|BRISBANE'S "JEN HOTEL". |
WHO'S REALLY WELCOME HERE?
It didn't take long for Outrigger to experience the reality of hotel management in Australia and they exited Cairns and Port Douglas within a few years, suffering heavy losses. In part they discovered that Americans (and as we're now learning, the Chinese) expect hotels to have bellmen, room service and laundry. The bulk of the Australian resorts are "self-catering" apartment-style properties, which make many tourists believe they're paying for space they don't need. In fact Palm Cove has NO real hotels, a negative that TTNQ has learned from airport exit surveys. And one of the reasons Tony Fung believes Aquis is suited to the Chinese market.
Last June, Outrigger appointed a new Australian general manager, the very experienced Sydney-raised John Garrard.
It took Garrard only a few months to realize the obvious - Outrigger could not provide their quality product in Australia and produce a profit. The nail in the coffin was the onerous labor rates and penalty rate system imposed by the federal Labor government. As it's become clear that the Abbott government isn't strong enough to fix this system that is crippling the tourism centres, Outrigger threw in the towel last week and withdrew completely from Australia - selling the last of their resorts (Airlie Beach, Noosa, Surfers, and Coolangatta) for a mere $29 million.
Insiders estimate that Outrigger lost over $100M on the Australian market in a little over ten years.
Other renowned hoteliers are experiencing similar problems in Queensland. Singapore-based Shangri-La purchased the Holiday Inn Brisbane just a few years ago. Suffering huge losses trying to operate this property as a full-service hotel, it's now been rebranded "Jen Hotel", with Silk Air-like service levels replacing the loss-making full service operation.
The proximate cause of these problems is the massive labor bills that Australian hotels have - making these hotels expensive and uncompetitive with our competitors. This is why huge numbers of Australians make their holiday destinations Thailand, Bali, and Hawaii. Even Australians know that service levels are low and hotel pricing is high. Chinese resort investment plans in Cairns and the Gold Coast are rumoured to include large numbers of imported 457 visa workers under the guise of "language skills", when in reality people like Tony Fung understand that $60k/year salaries for unskilled workers is absurd.
TTNQ and the Cairns Chamber of Commerce, both in the pocket of pollies on all sides of the spectrum, refuse to speak up on the real issues facing Cairns tourism. The loss of Outrigger in Queensland needs to be seen for what it is - the continued slide in Australian tourism.