How Suite It Is For Five-star Hotel Bargain Hunters

SUNDAY AGE

Saturday July 11, 1992

Jane Freeman

IN the week that the worst unemployment figures since the 1930s Depression were announced, the Sheraton Towers Southbank hotel was putting the finishing touches to the most expensive hotel suite in Melbourne.

For the lucky few who can afford $3000 a night, the Royal Suite will offer Sicilian pearl marble floors, hand-tufted rugs, a Waterford Crystal desk set and personal butler service.

The city's newest hotel is opening the super suite at a time when the hotel industry is in the doldrums. Melbourne followed the Australia-wide boom in five-star hotels during the '80s and now has a glut of luxury hotels.

To survive until the predicted tourist boom arrives, Melbourne hoteliers are waging a price war. They have dropped their rates by 20 per cent over the past two years. And there are some exceptional bargains, like the Windsor Hotel offering for $295 a suite that previously fetched $800 a night.

Melbourne has 10 five-star hotels in or near the city. Unwilling to heed the warning from Sydney, where hotels are struggling on 40 per cent occupancy rates, Melbourne already has one new hotel this year _ the Sheraton Towers Southgate, opened on 1 June _ and another, the Novotel's Australia on Collins, is scheduled to open before year's end.

``There is no money to be made in five-star hotels at the moment," says the Windsor's general manager, Mr Jean-Phillipe Beghin. The Regent's general manager, Mr Rudy Markl, says jokingly: ``If you have any money, don't build one, buy one." Mr Markl says the top end of the Melbourne hotel market has reached saturation point. He believes that optimistic market research exaggerated the need for five-star hotels, but points out that hotels around the world are suffering.

Given that it is difficult for five-star hotels to cover mortgages and government charges, there is a constant shuffle in the top end of the hotel market.

Last Feburary, the international French hotel chain Meridien took over the Menzies at Rialto, renaming it Le Meridien Melbourne. The Southern Cross was up for sale last year. Rockman's Regency is part of a bid for a cash injection for its Northrock group. When the Interwest group collapsed late last year, the Eden on the Yarra was brought by an Indonesian investor and is now The Centra.

Top hotels are maintaining an apparently reasonable occupancy rate. The Hyatt and Regent claim 70 per cent and the Windsor 60 per cent. However, a five-star hotel requires about 70 per cent occupancy just to break even.

Mr Beghin attributes the hotel slump to the reduction in disposable income and the reluctance of company directors to annoy their own staff by occupying expensive rooms or suites in times of financial hardship.

The Windsor's six-room suites are modest compared with the lavish suites at other hotels _ like the Presidential Suite at the Hyatt, where Rod Stewart and Rachel Hunter recently paid $1800 a night to enjoy the Steinway piano and black granite bathroom.

According to Mr Beghin, those massive suites are looking at a 15-25 per cent occupancy rate.

``Who can afford to pay $2000 a night for a room?" he says. ``There are simply not enough rich people. The problem is that five-star hotels are designed by entrepreneurs and architects who give this excessive space to huge suites when most suites are only ever occupied by two people." Mr Markl, whose Regent Hotel recently won the ``deluxe accomodation" award from the Victorian Tourism Commission and Australian Hotels Association, believes that opulent suites are essential to establish the personality of a hotel, even if they are not money-spinners.

With the hotel price war in full swing, the people of Melbourne can get a taste of the high life as much lower-than-normal prices.

The Windsor is offering its eight Victorian suites _ which three years ago would have cost $500 to $800 a night _ at $295.

The suites, which are listed by the Historic Buildings Council, include Victorian furnishings, a dining room, a study, marble fireplaces, antiques, original Australian art, a butler in tails and valet service.

``There is no doubt this is an offer you won't find in two years' time, but we want to build customer-recognition for the future," Mr Beghin says. ``It is like an airline: there is no point in having empty seats." The recently introduced ``Regent Reward" offer allows anyone who stays for two nights in a Regent Hotel in Melbourne, Sydney or Fiji to have two weekend nights free in any of the three Regents (the offer is transferable). The scheme has increased occupancy of the Regent Melbourne by 10 per cent, according to Mr Markl.

However, the industry says consumers ought to jump in quickly because these bargains cannot last: either business will pick up or even more hotels will be changing hands. ``You can't keep selling $1 for 70 cents (because) you will go broke," Mr Markl says.

The chief executive for the Victorian Tourism Commission, Ms Katie Lahey, is optimistic that a boom in tourism in the years ahead should rectify the present over-supply of five-star hotels.

Victoria attracted 698,000 international visitors in 1990, a figure the commission estimates will be 1.7 million by the year 2000.

Mr Markl believes the hotel industry is bottoming out but expects next year's winter to be tough. He still claims a five-star hotel in the central business district is a good investment as long as the city is balanced by hotels in the other price ranges.

``In the '90s," he says, ``Australia will become the national park of the world, one of the few places where you can see clean beaches and breathe clean air. The boom will be in ecotourism." In the meantime, he wishes the Sheraton well as it tries to lure people to the south bank of the Yarra and into its $3000-a-night luxury suite.

``We need more winners, not losers," he says.

© 1992 SUNDAY AGE

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