The rise and fall of paradise

Once the jewel in north Queensland's crown, Port Douglas has suffered from political bickering and a lack of investment.

When Christopher Skase unveiled his new five-star Sheraton Mirage resort in 1988, Port Douglas was transformed from a sleepy far-north Queensland seaside town into a sophisticated tropical playground for the rich and famous.

Celebrities such as Tom Hanks, John Travolta, Mick Jagger and Claudia Schiffer were regularly spotted strolling the palm-fringed sands of Four Mile Beach.

As the closest town to the World Heritage-listed Great Barrier Reef and Daintree Rainforest, Port Douglas should stand tall as one of the prized jewels in Australia's tourism crown.

Instead, it is staring at an economic crisis.

It welcomes 30 per cent fewer overseas tourists than in 2005 and, while many of its underlying problems can be pinned to a strong Australian dollar and the decline in international visitors, there has been no significant government investment for almost two decades.

During a recent visit to the town, several people were desperately seeking to offload million-dollar investment properties for as little as half of what they paid about five years ago. In fact, it is far cheaper to buy an apartment now than it was a decade ago. In the past year alone, the median value of an apartment has fallen 8.7 per cent, from $230,000 to $210,000.

At a time when Port Douglas needs to attract visitors and investors more than ever, the town's only designated tourism body is facing closure because the local council is threatening to withdraw its funding.

The executive officer of Tourism Port Douglas and Daintree, Doug Ryan, says the next 12 months are "crucial" to the town's future. "We need urgent investment - and quick," he says. "The government has benefited enormously out of Port Douglas but it's been a long time since it gave anything significant back."


In March 2012, the Port Douglas Strategic Plan was presented to the town's Chamber of Commerce, based on research by Melbourne Business School students. The findings were not pretty. The report stated the town had a "unique natural environment and economy dependent on tourism" but pointed out that in 2006 there was a 20 per cent material collapse in the tourism market - and "untimely investment in cheap accommodation assets".

The study argued that Port Douglas had been in a "downward spiral" and was in danger of losing its status as a premium destination. It concluded that community leaders and citizens must "confront and overcome" several major challenges to restore the town to its former glory, adding that marketing was "underfunded" and that the town "does not have a co-ordinated response to the decline, and stakeholder groups have different agendas".

The report was not well received. The widely respected and long-serving former president of the Port Douglas Chamber of Commerce Ken Dobbs says: "The problem with the MBS report was that some of its data was used out of context. It also outlined the issues and problems but not the solutions.

"There is no 'co-ordinated response' from us that can ever affect the exchange rate and strong Australian dollar. The downturn in tourism is not specific to Port Douglas; it's impacting on Cairns, it's affecting north Queensland and Australia in general."

One of the main proposals to help rejuvenate Port Douglas centres on a major waterfront redevelopment featuring a swimming lagoon, but the council-approved project remains in limbo because the necessary $40 million cannot be found.

"This time of the year nobody can swim in the sea because of the stingers, but if we had this nice modern lagoon pool … everybody could swim safely," Dobbs says.

"Trouble is, you can't raise those sorts of funds from such a small rate base and the federal and state governments are not in the spending mood, so for now it remains just a plan."

Another key factor holding the town back is the bitter divide among residents who want to remain with Cairns Regional Council and those who want to break away and have their old Douglas Shire Council back. The split has caused so much angst within the community that the Queensland Minister for Local Government, David Crisafulli, has just announced that a de-amalgamation referendum will be held in March.

Dobbs says: "We were amalgamated with Cairns in 2008 and many in the community have been fighting it ever since. We're a very passionate community and when you take a look around, we've got a lot to be passionate about. But that has often added to our problems. We debate for years, we rarely agree to move forward."

While it is no longer, by any means, a one-resort town, its flagging fortunes have closely mirrored those at the Sheraton Mirage, which put the town on the map.

During its heyday, the glamorous retreat was reaping annual profits of almost $10 million, but by the end of the financial year ending June 2010 it had posted a $492,000 loss.

Since then, the Melbourne property developer David Marriner and a Chinese investment group have snapped up the 294-room resort for a cut-price $35 million - a third of what it cost the disgraced tycoon Skase to build it in the 1980s.

The sprawling property sits in a stunning location but nobody denies it's in desperate need of a makeover. In 2011, Marriner announced plans for a major refurbishment and turned to both the Queensland and federal governments for a "modest financial contribution", not to upgrade his own resort but to help develop nearby conference facilities and other assets, such as a theatre, from which the whole town could benefit.

Ryan believes that if Port Douglas is to fully recover, it will need the Mirage to become a world-class resort once more.

"The Sheraton redevelopment needs to go ahead. It's an icon property in this region and to get it back up to a five-star facility would be a great boost for everyone."

The area's federal MP, Warren Entsch, agrees, describing the Mirage as the "Inca stone" of the town. "It's by far the biggest employer in the town. It needed a new owner with vision - and now it's got one.

"Mr Marriner has funding in place for his own refurbishments so it's high time our respective governments showed the same commitment to this town. Port Douglas has to succeed. The success of the entire region depends on it."