How the weak Australian dollar affects the hotel market

Australian $100 notes.

A weakened Australian currency is expected to draw more international visitors into Australia and encourage locals to stay home.

CBRE’s 2019 Real Estate Report has highlighted the impacts the struggling Australian dollar will have on the Australian hotel market.

In 2018, there was a slight decline (around 1 percent) in hotel nights from international visitors. It was the first time in 6 years that the international visitor trend declined. Now with a weaker Australian currency, international visitors should bounce back. Historically, when the AUD has depreciated by 10 percent or higher, hotel nights from international visitors has grown by 5 percent.

Tourism Research Australia forecasts back this up as well, predicting international visitor nights to grow 6.2 percent per annum over the next three years.

The weaker currency could also motivate locals to travel nationally rather than internationally. In the last decade, when the AUD fell 15 percent or more against the USD, domestic tourism hotel nights have grown by 5 percent.

In the same respect, the cost pressures of a weak currency could also hurt the local traveller market. Business travel, in particular, could be affected by poor business conditions, where companies will want to reduce costs. Households will also be keeping an eye on prices because of falling house prices and lower stock market values. These factors are expected to reduce local tourists demand for hotel nights.