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The Factors Driving The Growth Of The Hotel Industry In Australia

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What is the Factors The Hotal Industry Growth in Australia ?



Hotel industry is one of the fastest growing industries in Australia. With its serene beauty, the country is one of the favorite tourist places in the world. The growing tourism industry is the main cause of the rapid growth of hotel industry in Australia. The arrival of the international tourists from all over the world, Australia has felt the urge of giving an added importance to the hospitality industry. The tourism industry operates in a global competitive market. In the current scenario, the Australian market has been expanding their preferences and heading offshore as well. This literature review highlights the various drivers of growth, along with the positive effects that the growth of the Australian hotel industry has brought with itself. The importance of fulfilling the customer’s demand and the causes of the changes in the demand has also been discussed. The need for review of the standard of the hotels, and the type of services they provide is also mentioned in this review. Finally, the cause of the decline of some of the hotels in Australia has also been highlighted, identifying the ways it could be revived.    

Growth of the hotel Industry

Australia has always been an important business hub with people from all over the world travelling for the purpose of business (Assaf and Agbola 2014). However, with the added importance that the Australian government has given to the tourism of the place made it an attractive tourist place as well. While people came only for the purpose of business, their demand of luxury was less (Pereira and Almeida 2014). All they preferred was a hotel that offered a comfortable stay, with a large and well-equipped meeting hall, and a standard meal (Assaf and Agbola 2014). As he travelers along with the businessmen started preferring Australia for their holiday destination, their demand for luxury started rising. Thus, the need for the growth of luxury hotels, boutique hotels, and beach bungalows started growing, giving a strong boost to the hospitality industry, along with tourisms.    


Factors driving the growth

It is essential that Australian tourism and hotel industry stay at par with the hotel industries in the developed countries (Assaf et al. 2015). Hence, in order to ensure that, it is important that the Australian hotels incorporate the modern trends of the hotels. These include the luxurious facilities such as swimming pools, spa facilities, world class fitness centers, multi-cuisine restaurants, along with private breach facilities and customized tour plans. Travelers and tourists traveling for leisure prefer to travel without any hazards and worry, hence the hotels need to develop themselves and be well-equipped to fulfill the demands of the customers (Assaf et al. 2015).      

Another essential factor that contributes greatly to the growth of the tourism and hotel industry in Australia is the change in the lifestyle of the people. The increase in levels of salary and lifestyle of the people from all over the world, combined with an expansion in recreational demands, has been particularly advantageous to the tourism business in Australia (Yang and Cai 2016). The coming of technical advancements especially in the transportation made travelling much more easier. The number of voyage boats, ships and air planes became easily accessible and affordable for the people. Moreover, the automated reservation systems and ease of booking of the hotels from any end of the world have been an essential part in the worldwide development of hotel industry. Moreover, the upgraded efficiency have been ideal to the business by reducing the expenses and making travel and tourism much affordable for common people.

As the hotel industry started growing, rivalry in the business also started increasing around the world. Thus, each hotel tried their best to stay ahead in competition, and kept them upgraded, to meet the demands of the customers (Pereira and Almeida 2014). The customers and travelers have received incredible rewards as far as lower costs, in order to retain the loyal customers. Special discount on early booking and schemes such as discounts on extended stays have been introduced (Solnet, Boztug and Dolnicar 2016). More inventive ways to deal with advertising and promotions are used, such that the hotel industry grows with rapidity. One of the greatest barriers that the hotel industry faced was the lack of adequate capital to fund the growth and development of a world-class hotel chain (Thorpe and Leitão 2014.). However, the Australian government has taken various initiatives and funded a large number of hotel chains, as an initiative to promote tourism. This is an essential factor that boosted the growth of the hotel industry in Australia. As calculated, about $6.5 is invested for the skilled and unskilled labors for every one dollar. Hotel management requires employees and labors with diverse skills (Solnet, Boztug and Dolnicar 2016). The employees for housekeeping, cooking, customer services are among the few to be named. Thus, with the assistance of the Australian government, the costs of setting up the hotels have reduced reasonable, increasing the number of hotels in Australia.   

Customer demand

The rising demand of the customers and tourists is also a driving factor for the growth of hotel industry in Australia (Leung et al. 2013). Since the development of tourism in Australia has increase the number of foot fall of the tourists from all over the world, hence various people have different demands. Moreover, the increase in the variety of the number of people visiting Australia every year, the demographic factors of the tourists also contribute to the change in the demand of the customers (Manoharan, Gross and Sardeshmukh 2014). Thus, in order to cater to these demographic demands, the hotel industry have been growing steady, making improvements and improvisations.       

The Luxury hotel industry is considered to be an essential part of the conventional hotel industry. This also contributes largely towards the growth of the hotel business in Australia.  These hotels give visitors best line benefit and lavishness, to spend their holidays in luxury (McManus 2013). These designers and proprietors ensure to provide the customers with an experience of the lifetime, by providing lavishness to the people. With the rapid growth of the hotel industry, many international hotel industrialists have started investing in the tourism and hotels of Australia (Thorpe and Leitão 2014.). They have studied the growing trends of Australia, and have been confidently investing in the luxury hotel industries (Manoharan, Gross and Sardeshmukh 2014). Their predictions and market survey have been proven to be correct, since the tourism of Australia has been inviting people from all over the world, who prefer staying at these lavish and luxurious hotels.


Increase in competition

Earlier the picture was quite different. Since the number of luxury hotels was very few in number, hence they were expensive and not much affordable by most of the tourists. However, as the number of hotels started growing, the price that the tourist had to pay, to experience the luxury also decreased (Chon 2013). Competition increased and the hotels tried to provide the supreme experience at the lowest cost. In this way, the affordability of the hotels changed. The rise in competition also ensured that fair competition was being carried out by the various hotels of Australia. Moreover, the rise in the hotels and the tourism industry opened new avenues for employment (McManus 2013). People from all over the world, especially from the developing countries started travelling to Australia, in search of employment (Leung et al. 2015). Many people who migrated from the other parts of the world found employment in the growing hotel industries (Pereira and Almeida 2014). Thus, the number of cheap labors started increasing in Australia, facilitating the growth of the hotels. Both skilled and unskilled labors from various part of the world found employment, along with facilitating the growth of tourism in Australia.

Employment opportunity

As the hotel industry has been growing gradually, the employment opportunities of Australians have also been increasing. This resulted in the growth of the overall economy of Australia (Chon 2013). Large investors started investing in this industry, and creation of employment made the economy of Australia, more profound (Niewiadomski 2016.). The growth of this industry started becoming one of the major pillars of Australian economy, which earlier was just a minor part that hardly affected the economy of Australia (McLachlan 2013).   

The hotel industry is growing everywhere throughout the world because of increase in the number of travelers and the increase in the quest among the people to explore the world (Yang and Cai 2016). The number of travelers from India, China and other Asian nations, being the maximum, the hotels of Australia is also focused on catering to their demands. In the present year it is extremely beneficial to get into this business in Australia (McPhail et al. 2015). The footfall of travelers has significantly increased in the course of time and is the highest as compared to the past decade. The hotel business in Sydney had possessed 88.8 % of the aggregate populace before the end of 2016 (McLachlan 2013). This is the most elevated development rate throughout the years. Australia now lies among the top hotel and tourism improvement nations among the various countries of the world (Manoharan, Gross and Sardeshmukh 2014).             

Review of the standards      

As the hotel industry has been steadily rising, it is essential to review the standard of the hotels and ensure that they meet the world class standard, in order to cater to the customers from around the world. A regulatory body such as the Australian Hotel association (AHA) provides a guideline that all the hotels operational in Australia needs to follow (Australian Hotels Association, 2017). These guidelines ensure that the hotel industry of Australia, not only serves the customers well, but also become eligible enough to compete with the hotels of the  developed nations such as UK and US. About 5000 people are members of the AHA, along with 6807 hotels (Australian Hotels Association, 2017). This regulation is essential, to keep a keen eye and monitor the operations of the hotels, along with regulating the standard of food being served and charges taken for each facility (Li et al. 2015). The price of the hotels is also regulated by AHA, in order to prevent unfair competition among them (Australian Hotels Association, 2017). This regulation is essential since the hotels and its facilities have to be easily affordable by the tourists (Kong and Lien 2016). The major source of income for the hotels is the food and beverages they serve, since the lodging price is regulated by the AHA. The hotels have been introducing various incorporations. These include night clubs, various night safaris, sightseeing packages and various other entertaining activities (Chon 2013). These activities keep the tourists engaged during their stay at the hotel and make their stay a memorable one (Ng and Austin 2016).          

Taking all the factors into account, the worldwide extravagance travel advertise has recorded a development in 2011- 2012, after a noteworthy decrease in 2009 and modest recovery in 2010 (Li et al. 2015). The interest among the customers and travelers towards the luxurious living has grown by 1.5% than the recent previous years (The World Luxury Index, 2013). One of the key drivers for this development has been the increase in the affordability of the people along with the change in the lifestyle of the people (Niewiadomski 2016.). Moreover, with the BRIC agreement, the BRIC nations, to be specific Brazil, Russia, India, and China has shown remarkable development in the hospitality industry (McPhail et al. 2015). These developments in the mentioned countries have given a strong competition to Australia and its hotel industry (Kong and Lien 2016).


Sudden decline

However, with so much initiatives being taken in the hotel industry, there has been a significant decline in the hotels. To be specific, the hotel industry has shrunken by 10% in the past few years (Li et al. 2015). A close investigation highlights the fact that the removals of casinos and poker machines from the hotels have caused this significant fall. Moreover, with the rapid growth of luxurious hotels, many hotels that are not well-equipped and facilitated have been facing heavy loss (Ng and Austin 2016). Thus, though the tourisms industry has experienced growth significantly, yet a part of the hotels have faced a significant decline as well.



The significance of conducting a literature review lies in the fact that the present scenario, along with the past researches on the same or similar topic is known. Along with knowledge gain, it acts as a platform from where further researches could be started. Moreover, the gaps in the actual situation and the reviewed literature are also obtained from the literature review. In this case, the present scenario of the hotel industry in Australia is highlighted along with the drivers of the growth. The factors that have been affecting the rapid growth has been presented along with the barriers that are being faced by the hotel industry, thus hindering growth has also been presented in this literature review. The various reasons of growth, along with the sudden decline of the growth of the hotel industry have also been highlighted in this review. Moreover, the position of Australian hotel and tourism industry has been reviewed and the determined. The employment opportunity that the hotel industry brings in with its growth has also been highlighted in this literature review. 



Assaf, A.G. and Agbola, F.W., 2014. Efficiency analysis of the Australian accommodation industry: A Bayesian output distance function. Journal of Hospitality & Tourism Research, 38(1), pp.116-132.

Assaf, A.G., Josiassen, A. and Agbola, F.W., 2015. Attracting international hotels: Locational factors that matter most. Tourism Management, 47, pp.329-340.

Australian Hotels Association. (2017). Here's Cheers! - Australian Hotels Association. [online] Available at: [Accessed 28 Apr. 2017].

Chon, K.S., 2013. Tourism in Southeast Asia: A new direction. Routledge.

Kong, E. and Lien, C.Y., 2016. Impact of social media in service innovations: An empirical study on the Australian hotel industry. In Social Media and Networking: Concepts, Methodologies, Tools, and Applications (pp. 978-993). IGI Global.

Leung, X.Y., Bai, B. and Stahura, K.A., 2015. The marketing effectiveness of social media in the hotel industry: A comparison of Facebook and Twitter. Journal of Hospitality & Tourism Research, 39(2), pp.147-169.

Li, G., Law, R., Vu, H.Q., Rong, J. and Zhao, X.R., 2015. Identifying emerging hotel preferences using Emerging Pattern Mining technique. Tourism management, 46, pp.311-321.

Lockyer, T., 2013. The international hotel industry: Sustainable management. Routledge.

Manoharan, A., Gross, M.J. and Sardeshmukh, S.R., 2014. Identity-conscious vs identity-blind: Hotel managers’ use of formal and informal diversity management practices. International Journal of Hospitality Management, 41, pp.1-9.

McLachlan, R., 2013. Deep and Persistent Disadvantage in Australia-Productivity Commission Staff Working Paper.

McManus, L., 2013. Customer accounting and marketing performance measures in the hotel industry: Evidence from Australia. International Journal of Hospitality Management, 33, pp.140-152.

McPhail, R., Patiar, A., Herington, C., Creed, P. and Davidson, M., 2015. Development and initial validation of a hospitality employees’ job satisfaction index: Evidence from Australia. International Journal of Contemporary Hospitality Management, 27(8), pp.1814-1838.

Ng, D. and Austin, I., 2016. Integrated resorts and hotel (gambling) service enterprises in Singapore, Macau and Australia: the changing policy landscape. Asian Journal of Political Science, 24(1), pp.42-62.

Niewiadomski, P., 2016. The globalisation of the hotel industry and the variety of emerging capitalisms in Central and Eastern Europe. European Urban and Regional Studies, 23(3), pp.267-288.

Pereira, L. and Almeida, P., 2014. Marketing and promotion in the hotel industry: A case study in family hotel and hotel group. CONSELHO EDITORIAL| EDITORIAL BOARD.

Solnet, D., Boztug, Y. and Dolnicar, S., 2016. An untapped gold mine? Exploring the potential of market basket analysis to grow hotel revenue. International Journal of Hospitality Management, 56, pp.119-125.

Thorpe, M. and Leitão, N.C., 2014. Economic growth in Australia: Globalisation, trade and foreign direct investment. Global Business and Economics Review, 16(1), pp.75-86.

Yang, Z. and Cai, J., 2016. Do regional factors matter? Determinants of hotel industry performance in China. Tourism Management, 52, pp.242-253.


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