Hotel room rates in Australia could soon rise as the market struggles to keep up with demand, according to a report in The Sydney Morning Herald today.

Quoting figures released by the Australian Bureau of Statistics, the paper says both occupancy rates and the cost of a hotel have both risen in 2007, with Sydney, Melbourne and Perth having the most difficulties raising supply.

Hoteliers say the industry is currently struggling to meet skills shortages and retain existing staff, as well as meet increasing cost pressures.

By Penny Jones