Hoops.

 

Plans for the $450 million The Hive project in the CBD are taking shape with developers seeking approval for a master plan and demolition of the Criterion Hotel. Consultants RPS, on behalf of developers the Griffin Group and land owners Gleeson Properties, lodged two preliminary applications – one on the master plan and the other on the Criterion – with Townsville City Council in November.

 

The project is proposing a library, concert hall, art gallery, offices, shops, food and drink outlets, marine-based research, environmental tourism, residential and short-term accommodation. The master plan provides for a maximum gross floor area of 120,578m2 and building heights of up to 20 storeys.

 

Under construction is the 181-room Mantra Townsville by the Northern Management Group.

 

Cardwell:

 

The big news for Cardwell was work beginning on a $450 million redevelopment of the Cyclone Yasi-destroyed Port Hinchinbrook resort and marina after it was sold to a syndicate of United States business people. Dredging works, which could cost as much as $7 million, is being undertaken at the time of writing.

 

The resort’s former owners Williams Corporation were placed in liquidation in 2013. Liquidators sold the resort to The Passage Holdings, an Australian company associated with American businessmen Lewis Cohen, Stephan Pinto and Joe Korman.

Architects DBI Design had been working on the resort’s masterplan that would include a $45 million international fishing village, new marina, family resort, water theme park, 300-site motorhome park, camp grounds, backpacker accommodation, and waterfront residential lots and apartments.

 

Other projects:

 

Outside of Cairns, Reever & Ocean Developments, owned by Macau-based Ken Lee, is planning to build a $640 million eco-resort at Kuranda, on the Atherton tablelands named KUR-World. Lee has already spent $7 million on the 626ha property and the eco-resort would be a unique theme park, focusing on the environmental aspects of the property, with the master plan designed around the habitats of the protected Kuranda tree frog. About 230ha of the 626ha property will be developed to include a five-star, 200-room resort, 18-hole golf course, another three or four star, 270-room resort, retail and dining outlets, about 380 residential villas, and a tertiary education campus and sport facilities. The project will also have a health and medical retreat, adventure park, rainforest education centre and equestrian centre and farm theme park.

 

The opening of Double Island Resort off Palm Cove by Chinese developer Benny Wu was expected before Christmas.

 

Islands:

 

Queensland's Tourism Industry Council says the rundown look of several resorts on the Great Barrier Reef is having an adverse impact on Queensland's tourism with 11 of 24 Queensland reef resorts closed. Of those 11, nine have redevelopment plans in place and the other two are subject to private party negotiations to resolve their future, environment minister Steven Miles said.

 

Only 13 of the Queensland's 24 Great Barrier Reef Island resorts are open, according to the Queensland government.

 

QTIC chief executive Daniel Gschwind said many resort owners had told him they were having major problems negotiating between the three levels of government for approvals and regulations. “Very often a developer ends up being very frustrated at being changed from one agency to the next, one department to the next,” he said.

 

Upmarket resorts like Bedarra and Orpheus are doing well. Sam Charlton, owner of the $1600-a-night Bedarra resort off Mission Beach, said their nine villas had enjoyed almost 100 per cent occupancy this season.

A wave of private islands has floated on to the Queensland market giving day dreaming buyers an ocean of choice. Prices vary considerably for the slices of paradise from $30 million resorts to $850,000 secluded islands. Those in FNQ incude:

 

Fitzroy Island:

 

The island is located 30km south-east of Cairns and comes with its own tourism resort on 4.3ha - price expectations in the $30 million range.

 

Keswick Island:

 

Located 32km from Mackay sitting in the Great Barrier Reef, this 517ha island has approval for tourism, residential, aviation and marina large-scale development. Asking price $30 million. 

 

Camp Island Silver Shoals:

 

A 2.4ha island resort in the far north with private lodges, a pool and a tennis court. It is located next to 15ha of national park. $3.5 million is being asked.

 

In a region that has been hit by climatic upheavals, severe job losses from corporate collapses and slow progress on long-promised developments, the growth in tourism has been a god-send. It is important that the momentum continues unabated and that new infrastructure is not thwarted by state government and bureaucracy.

 

Leaving the last words to Shane Mullins, “I’ll say it again… there has never been a better time to be in tourism in Australia… and particularly here on the Great Barrier Reef.”

 

 

 

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