2004

Hunter Valley Country A Market Overview

HVS International – ,

HVS INTERNATIONAL SYDNEY Level 1, 5 Elizabeth Street Sydney NSW 2000 Australia Tel: (61) 02 - 9233 1125 Fax: (61) 02 – 9233 1147 Email: [email protected] Web: www.hvsinternational.com

September 2004

Sydney Hong Kong London Madrid New Delhi São Paulo Buenos Aires New York San Francisco Boulder Denver Miami Dallas Chicago Washington, D.C. Weston, CT Phoenix Mt. Lakes, NJ Vancouver Toronto HVS International - Sydney Country- A Market Overview 1

The Hunter is a sizeable area located ninety minutes’ drive from THE Sydney and renown for being the oldest vineyard region of Australia. It extends from Cessnock to the south, Barrington Tops to the North and Merriwa to the West. It also incorporates seven distinctive tourism sub- , each marketed separately: Barrington Tops, Lake Macquarie, Hunter River Country, Newcastle, Singleton, Hunter Valley Wine Country and Upper Hunter Country.

Hunter Region The majority of visitors to the wider Hunter Region, including Visitation Newcastle, are domestic, with only 19.5% originating from international markets. In 2003, the Hunter Region received over 5.3 million domestic visitor nights, the majority of which originated from Sydney. The average length of stay was 2.9 nights, which confirms the Hunter Valley as a relatively short-trip destination.

In 2003, approximately 24% of domestic visitor nights in the Hunter Valley were spent in hotel, motels or serviced apartments, up four percentage points compared with the year 2000. However, the share of domestic visitor nights spent in transient accommodation in the Hunter Valley is well below both Sydney and Australia ratio of 32.3% and 32.6% respectively.

For the year ending December 2003, over 116.5 million international visitors nights were spent in Australia, of which 36% were spent in NSW. Of these visitors to NSW, 3% or 1.3 million visitor nights were spent in the Hunter Region. The largest inbound markets to the Hunter Region are the United Kingdom and Other , each with 21% of the total market, followed by New Zealand, Germany and the USA. These results correlate with the established enthusiasm with wine for the people from those countries.

Noteworthy, in 2003, a mere 5% of international visitor nights in the Hunter Valley were spent in hotel, motels or serviced apartments, down three percentage points compared with the year 2001. The share of inbound visitor nights spent in transient accommodation in the Hunter Valley is well below both Sydney and Australia ratio of 16.5%. However, it should be recognised that the Hunter Valley comprises a significant number of Bed & Breakfast and guesthouses, which are not included in the Hotel category.

Purpose of Visit The main purpose of visit to the region is for holiday or leisure. Visiting friends and relatives is also an important market, followed by the business segment, which generated 11% of the total visitor nights for the year 2002.

HVS International - Sydney Hunter Valley Wine Country- A Market Overview 2

Cessnock is the commercial centre of the Hunter Valley Wine Country CESSNOCK AND THE and is located 45 minutes’ drive from Newcastle, some 120 kilometres HUNTER VALLEY WINE north east of Sydney. Cessnock is situated at the junction of COUNTRY and Maitland Road and is easily accessible via the F3. It has a small airport and is just 20 minutes from Maitland train station.

During the 1970s, the labour force of the Lower Hunter Region was characterised by a significant proportion of jobs in mining, manufacturing, power generation and construction industries. Following a major restructuring period, there was an increase in tertiary and service industries such as health services, tourism and accommodation and retail trade. These increases led to a significant increase in the tertiary sector from 67% to 82%, whilst secondary industry employment fell from 23% to 12%, of total jobs. Overall, the sectors of mining, manufacturing, agriculture wholesale and retail, wine and tourism dominate the region’s industry structure, with the district particularly supporting tourism, wine, mining and agricultural businesses.

The Cessnock district is anticipated to significantly benefit from the development of the Hunter Economic Zone (HEZ), which is expected to enhance the social and economic climate in the Hunter region. HEZ is a large site of 900 hectares of industrial land surrounded by 2,300 hectares of environmental buffer, located in the lower Hunter Valley, near the town of Kurri Kurri. HEZ is seen as a 20 to 30 year development, potentially generating 600 jobs per year throughout the period, with the first stage of industrial lots due for completion in 2006. Cessnock is well placed as a “service hub” due to its close proximity. Despite its importance as an administrative, commercial and residential centre, Cessnock is best known for its proximity to the Lower Hunter Valley - one of the most important wine-growing region of NSW.

Population Cessnock has experienced a marginal growth in population over the last census period averaging 0.3% every year compared to the Hunter region increasing at 0.9%. Demographic trends in the region are moving towards middle and elderly age groups, with the median age of the population shifting from 34 to 36 years old and 64.5% of the population aged over 25. Overall, Cessnock’s population has a relatively low level of tertiary educational attainment as well as a lower median individual weekly income than the State average.

Cessnock Population Estimates Annual Growth 2003 2006 2011 2003-11 Cessnock 47,842 49,002 50,239 0.6% Source: Cessnock City Council

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Cessnock City Council forecast population to reach over 50,000 by 2011, resulting in a likely population growth of over 5,000 people between the two census of 2001 and 2011, compared with an increase of 1,300 people between 1991 and 2001.

Tourist Infrastructure Cessnock’s convenient location allows easy access to a variety of recreational areas including Hunter Valley Wine Country, Singleton and the Port Stephens areas. In addition, since European settlers first planted in the land surrounding Cessnock, the area has become renowned for its vineyards, offering a wide variety of attractions to visitors.

Hunter Valley Wine Country – Main Attractions

Attraction Description Pokolbin Estate Vineyard Vineyard Tyrrell's Vineyards Vineyard Peppers Creek Antiques Arts, crafts and antiques on display Harrigan's Irish Pub Irish Pub Hunter Valley Hot Air Ballooning Scenic flights over the Hunter Valley The Oaks Golf & Country Club Golf course Hunter Wine Helicopters Scenic flights over the Hunter Valley Hunter Valley Aviation Scenic flights over the Hunter Valley Hunter Valley Gardens Recreation and Nature Park Hunter Valley Cheese Company Tasting of various local cheeses Hunter Valley Wine School Wine education Cessnock Rugby League Supporters Club Entertainment facilities Ken Duncan Galleries Art Gallery Les Indiennes de Provence Fabric and products from the south of France Source: Hunter Valley Wine Country

Cessnock, in conjunction with the Hunter Valley Wine Country Association, hosts a number of events and festivals throughout the year, which generates a significant amount of visitation to the region. The major events held in the Hunter Valley Wine Country are as follows: • Wyndham Estate Signature Concert in February; • Hunter Valley Festival in March; • Ivanhoe Chocolate Festival in April; • Vintage Jazz in the Rothbury Estate in April; • Lovedale Long Lunch in May; • Mount View Autumn Festival in May; • Opera in the Vineyards in October; • Jazz in the Vines in October; and • Mount View Spring Festival in October.

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The tables below present the performance of hotels in Cessnock for the HISTORIC HOTEL years 1990 through to 2003 in a rolling 12-month format, according to PERFORMANCE information from the Australian Bureau of Statistics (ABS).

Room Occupancy Room occupancy in the Cessnock area hit bottom in June 2001 with an annual occupancy of 42%, as a result of strong supply increases since December 1998. Despite further increases in supply averaging 10% per annum since 1999, occupancy levels improved to reach 55.5% in 2003, as a result of strong growth in demand averaging 16.5% per annum over the last 5 years.

Hotel Occupancy Performance Cessnock

300,000 58.0% 56.0% 250,000 54.0% 52.0% 200,000 50.0% 150,000 48.0% 46.0% 100,000 44.0% 42.0% 50,000 40.0%

0 1 2 3 1 3 9 9 9 9 94 95 96 97 98 99 00 0 02 0 9 9 9 19 c-19 c-19 c-19 c-19 c-19 c-19 -20 c-20 -20 c-20 e e e e e e ec-1 ec-1 ec-1 ec- ec e ec e D D D D D D D D D D D D D D

Rooms Available Rooms Sold Room Occ%

Source: Australian Bureau of Statistics

Noteworthy is that the total supply of hotel rooms has remained virtually unchanged over the last three years, stagnating at around 800 rooms or 290,000 available room nights in the ABS sample. This indicates that the growth in occupancy is achieved entirely through real growth in demand.

Average Room Rate The average room rate achieved in the Cessnock LGA is double that of other areas in the Hunter Valley such as Maitland, reflecting the high standard of available accommodation as well as the high-yielding segments visiting the region.

Despite the growth in room occupancy, however, no growth was achieved in average room rates, which has remained at around $155 since June 2002, recovering from a sharp decline in June 2001. Prior to this decline, the area had achieved average room rates in excess of $160 over a prolonged period from March 1998 until March 2001, albeit at the expense of room occupancy.

HVS International - Sydney Hunter Valley Wine Country- A Market Overview 5

Hotel Average Rate Performance Cessnock

300,000 200.00 180.00 250,000 160.00 200,000 140.00 120.00 150,000 100.00 80.00 100,000 60.00 50,000 40.00

3 4 8 9 0 3 90 91 92 9 9 95 96 97 9 9 01 02 0 9 9 9 9 9 9 00 0 19 19 1 -1 -1 19 19 1 -1 -1 -2 20 20 -2 c- c- c- c c c- c- c- c c c c- c- c e e e e e De De D D De De De D D De De De De D

Rooms Available Rooms Sold Average Rate

Source: Australian Bureau of Statistics

Revenue per Available RevPAR denotes the combination of room occupancy and average rate Room (RevPAR) and is the most objective measure of market performance. From the graph below it is clear that RevPAR dropped briefly when room rate declined in June 2001, but recovered as room rates stabilised and occupancy began its ascent. At present RevPAR is at $86 for the year ending December 2003.

Hotel RevPAR Performance Cessnock

58.0% 200.00 56.0% 180.00 54.0% 160.00 52.0% 140.00 50.0% 120.00 48.0% 100.00 46.0% 44.0% 80.00 42.0% 60.00 40.0% 40.00

3 0 90 97 9 991 992 99 994 995 996 9 998 999 00 001 002 003 -1 c-1 c-1 c-1 c-2 Dec-1 Dec De Dec-1 Dec-1 De Dec-1 Dec-1 De Dec-1 Dec-2 De Dec-2 Dec-2

Room Occ% Average Rate RevPAR

Source: Australian Bureau of Statistics

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More detailed analysis on hotel performance is available through a BA Market Survey research initiative by Hunter Valley Wine Country Tourism (HVWCT), which appointed BA Market Surveys (BA) in January 2000 to conduct independent research into the tourism sector. In its 2003 report, BA notes that 60% of available accommodation units are represented in the survey. Reporting is available by accommodation type, with Resorts being defined as accommodation providing 12 or more units.

While limited in its capture and restricted to hotel occupancy analysis only, the information gathered by BA provides valuable insights in the growth and seasonality of accommodation demand.

The following tables represent historic performance statistics for the years 2001 through 2003, for total accommodation as well as resort accommodation only. Both sample sets are further broken down in mid- week and weekend performance, as well as a 12-month rolling trend.

Hunter Valley Wine Country Hotel Occupancy Performance – Total Accommodation and Resorts only (2001-2003)

Total Accommodation

90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 1 2 3 1 2 3 1 2 3 1 2 3 01 02 03 01 02 03 01 02 03 0 0 0 01 02 03 ------n- n- n- c c c Jul Jul Jul Ja Feb-01 Apr-01 Oct Ja Feb-02 Apr-02 Oct Ja Feb-03 Apr-03 Oct Mar-0 Jun-01 Sep Mar-0 Jun-02 Sep Mar-0 Jun-03 Sep Nov-01 De Nov-02 De Nov-03 De May-0 Aug-0 May-0 Aug-0 May-0 Aug-0

Mid-Week Weekend Total Trend

Resort Accommodation

90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 1 2 3 1 2 3 1 2 3 1 2 3 1 2 3 1 2 3 01 02 03 01 02 03 01 02 03 01 02 03 ------l l l t-0 t-0 t-0 b- b- b- e e e un-0 un-0 un-0 Ju Ju Ju Jan F Apr-0 Oc Jan F Apr-0 Oc Jan F Apr-0 Oc Mar-0 J Sep- Mar-0 J Sep- Mar-0 J Sep- Nov-01 Dec-01 Nov-02 Dec-02 Nov-03 Dec-03 May-0 Aug-0 May-0 Aug-0 May-0 Aug-0

Mid-Week Weekend Total Trend

Source: BA Market Surveys

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Based on the available data, the following observations and conclusions can be drawn: • Total room occupancy has improved from 48.3% in 2001 to 51.9% in 2002 and 54.6% in 2003. • Room occupancy for resorts demonstrates a similar trend, growing from 48.9% in 2001 to 53.6% in 2002 and 56.7% in 2003. • The above suggests that resorts outperform the overall market marginally, by two percentage points in 2003. • Midweek occupancy in 2003 for the combined market was 44.3% versus 47.1% for resorts. This is an improvement over previous years with 40.4% and 41.7% in 2001 respectively. • Weekend occupancies are significantly higher, with 78.2% overall and 81.5% for resorts in 2003, again improving over previous years. • Demand is subject to significant seasonal fluctuation, with the highest occupancies achieved in October/November and March/April (depending on the timing of Easter). The weakest period is December/January. • Demand peaks correlate directly with major events in the Valley. • Assuming no changes in supply have occurred (BA notes a 2.1% overall increase in supply in 2003 over 2002), a steady overall performance increase can be identified, with 6.1% growth overall and 7.5% growth for the resorts.

Growth in weekend occupancy is stronger than growth in mid-week occupancy, at 7.4% versus 4.6% overall and 10.2% versus 6.1% for resorts. While indicative of the overall market performance, it should be recognised that the overall market comprises only an estimated 1,700 accommodation units. The resort segment is estimated to represent around 700 of these units (41%).

Demand Based on further research undertaken by Tourism and Characteristics BA Market Surveys for the year ending December 2003, the following characteristics for visitors to the Hunter Valley Wine Country were established: • The vast majority of visitors to the Hunter region were from NSW (88%). • Visitors are likely to belong to the 25-44 age group. • Long trip holidays (more than one week) represented only 3% of total trips, with over 80% representing one or two nights’ stay.

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Confronted with the significant fluctuations in demand by the leisure M.I.C.E. Trends segment, accommodation providers in the Hunter Valley have resorted to the development of the Meetings, Incentives, Conventions & Exhibitions (MICE) market to sustain occupancy levels. Consequently, the number of MICE events held in the Hunter has grown by 28% over the last three years, compared with a 6.5% increase for regional NSW. The Hunter region’s share of that business has increased from 18% in 2001 to 21.7% in 2003.

The majority of MICE business to the Hunter is related to general industry and sporting associations, which include meetings, exhibitions and sporting events. The share of Association events dropped from 86% in 2001 to 73.5% in 2003 in favour of a strong increase in corporate events, which currently accounts for nearly 24% of all events held in the Hunter. Most of these events are booked directly with the hosting resort, rather than through HVWCT.

In terms of seasonality, Association business would appear to be concentrated at the beginning of the year between February and May, with another peak in October and November. In 2003, the majority of events held in the wider Hunter area were either of a very small size (less than 100 delegates), or much larger (34% of all events had over 1,000 delegates). The following table summarises recent MICE business trends in Regional NSW.

MICE Trends – Regional NSW

2001 2002 2003 Regional Hunter Blue Regional Hunter Blue Regional Hunter Blue Total No. Events NSW Valley Mount. NSW Illawarra Valley Mount. NSW Illawarra Valley Mount. Association 435 22 104 6 530 17 62 10 420 31 114 27 Corporate 16 3 5 50 16 14 65 8 37 Government 41 12 27 8 44 1 4 1 Other 179 35 185 TOTAL 671 25 121 6 642 33 84 10 714 40 155 28 Source: Business Events

The Hunter Valley Wine Country is at present most popular with the leisure market from Sydney, who drive there mostly on weekends. This trend results in highly seasonal demand with strong peaks at the weekend and especially during special events, while weekday leisure demand is limited.

With the emergence of larger hotels and resorts with meeting and conferencing facilities, notably Cypress Lakes and the Sebel Kirkton Park, demand from the corporate conference market has increased, strengthening weekday demand in particular.

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A map with the location of the more prominent hotels is presented SUPPLY OF HOTEL below. The tables overleaf summarise the key operating characteristics ACCOMMODATION of these competitors.

Location of Properties - Hunter Valley Wine Country

7 6

14 9

12 11 3 8 2 10 13 15 16 5 1

4

Existing Facilities Proposed Facilities 1 Peppers The Convent 7 Tuscany Wine Estate 13 Crowne Plaza Resort 2 Peppers Guest House 8 Pokolbin Village Resort 14 The Vintage 3 Hunter Valley Gardens Lodge 9 Casuarina Country Inn 15 Airport Site 4 Sebel Kirkton Park Hunter Valley 10 Tower Lodge 16 Elysia Resort 5 Cypress Lakes Resort 11 Harrigans Irish Pub 6 Hunter Resort Country Estate 12 Pokolbin Hill Chateau

Source: HVS International

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Operating Profiles of Existing Facilities - Hunter Valley Wine Country Number Star Year Published Meeting Capacity Property of Rooms Rating Opened Rates Facilities and Amenities Space (m²) Theatre Style

Peppers The Convent 17 5 1989 $338-$601 pool, spa, tennis 51 40

pool- heated, sauna, spa, Peppers Guest House 48 4.5 1986 $248-$347 200 120 tennis indoor heated pool, sauna, spa, Sebel Kirkton Park Hunter Valley 71 4 1989 $245-$400 255 290 gym, tennis pool- heated, sauna, spa, Hunter Valley Gardens Lodge 72 4.5 2002 $215 264 250 tennis 2 pools, spa, fitness centre, Cypress Lakes Resort 206 5 1988 $280-$1,000 600 400 golf, petanque

Hunter Resort Country Estate 36 4 1991 $190-$245 pool, spa, tennis, horse riding 175 150

Tuscany Wine Estate 38 4 1997 $175-$250 pool, tennis - 120

Pokolbin Village Resort 50 4 1993 $260-340 pool- heated (solar), tennis 100 100

Casuarina Country Inn 12 4 1988 $265- $345 pool, sauna, tennis 182 60

pool- heated, sauna, golf, Tower Lodge 12 5 2000 $510 81 30 tennis

Harrigans Irish Pub 48 4 1998 $155 pool- heated 125 60

Pokolbin Hill Chateau Resort 100 4 1999 $115-$210 pool, tennis - -

Source: HVS International Research

Proposed New Proposed New Facilities - Hunter Valley Wine Country Facilities Number of Anticipated Proposed Property Rooms Opening Date Development Stage

The Vintage Mercure Grand Appts 44 1 July 2005 Early Development HVG&CC Crowne Plaza Resort 150 1 January 2006 Under Construction The Vintage Sofitel 100 1 January 2007 Approved Airport Site 104 1 January 2007 Rumored The Vintage Boutique Hotel 25 1 January 2008 Rumored Eco Tourist Resort Paxton 30 1 January 2008 Approved Hunter Valley Lakes Resort 43 1 January 2008 Approved Source: HVS International Research

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The $450 million Vintage project is a joint venture between Medallist The Vintage Golf Development and the Stevens Group. The project is an integrated residential, golf, holiday and conference complex with provisions for two styles of transient accommodation under Accor management. The initial development phase comprises 44 Mercure Grand Apartments, whilst stage II will see the development of a 100-room Sofitel, offering oversized suites overlooking the Greg Norman championship golf course. Construction of the Mercure Grand Apartments is proposed to commence in 2004, with completion expected in mid 2005. The Sofitel is scheduled for an anticipated opening late 2006 or early 2007.

Hunter Valley Golf & A Crowne Plaza resort is being constructed within the Hunter Valley Country Club Golf & Country Club (HVGCC), formerly known as the Portofino Golf Club. The resort will comprise 150 guestrooms and suites, complemented by 640 m² of meeting space, a choice of restaurants, an outdoor swimming pool, health and fitness facilities and appropriate back-of-the-house facilities. The development should be completed by early 2006.

In addition to the main resort building, 175 villas are proposed in three villages spread throughout the site. We understand the golf course will be redeveloped and upgraded to a championship standard, supported by a practice area, pro-shop, and tuition facilities including a video-clinic.

Eco Tourist Resort An Eco tourist resort is proposed for development on a 160 ha former Paxton Stanford Colliery site near Paxton, configured as a wildlife sanctuary style holiday resort. Part of the existing Stanford buildings would be redeveloped to provide a 300-seat conference centre, restaurant and educational centre, complemented by retail and recreational facilities.

The proposed accommodation facilities comprise 242 cabins, a 100-room motel as well as a 30-room boutique hotel, managed by the up-market Aman Group. Development approval has been granted. We have assumed an opening date of 2009, though this could be earlier.

Hunter Valley Lakes The proposed Hunter Valley Lakes Resort will be located on a 405 ha site Resort between Kurri & Mulbring at Richmond Vale. Current information suggests the development of a golf course, 535 accommodation units and a 43-unit tourist hotel component, complemented by retail and entertainment facilities. Development approval has been granted and we have assumed completion of the resort by 2008.

Airport Site A site adjacent to the is earmarked for the development of a 104-room mid-market hotel under a well-renowned international brand. The proposed development will include a 400 m2 conference centre and is expected to open towards early 2007. We understand development approval has not been granted yet.

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We estimate that, in 2004, the distribution of accommodated hotel room DEMAND FOR HOTEL night demand is as set out in the following table. ACCOMMODATION Accommodated Room Night Demand (2004) Percentage of Market Segment Total

Individual Leisure 54 % Meeting and Conference 34 Golf 4 Group Leisure 5 Inbound 3

Total 100 % Source: HVS International

This aggregate market mix reflects the area as a primarily leisure destination, supported by conference demand. Both of these segments are enhanced by the availability of golf facilities, though only little golf specific demand is generated.

Individual Leisure The Individual Leisure segment comprises visitors who visit the Hunter Segment Valley for recreational purposes only, attracted by the wineries, the golf courses, health and spa facilities, a choice of restaurants and other local attractions and events.

This segment at present comprises the majority of demand to the area, accounting for over 50% of total room nights. Unfortunately, this demand is heavily concentrated towards weekends, resulting in strong demand fluctuation during the week, often with all rooms in the area booked during the weekend while during the week occupancies remain below 50%. As a result, average rates for this segment are high during the weekend, and often linked to a minimum two-night stay, while during the week significant discounts are offered.

Individual Leisure demand is relatively constant throughout the year, with some drop off noticeable in the hot months of December and January, as well as in June when it is the coldest. The school holiday periods provide further peaks, although the Hunter Valley at present is not recognised as a family destination, with limited attractions suitable for children and only a few operators offering dedicated child-care facilities.

Future growth of this segment will be largely dependent upon the of operators to provide an attractive product and market these facilities effectively to stimulate visitation. The creation of family-friendly accommodation and services will also create opportunities to attract the family market.

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At present the Conference market accounts for some 35% of total room Meeting and nights, mostly corporate groups from the Sydney market booking Conference Segment smaller events such as company trainings and inductions, product launches and other business related gatherings.

Peak conference demand typically occurs in the spring and autumn; summer represents the slowest period and winter demand can be variable. The average length of stay for typical conference groups ranges from one to three nights. Most commercial groups require accommodation during the weekday period of Monday to Thursday, but associations and social groups will sometimes utilise the weekends.

Demand within this segment tends to vary with the size and quality of facilities offered. Competitive hotels with large conference and meeting facilities tend to generate a higher share of Meeting and Conference demand. However, as conferencing facilities in the area are relatively limited at present and cannot accommodate larger groups of several hundred attendees while also providing catering facilities, demand within this segment is restricted and limited to a small number of hotels. It should further be noted that although many hotels host weddings and other social functions, only a small proportion of these events generate room night demand and are thus not effective in building room occupancy.

Future demand potential in the Meeting and Conference segment is again closely related to the ability of operators to provide quality facilities and market these effectively. The provision of new, larger facilities, supported by adequate breakout rooms and food and beverage provisions will significantly enhance the appeal of the area to this market segment. Conference organisers like to have both conferencing and accommodation facilities under one roof and thus the provision of larger, well equipped facilities in combination with a quality accommodation product is required to attract this segment.

Our research suggest that the corporate market in Sydney has few suitable venues within easy drive distance from the CBD. This would auger well for the provision of quality facilities in the Hunter Valley. Demand from the national association market is less likely to materialise, as this market prefers to remain with an easy (taxi) drive from the major airports to facilitate easy access for delegates from multiple locations.

Golf Segment The Golf market is at present very small, estimated at less than 5% of total room nights. Golf is regarded as providing a support function in attracting leisure and conference demand, rather than being a primary demand driver. In order to establish itself as a golf destination, typically at least three quality golf courses are required to provide sufficient choice of play.

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With the existing golf course at Cypress Lakes and the newly created Greg Norman course at the Vintage, combined with the upgraded course at the Hunter Valley Golf and Country Club, this criteria can be fulfilled. The creation of further courses, as proposed by both the Vintage and Cypress Lakes, would further enhance this appeal.

The typical golfer books either direct with a resort, usually in small groups of two to four people, or through specialist golf tour operators, more common for interregional or overseas players. While this market offers good growth opportunities, albeit off a small base, it is likely to remain a relatively small segment in the overall demand pool.

Group Leisure and The Group Leisure and Inbound segments generally comprise visitors Inbound Segments who have purchased package holidays that include the cost of travel, hotel accommodation and some provision for meals, or what is termed an ‘inclusive tour’. Tour operator rates are generally contracted annually at discounted rates, and are often used to help fill lower occupancy periods. Because of the low rate of this segment, this demand will be replaced by higher-yielding demand as market occupancy increases.

These market segments are currently not well represented in the Hunter Valley, with most interregional and international visitors to Sydney opting for a tour to the Blue Mountains instead. This is once more linked to the availability of adequate facilities, in this case being able to provide quality accommodation to larger groups at affordable rates, and thus provides good growth opportunities in view of the proposed development of several new facilities. Attracting demand from this segment is strongly influenced by the marketing ability of the operator and the introduction of major hotel brands in the Hunter Valley will definitely stimulate this demand segment.

CONCLUSIONS The anticipated changes in competitive supply, as set out in the preceding paragraphs, will have a significant impact on the Hunter Valley Wine Country. While the considerable enhancement of accommodation supply will undoubtedly result in significant pressure on market performance, the introduction of several experienced hotel operators with strong brands will result in a substantial increase in the overall marketing effort to attract additional demand.

Unlike a corporate market, which is driven by economic activity and is less responsive to the addition of new supply, the Hunter Valley Wine Country is driven by leisure and conferencing demand, which can be successfully increased through the provision of new facilities and effective marketing techniques.

Without a doubt, the Hunter Valley Wine Country is on the verge of a major change in image and public perception.