Luxury hotels could push down accommodation prices in Perth

An increase in high-end hotels entering the Perth market over the next four years could push accommodation prices down, making the city more attractive to visitors, according to a tourism expert.

Edith Cowan University's head of the School of Business, Professor Hugh Wilkins said the recent announcement of the Ritz Carlton and Hilton hotel chains setting up in Perth could prove a boon for the tourism industry.

Coming to Perth there is that tyranny of distance and they are also coming to an expensive destination

He said the opening of the luxury hotels would likely contribute to lower room prices.

Following the announcement that the Ritz-Carlton hotel would be built as part of the Elizabeth Quay development in the CBD and open in 2018, Hilton Hotels and Resorts announced two new DoubleTree-branded hotels for Perth and Fremantle in 2016 and 2017 respectively.

The new accommodation options will create an additional 995 hotel rooms in Perth, a boost to the about 8000 rooms currently available.

Professor Wilkins said the high cost of Perth hotel rooms have put tourists off, so the expected reduction in room prices could make the city a more attractive destination.

"Prices vary with quality but what we do know is that Perth is one of the most expensive cities in Australia," he said.

"They are reliably high driven by people coming to town mid-week in relation to the mining industry."

Professor Wilkins said "a lot of discounting goes on [at] weekends" in terms of Perth hotel rates.

He said the cost of a room was usually about $300 upwards mid-week, down to about $150 on the weekend.

Professor Wilkins said there was an under-supply of rooms for much of the week.

"The premium prices are a reflection of the imbalance between supply and demand," Professor Wilkins said.

He said given the choice of destinations, some tourists may select options other than Perth because the price of accommodation may be cheaper in other Australian capital cities - or even New Zealand.

"Coming to Perth there is that tyranny of distance and they are also coming to an expensive destination."

According to the Australian Bureau of Statistics, the average length of stay by visitors to Perth in the June 2013 quarter was 2.3 days.

Professor Wilkins said while these numbers could be driven by the high number of business travellers, he said it also showed that many tourists were restricting the length of their stay.

He said if mid-week prices were more affordable people might be willing to stay longer.

The ABS statistics also showed the average occupancy rate for Perth hotels was 74.4 per cent and 466,709 guests were catered for in Perth.

Professor Wilkins also said it would also make a "very significant change to the profile of accommodation in Perth," by allowing "more market segmentation to occur."