Hotel Sector Braces for Weakest Quarter

Brisbane and Canberra’s hotel markets are tipped to lead the ailing sector’s recovery, according to a hotel sentiment analysis.

Colliers Australian Hotel investor survey found investors expected the two cities, Brisbane and Canberra to lead the sector’s recovery, bolstered by growth in domestic leisure travel.

As the global hotel and tourism sectors have been heavily disrupted from Covid-19-related measures, Colliers head of hotels Gus Moors said investors expect the third quarter of 2020 to be the weakest quarter for Australian hotels.

“With sentiment for negative trading averaging -79.4 per cent,” he said.

Moors added that investor sentiment for trading in the fourth quarter was still negative at -27.2 per cent.

“Which highlights the slow road to recovery which owners, operators, financiers and governments must navigate.”

The report, which surveyed bank and institutional investors, property developers, hotel operators, investment and sovereign wealth funds, found that the majority of investors expect the recovery to take between 18 months and two years before Australia’s hotel investment market reaches stabilisation.

More than half of the survey’s respondents expect to see city hotel capital values fall by between 10 per cent and 30 per cent by the end of 2020. While more than one third of investors expect to see city hotel capital values decline by up to 10 per cent by the end of this year.

Hotels director Karen Wales said all markets except for Cairns and Darwin are expected to see positive trading in the first half of 2021.

The report shows strongest expectations for Canberra at 57.1 per cent, Brisbane 27.6 per cent and Gold Coast at 27.3 per cent.

“These markets all have a high domestic visitor component which should stand them in good stead as the recovery gains pace.”

Australian hotel investors cited the lack of room night demand as the biggest challenge facing the industry in this time.

Since travel quarantines were introduced in late March, up to 13,000 people have self-isolated in hotels across New South Wales. This number includes 1059 families with children housed in serviced apartments.

Tourism Accommodation Australia chief executive Michael Johnson said 3,637 people are still in hotel quarantine accommodation across the state, as of Friday.

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