WA's once-overheated hotel market has recorded a decline in occupancy rates for the first time in four years, with the State now falling behind NSW, Victoria and Tasmania, according to latest figures.
Australian Bureau of Statistics data revealed WA hotel occupancy fell to 66.8 per cent in the three months to March, down from 70.2 per cent over the same period last year.
Six of the eight States and Territories recorded a downturn in room occupancy rates, but WA's decline was four times the national average.
The State also recorded the biggest decrease in total accommodation takings - down $7.6 million compared with March last year.
Tourism Council of WA chief executive Evan Hall said business travel, both international and domestic, had dropped off over the quarter as the resources sector slowed.
"Up until now, WA tourism has been able to rely on corporate visitors to fill beds," he said.
"But as the mining boom slows down, business travellers will start to disappear very quickly and this will leave us extremely exposed."
Mr Hall said while the Perth CBD, which has one of the highest occupancy rates in Australia and the world, would not be significantly affected by this downturn, regional centres and mining hubs would suffer.
Figures show Port Hedland's room occupancy dropped to 64.4 per cent in the March quarter, down from 76 per cent last year.
In Karratha, where Hilton Worldwide plan to build a $65 million hotel, occupancy rates also fell, from 78.8 per cent to 59.6 per cent.
Mr Hall called on the State Government to invest in leisure tourism to counteract the downward trend or risk further decline.
He said the Barnett Government's decision to freeze $1 million of tourism advertising last month could not have come at a worse time.
"We need to be investing more to attract leisure visitors to replace the drop-off in business visitors - not cutting funds," Mr Hall said. The Government says the freeze is only on international advertising.