Sydney hotels showed the most improvement across the pandemic-battered capital city markets in the first quarter of this year as occupancy rates reached almost 50 per cent in March, according to the latest figures from analysts STR.
Buoyed by fewer lockdowns, the return of some events and green shoots of recovery in corporate travel, all the major capital cities recorded higher occupancy rates in March, led by Adelaide at 70 per cent and Perth at 60 per cent, up from 59.2 per cent and 57.6 per cent respectively in January.
Sydney, which like Melbourne has suffered from a lack of international travel, was the most improved market over the first three months of the year, as occupancy rates increased from just 30 per cent in January to 49.4 per cent in March.
Melbourne hotels, which were hit hardest by the long second Victorian lockdown last year, also recovered, hitting occupancy rates of 44.4 per cent in March compared with 38.3 per cent in January.
Apart from the Victorian capital, all other capital cities had higher occupancy rates in March than a year ago when the pandemic first hit Australian shores. However, average daily rates in Sydney and Melbourne remain well below what they were a year ago.
Matthew Burke, regional manager for the Pacific at STR, said the March occupancy figures reflected the growing confidence in the sector.
Among the factors driving demand, Mr Burke said, were open borders across the country and the reduced impact from local lockdowns.
“The Brisbane [three-day] lockdown [from March 29] has had the smallest impact of all past lockdowns,” he said.
Return of leisure travel
Other positive factors included workers returning to the office, which was driving small levels of business travel returning and a positive pick-up in weekend demand.
“For example, in Sydney, Saturday nights are now above 70 per cent, [something] not seen since prior to COVID-19,” Mr Burke said.
Simon McGrath, CEO of AccorPacific, the country’s biggest hotel operator, said revenues were steadily rising.
“It’s been a good year so far. Compared with the rest of the world we are doing very well,” Mr McGrath said.
“The first phase of the recovery late last year was the leisure sector returning to near 2019 levels. Then from March this year onwards there has been a recovery in the CBD. However, it is still well short of the strength of the leisure sector due to the lack of corporate travel, conventions and events.
“The focus of the government should be to stimulate the Australian city landscape, which is where 60 per cent of all hotel stock is,” he said.
Sean Hunt, Marriott area vice-president for Australia, New Zealand and the Pacific, said occupancy across its hotels was above 50 per cent in April.
“In the second quarter of this year, all our hotels will exceed 60 per cent occupancy.
“Leisure travel is still driving the recovery, but there are green shoots of recovery in corporate travel, which is increasing week on week led by consultancy companies.”
Capital Alliance boss Mohan Du said occupancy at the group’s Peppers Docklands hotel near Etihad Stadium had exceeded expectations since reopening two months ago.
“We were expecting and would have been happy with mid-week occupancy of 40-45 per cent, but it’s closer to 70 per cent. During weekends, we are near full,” Mr Du said.
Mr Du who will next month open a new Marriott Hotel Docklands said the withdrawal of some hotels from the market for quarantine stays had reduced the number of hotel rooms available and assisted hotels that had not participated in the program.
“Those hotels that were in the quarantine program and are now out of it will have reputation problems.
“The number one inquiry we get at Peppers Docklands is: ‘Has this ever been a quarantine hotel?'”
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