Ningaloo Numbers

The WA government and environmental groups seem comfortable with the recently proposed Coral Bay development near Ningaloo Reef. $60 million for a 260 bed hotel run by the Hilton chain. It looks like no EPA study will be sought. Contrast this with the hostile reception to the rejected Maud’s Landing development, to be the subject of legal action against the government. Wait a minute.

$60 million; 260 beds. Does that add up? It’s a cost per key of $231,000. The industry rule of thumb is your cost per key divided by 1000 = the actual room rate you need to break even at 70% occupancy. $231 per room.

But the actual room rate is only half the “rack rate”. In other words, to break even the hotel would need an advertised room rate of $460 a night. Good luck with that. Something’s fishy in Ningaloo.

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