Expansion of the Hospitality Industry- Delayed Projects in Australia

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The unfortunate downturn has caused a lot of problems for any lofty goals this year. Major Asian economic behemoths are experiencing the painful pinch. Macau and Singapore has delayed some casino projects. China just lost a major hotel in a fire. In these trying times is there no end to the delayed and canceled projects in the next few years?

The answer is simple — No. Not yet, anyway.

The economy is not yet going up. It is still on a downward trend. The United States of America is already addressing its own financial problems by passing the Obama Economic Stimulus Bill. If this billion dollar endeavor succeeds or fails, the whole world economy will surely be affected.

In Australia, the 1980′s were the turning point for similar economic reforms. These reforms strengthened their GDP from 140,987 to 926,880. All this growth with an inflation index of 30 in the 80′s and 116 in 2005. This is surely a far cry from the horrid Australian depression of the 1930′s.

Australia has shown that it can climb back. With cooperative and hardy citizens, plus a government with political will, they were able to boost their economy and become one of the riches first world countries in the world.

Now, the world is changing rapidly again. And with change only the ones who can adapt will survive. Is Australia ready to claw her way back up in this new depression?

The hospitality industry in Australia has been growing stronger since the last Sydney Olympics of 2000. However, even giants can falter when a pebble gets stuck inside its shoe. Unemployment is the pebble in the shoe of Australia. In just a few months it has increased 4.5 percent, with about over 40,000 jobs lost to the ether. Economist Riki Polygenis said that full time employment is dropping, while part time jobs are taking their place. This is bad for economic growth.

The 4.5 percent unemployment rate is projected to increase to about 6 percent according to economists. However, the movements will be gradual in contrast to the United States unemployment rate. 6 percent is no laughing matter, but it is pretty diminutive compared to the unemployment rate of third world countries. Australia is still number 11 in the world in terms of employment.

Because of the economic uncertainty, much of the hospitality projects in Australia are subject to profitability testing and future viability tests. These studies will be carried out until the market improves. The managing director of Jones Lang of Lasalle hotels said that unless financing has been secured and construction imminent, proposed projects scheduled to open in 2010 and beyond is unlikely to materialize. There are currently 6,246 rooms in the development from across Melbourne, Adelaide and Darwin. The problem is that some of these proposed constructions are yet to secure development funding.

The trend is clear. Although travel and tourism will not drop like an anvil this year for Australia, outbound travel is expected to fall 2.9% according to pundits. The reason is a weakening of the Australian dollar and an untrusting credit market.

As mentioned before, this is hardly a cause for major concern on the part of Australia. Compared to other countries whose economic wagons are barely hobbling along the Oregon Trail of depression, Australia is coasting on easy street.

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