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Hamstrung Hotel Sector Pins Hopes on JobKeeper

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The boss of the nation's largest hotel lobby group has called for critical economic support and for the job keeper to be extended beyond September for workers in the hard-hit tourism sector.

The Australian Hotels Association (AHA), along with Tourism Accommodation Australia (TAA) have released a draft report: Economic Impacts of Stimulus for the Accommodation and Food Services Sector, outlining the impacts of varying economic scenarios on the stricken sector.

The research, published by consulting giant EY, was submitted to the federal government earlier this month ahead of treasurer Josh Frydenberg's update on the economic and fiscal outlook on Thursday.

Major hotel operators, currently facing a slow recovery rather than a V-shaped rebound, have wrestled with occupancy rates between 10 and 20 per cent at the height of the pandemic which has crippled cash flows and earnings.

Hotel occupancy rates were predicted by analysts to reach only 20 per cent by August, with hopes they would climb to 50 per cent by March of 2021.

The report underscored that current estimates suggest the national average fall in revenue currently sits at 23 per cent while occupancy rates are at 34 per cent.

EY said the next few months remained that forward-looking data showed occupancy rates below 50 per cent of capacity based on current bookings over the 90-day period from 15 June to 12 September.

Treasury estimated over the June quarter close to 440,000 jobs were lost in the sector as a result of the government's coronavirus restrictions.
▲ Treasury estimated over the June quarter close to 400,000 jobs were lost in the sector as a result of the government's coronavirus restrictions.


The report highlighted that due to lockdown measures 84 per cent of businesses reported decreased revenue, with 53 per cent reporting revenue decreases of 50 per cent or greater—the highest proportion of any industry to report revenue decreases.

It also found that 15 per cent of hoteliers were in extreme uncertainty with current cash at hand able to support operations for less than a month.

According to the Accommodation Association of Australia, there are approximately 86,000 direct employees in the hotel sector alone and 900,000 in broader tourism jobs.

High-profile hotel and tourism industry leaders have stepped up lobbying of the federal government to extend job keeper payments to what was once the nation's second-biggest export industry behind mining.

AHA chief executive Stephen Ferguson said the report was critical to building the evidence base for continued economic support.

“The draft report shows that depending upon final Government policy settings, three of the four Job Keeper scenarios examined indicate economic returns range from 1.42 to 3.38 times the initial cost to Government,” Ferguson said.

▲ Over the past month, more than 72,000 people have arrived in Australia and been required to undertake 14 days of mandatory quarantining in hotels—an average of 2,400 a day.
▲ Over the past month, more than 72,000 people have arrived in Australia and been required to undertake 14 days of mandatory quarantining in hotels—an average of 2,400 a day.


“EY found that accommodation, meal and beverage entertainment only forms a relatively small portion of the total fringe benefits tax collected by the government.

“But, suspending Fringe Benefits Tax for our sector would produce economic returns ranging from 3.25 to 3.81 times the direct cost to government.”

Apart from preventing even more economic pain, job keeper has allowed businesses to reopen relatively quickly and with a smaller cost base.

Hotels during the crisis have found some respite, repurposing for Australians returning from overseas forced into mandatory two-week quarantine as well as rough sleepers and front-line health workers.

State governments had negotiated commercial rates differently with hoteliers, with many signing onto three month contracts.

Last week, prime minister Scott Morrison announced a review of hotel quarantines across Australia while also taking the decision to cull the already tightly controlled number of arrivals in the country by half.

All arrivals into Australia since the borders closed in March have been quarantined in their port of arrival at a hotel with most state governments covering the costs of those stays.

Morrison has now called for "national uniformity" in regards to the prices charged to people who undergo quarantine in hotels as well as training standards for security staff and clinical control workers.

Solo traveling Australian citizens and residents returning to most states will now have to foot a $3,000 hotel quarantine bill.

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Article originally posted at: https://theurbandeveloper.com/articles/hotel-stimulus-economy-jobkeeper