Message from the CEO, Richard Munro
Reserve Bank Policy and your Business.
The Accommodation Association of Australia is one of a number of industry leading organisations that provides briefings and insights into the industry data that shapes monetary policy by the Reserve Bank of Australia.
The Reserve Bank Board considers our industry data and commentary to shape major decisions such as where the cash rate should be and indicators for inflation.
Our industry tends to be an early signal as to the economic climate of different Cities and States and it is interesting to see that we tend to be an early marker for the property sector.
A few telling pieces of information relative to our members is that wage increases are slowly picking up, which should be no surprise since we have seen successive increases in the minimum wage of over 3% per year (FWC 2017 decision was 3.3% and 2018 was 3.5% or $18.29/ hour). We will argue to the Fair Work Commission (FWC) that successive plus three percentage point increases are not sustainable to our business year on year as increases to our pricing (rates) to our customers is a modest 2.9% increase in RevPAR for the financial year ending 30 June 2018. We would add that inflation has slowed (below 2% for the year 2018), therefore large increases (over 3%) will not be a sustainable outcome.
Another interesting insight was the lower participation rates in the workforce by youth as more of this group aged 15-34 take up study. In contrast however the participation rates for mature age has increased, so mature age (now 45 years plus) is an area your business may consider.
The Reserve Bank of Australia acknowledged risks have risen for the economy which is softening, , but the central bank has not yet signalled it could switch its bias for raising interest rates towards rate cuts. Rate cuts ultimately give consumers the ability to spend more and the theory is that some will flow to discretionary spending in sectors such as ours, tourism.
We always welcome participation from our members and if you wish to share any business insights through our association directly to the Reserve Bank of Australia, we welcome your valuable insight on an ongoing basis. To view the detailed report, please click
here
