4CA - Queensland's Home for Fake News

4CA - Queensland's Home for Fake News
4CA - Queensland's Home for Fake News Led by John "Cueball" Mackenzie

20 March 2015

READING THE TEA LEAVES - MAJOR RESORT HOTELIER OUTRIGGER BAILS FROM AUSTRALIAN MARKET

The tourism marketing machine is good at promoting new opportunities, in part as they all try to take credit for things they didn't do.  TTNQ trumpets the arrival of Silk Air, but is mum when Qantas cancels key international connections to US-originating flights.

BRISBANE'S "JEN HOTEL".
WHO'S REALLY WELCOME HERE?
But Cairns and Queensland were full of hope when, on the back of the Sydney Olympics in 2000, Hawaii-based resort hotelier Outrigger began a major expansion into Australia - an expansion that began in Cairns.  The newly-built esplanade hotel, now managed by Mantra, was the first acquisition by Outrigger.  And their quick expansion into Australia included hotels in Port Douglas, Airlie Beach, Noosa, and Surfers Paradise.  When Outrigger arrived this was seen as a vote of confidence in Cairns, and the Queensland tourism industry.  Outrigger is the largest operator of hotels in Hawaii and across the Pacific including the Maldives, Fiji, and Guam, and was positioned to be a major driver of North American tourists to Australia.  They were enthusiastic.  

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.





21 comments:

Anonymous said...

High wages are a contributing factor but are by no means the only issue here HillBill. Australia is very expensive for operators as well as tourists.
Operators: insurance, wages, rates, utility bills all ridiculously expensive.
Tourists: insurance, travel costs( within aust.), accommodation, food/ hospitality, tourist admission costs etc all ridiculously expensive.
Combine this in a country where confidence is low and the average increase in household costs is making it virtually impossible for the average Aussie family to go on a holiday.
All our international friends that come to Australia all comment on how bloody expensive this country is.
With insurance, utility bills and childcare costs we live week to week and a family holiday consists of pitching a tent at kurrimine Beach.

TAS said...

Very easy (and simplistic) to blame this on high wages. They're not that high anyway as anyone in the bottom end of the industry will attest. The basic wage plus penalty rates doesn't provide for anything more than a basic lifestyle.
But even if wages were the problem, and the solution was to reduce them, it will only ever be those on the poorest wage which will take a hit. Did the CEO of Outrigger Australia ever consider taking a wage cut to assist the profitability of the business? Would our politicians who seek to impose a work choices regime (Mk 2) ever consider reducing wages and perks to set an example? You know the answer. Lets keep a sense of fairness and not go down the road the USA has taken.

Ivor. said...

Sounds like you want the USA tipping system replacing decent wages,what else are workers,(Hockeys leaners) to blame for,health system,OAP?.The fact that Hotels go broke are the ridiculous price(per person) they charge for staying at Aussie hotels,if they charged less tourists wouldn't expect Bellmen,(bellmen, thats a laugh).

Anonymous said...

Ohhh HBW you really are going to piss off the Ivors, the Bob Rs, the Tas's the Krints etc with this. A very accurate piece but things have to get a lot worse before wages come down. And it will happen, only a matter of when.Anyone who says anything, including you will be shot to death by the loony left.

DAZA DUKE said...

Pitch a tent at Kurrimine Beach. WHAT? Are you rich. We cant afford to pitch a tent at home. Hang on, we cant afford a tent.

Anonymous said...

Asia is coming, don't fool yourself, become part of the future or be left behind, if you become the latter, whinging will not help you because too many people will be busy with the future to care about those who chose not to act

Anonymous said...

Fuck me you bunch of retards you all need to slit your wrists. Why don't ya all fuck of to Iraqi and be little happy souls over there, and let "WTF Shanghai" and "Shanghai" Live in peace to eat there "Yum Char" with the Chinese at least they tip.

Anonymous said...

Spot on HillBilly ...
we have to accept the level playing field means we have to drop our standards (and wages).
End of story ...

Anonymous said...


I have a ton of people in the US who are always asking us to go back and stay with them but have no inclination to come here even though accommodation is free. Has nothing to do with wages. Also the high dollar has been the big issue

The Chinese are travelling to major cities and staying in cheaper hotels. Like New York they stay in New Jersey as it is cheaper so US wages deter them as well? I would say so as Chinese still earn very low, the very wealthy are still in the minority.

This article is about the most irrational you have ever written. Cairns economy is nose diving because tourism pays so little, you will find few on $60g a year. With mortgage,rates and insurance costs so high wages need to being going up,not down. Maybe best we dump tourism, always crying poor and wanting to be leaners and now demand slaves?

Anonymous said...

What a load of bollocks. Wages in the hospitality industry are already pathetically low. Four and five star hotels in major Asian cities and in the USA are not cheap either, although the staff get paid peanuts.

Do we want a Walmart type society , where it has just been announced that the minimum wage has been lifted from $ 7.50 to $ 9 per hour ?

When traveling in the USA recently I got absolutely sick of having to tip just about every person you deal with, because apparently their employers don't pay them a living wage. What a pain in the arse and what a stupid system.

Anonymous said...

Fuck Americans.

TAS said...

If we HAVE to drop our wages, it would be a lot more palatable if we ALL dropped by a similar percentage. But wait; isn't that what a floating AUD is supposed to do? Dollars goes down relative to other countries, Australia becomes better value for those visiting. Why is that not the solution? Or do we just need a bigger under-class of poor people to make the uber-rich feel even more superior.

Ken Svay said...

Can't see wages dropping to the hundred dollars a month that hotel staff make in Cambodia. Everything is expensive in Australia, I can't understand why tourists come here. Commercial rents are ridiculous, that won't change. Insurance costs and utility costs won't come down so blaming wages alone is a folly.
But there are plenty of tourists in the world who pay two thousand dollars a night for great experiences in unique places, that's not Cairns.

Anonymous said...

Ever wonder how many back packers receiving cash in hand are employed in the tourist industry, huh? Quite a few. As for tourist industry workers all getting $60 grand a year in wages, that would have to be outright bullshit.

Anonymous said...

Lowering wages to bring in more tourists who can then pay less helps them, but doesn't help us.

We're a rich well-off nation, so people from other less well-off places can't afford to come here, or if they can, they can't expect the same service they'd get for the same price in Bali/Thailand.

So some rich business from Hawaii lost money on hotels in Australia, so what?

Putting service staff below the poverty line will see more foreign workers filling those jobs and less local Cairns people earning a decent living.

I don't want to see a Cairns of foreign hotel owners with hotels staffed by 457 visas.

If you want staff to be able to work for less, then lower the cost of living, then try to lower wages. Don't lower the wages then make them scrape together a living.

Anonymous said...

Bit difficult to make judgement on our worth as a tourist destination when you live here, but think, for me, one week would do it - and not much to bring me back for a second visit. I suppose it depends on what you seek. We have the reef rainforest and a tropical climate and not much else. And both can be enjoyed for a much cheaper price to our near north. The problem for Cairns is that all eggs are in one basket, unlike Townsville which could much easier weather a tourist downturn.

shanghai said...

I thought it we a good time to awaken from my opium induced slumber and extract my self from grafton street and save cairns and the bats and call for a popular uprising against the ccc and the zealots of spence st and those in competes at cans airport and other various wowsers and do gooders around the place remember the good readers of hbw the meek shall inherit the earth

mickwow said...

A good employer will always work with good employees and permanents to achieve a wages deal that suits each party.I dont believe a person who just works weekend and public holidays should be receiving double time etc,it is their choice to do these hours. In the end if the money is no good.....then you must look for ajob that does pay what you would like.

shanghai said...

my god the ccc has come up something positive and forward thinking with the insurance cover in my day we had state government insurance companies but short term thinking by pollies in love with selling our assets left us with nothing if they keep this up they might get an invite to a yum cha only if they bring their credit cards of course next time kiddies we might talk about nationalising super the next big thing

Anonymous said...

Suggest you talk to a tourism and hospitality worker at the low end of the scale HBW, those people making beds or cleaning public areas, most of whom are paid around $15 an hour, if that, are on casual contracts so they can be sacked at any moment, and too afraid to speak up about being exploited because they're threatened with losing their jobs. Its easy to say just go and find another job, but the reality is there are no other jobs that offer anything different in an industry that is well known for exploiting its workers. God help us if we become like the Americans, where capitalism rules above everything else.

Anonymous said...

Just got really excited when I read in the CP that a free bus service will be trialled from the Airport to the CBD! About bloody time!
Then reading on it appears that the bus will operate from the Airport TO TOBRUK POOL on Sheridan St!!
No wonder the Taxi Industry is unfazed - a ridiculous decision by a pathetic Council..