Why do Byron’s hotels experience underwhelming occupancy levels when visitor numbers are close to all-time highs?

This isn’t about the annual ‘day-visitor’ numbers to the Byron shire which hit a record 1.1 million visitors last year – that research can be found on Destination Byron’s website. It’s about the other 50% of visitors to our shire, those that stay ‘overnight’. Their numbers also hit a near record last year of approximately 1.1 million visitors.

Recently acquired benchmarking data indicates that Byron’s hotels are achieving on average 65-70% occupancy, which is only slightly higher than a sample of 32 hotels between Tweed Heads and Evans Head. These occupancy levels are quite underwhelming considering Byron’s popularity. They’re also weaker than almost all of Australia’s other favourite holiday destinations.

Potential over-supply of accommodation in Byron?

The past decade has seen Byron’s overnight visitor numbers more than double, meanwhile its ‘hotel’ room supply growth has been moderate at best. It’s safe to say that the decade of overnight visitor growth hasn’t benefited Byron’s hotel occupancies.

The Australian Trade and Investment Commission recently released its 2018 local government area (LGA) profiles.

Of all visitor nights in Byron 14% were spent in ‘hotel or similar’, 22% in ‘home of friend or relative’, 12% in ‘camping/caravan park’ and 40% spent in ‘other’.

Compare this to a town with near identical visitor numbers – Noosa, which recorded 32% in ‘hotel or similar’, 23% in ‘home of friend or relative’, 7% in ‘camping/caravan park’ and 39% in ‘other’.

Byron’s hotels are capturing only 14% of overnight visitor nights versus Noosa’s hotels which are capturing 32% of overnight visitor nights. It’s fair to say that the percentage split of supply type may be different in each town, though it’s unlikely this split would cause such a strong variance.

What’s also of interest are the number of overnight stays spent in the ‘other’ accommodation category. This category is approximately 40% for both towns. An average much larger than other Australian tourist centric towns. ‘Other’ consists of ‘rented property’, ‘guest house or bed and breakfast’ or ‘own property’. 40% is a huge portion of the overnight visitor economy that is almost impossible to track supply or demand in. Local knowledge points to ‘rented property’ accounting for a very large part of this 40%.

The NSW state government is currently seeking feedback on their draft ‘Code of Conduct for the Short-term Rental Accommodation Industry’ (STRA). They’re also seeking feedback for their draft planning instruments which will allow residential premises to be used for STRA under certain conditions and provide a state-wide definition of STRA.

Theoretically, how much of Byron’s overnight visitor demand would go elsewhere if the supply of STRA in our shire was reduced as a result of government regulation? Is this demand compatible with Byron’s hotel offerings?

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