Wollongong’s tourism ‘escape spending’ costing us millions as events look elsewhere

Despite a concerted effort to attract more tourist accommodation to Wollongong, it seems the shortage of hotel rooms is going from bad to worse, and there’s little on the horizon to arrest the slide.

It’s now resulting in state and national events having to look elsewhere for a host city. In one case, Wollongong being bypassed for regional towns like Dubbo and Cowra – but more on that later.

Since the 2024 launch of Wollongong City Council’s long-awaited Tourism Accomodation Strategy, two budget hotels – The Normandie and Boat Park Motel – have been bulldozed to be replaced by luxury apartments. As reported in The Illawarra Flame, the 42-room Boat Harbour Motel overlooking Belmore Basin will be the next to go. That’s around 100 affordable hotel rooms lost with nothing comparable coming on line to replace them.

It also means people visiting the city this summer are having to pay a premium for the limited accommodation still available, but in most cases rooms are booked out until the end of the month. That’s good news, of course, for Wollongong’s Airbnb properties, and even better news for other coastal communities who are happy to pick up the ‘escape spending’ from those seeking a beachy break this summer.

While the current accommodation crisis may be most obvious during the peak holiday season, there’s a hidden problem that is likely costing Wollongong millions each year in lost revenue.

In the past, Wollongong has been a popular location for small to medium sized events – sporting, business, cultural and community – but more and more organisers are being forced to look elsewhere, for venues with a better range of accomodation options.

Craig Keller, a committee member from a state-based car club, told The Illawarra Flame he had hoped to bring the club’s 2027 nationals to Wollongong in May next year. It was ruled out, however, based solely on the shortage of affordable accommodation for the 200 visitors he’d hoped to bring to town.

“It’s frustrating,” Craig said.

For the past 50 years the nationals have moved from state to state, hosted in regional centres like Dubbo, Cowra and Griffith in NSW, Devonport in Tasmania and Maryborough in Queensland. This year they’re headed to a rural town in WA.

With 2027 being NSW's turn to host, Craig said he was determined to bring the club’s premier event to his home town.

“We were asked to hunt around,” he said. After reviewing what’s currently on offer, and targeting accommodation that allowed most of his members to stay in the same place, he quickly realised Wollongong wasn‘t a realistic option.

“We like to keep our group together. It’s more social that way,” Craig said.

“There are only two places in Wollongong capable of fulfilling our needs, and they are the Sage Hotel and Novotel. But we aren’t willing to pay $1300 or more for the three nights to stay there. And then there’s the cost of parking on top of that.

“After reviewing all the options, the financial realisation was that we just can't do this. It’s very frustrating as we’ve lived in the Illawarra since 1973 and wanted to show the place off to our visitors.”

He said Wollongong wasn’t just missing out on valuable tourism dollars from hotel revenue. “We have social get-togethers and would have loved to book a big dinner at the Fraternity Club. We also love visiting the best local tourist attractions on our drives, like Minnamurra Falls.”

Craig’s concerns mirror those raised at the time Council was putting its Tourism Accommodation Strategy together more than 12 months ago.

At Council’s August 2024 meeting, the president of Business Illawarra’s Regional Advisory Council, Ryan Atchison, urged councillors to do more, and in a hurry, to attract additional hotels to the city.

“Wollongong is walking when it should be running in this space,” Ryan said. “We can’t compete with other cities.”

Ryan said Wollongong was lagging behind smaller cities like Wagga for the number of hotel rooms, while comparable-sized centres, such as the Central Coast and Geelong, have three times as many rooms available for tourists.

Ryan shares the views of Destination Wollongong CEO Jeremy Wilshire, who believes the city needs much more “tourism product” to bring them here in the first place and to keep them here longer once they arrive. “Wollongong needs to do more than selling ice-creams to day trippers,” Ryan said.

It’s well documented that while Wollongong did a great job hosting two major international events, cycling's UCI Road World Championships in 2022 and the Triathlon Worlds in 2025, the majority of competitors and their supporters had to bunk down beyond Wollongong’s borders.

The ‘escape spending‘ from those two events alone – which were a significant burden on our city’s limited budget – would be enough to bring our civic, tourism and business leaders to tears, while neighbouring LGAs reaped the majority financial benefits.

The one bright spot on the horizon is the plan, currently out for public comment, for hundreds of new hotel and motel rooms in the heart of the CBD. The Globe Hotel, still several years away, will occupy the site of the former David Jones building on the Crown Street Mall and the City Diggers Club on Burelli Street.

Once completed, the 35m, 45m and 80m towers will provide a 172-room motel and 262-room hotel and 13,000 square metres of commercial office space.

If approved, this project will be a welcome addition to the city’s tourism accommodation mix, but it probably isn’t the ‘affordable’ answer Craig Keller’s car club is looking for.

Lord Mayor Tania Brown will also be sweating on the city bringing on line a range of new hotel options, and quickly. She is spearheading a regional push to bring the state’s new cruise ship terminal to Port Kembla Harbour, and knows the huge benefits that would come to Wollongong if its bid is successful. The Lord Mayor is also aware we're facing stiff competition from Newcastle, and with cruisers wanting to stay one or two nights close to their cruise departure or arrival point there’s a growing urgency to get more hotels off the ground.

As things stand, there's a worrying trend, with developers opting not to build hotels – despite approvals for eight in recent years with more than 700 rooms. Instead, they’re taking the immediate financial rewards on offer by converting those approvals to apartments (also desperately in need) and getting millions in the bank upfront by selling off the plan.

That’s prompted Council to incentivise hoteliers and developers to invest in Wollongong in the hope it will reap some early rewards. If successful, it will add considerable weight to the ambitious Port Kembla cruise terminal bid and it just might mean the next time Craig Keller’s car club is looking for the perfect venue for its nationals in NSW, Wollongong roars to the top of the list.