Melbourne Hotel Occupancy Slumps 62pc


Melbourne hotel owners and operators have seen occupancy rates and average daily room rates tumble across the city in the wake of the spread of the coronavirus.

According to hotel research firm STR, revenues per available room (revPAR), the key industry metric of occupancy rate multiplied by average daily rate, slumped to an average of $33.16 a night across April.

The figure marks a 62 per cent slide from $177.74 a night recorded last November, intensified by a surge in booking cancellations following bans on travel and large gatherings. The occupancy level was also down from 47.8 per cent in March.

The downturn gained momentum over April nationally with hotel lobbyists Tourism Accommodation Australia estimating 300 hotels closed their doors and 240,000 hotel rooms remaining empty.

Despite this, Melbourne’s occupancy was the second highest across Australia’s state and territory capitals, just behind Perth, which was the only capital to record greater than 30 per cent occupancy in April.

Melbourne's performance relative to other cities nationally was put down to its innovative response and use of hotels to quarantine residents returning from offshore.

Last month, the Victorian government announced the Hotels for Heroes program where both clinical and non-medical staff working in healthcare facilities could isolate.

In a bid to remain open many operators have now reduced operational basis, to provide accommodation for government business or at-risk guests.

Looking ahead, the added issue of supply could also tilt the sector with Melbourne set to see the largest increase in room capacity a wave of new development continues to escalate ahead of an expected peak next year.

A total of 25 hotels supplying up to 8,100 hotel rooms are due to be added to Melbourne’s CBD, Southbank and Docklands areas over the next four years.

According to a recent Colliers Australian Hotel investor survey. investor sentiment for trading in the fourth quarter was still negative at -27.2 per cent.

JLL hotels and hospitality managing director Nihat Can Ercan said there was now a longer term outlook for the hard-hit sector and expects the crisis will open up “priced-to-market” opportunities.

“Looking at the investor angle provides hope for the industry and a recovery,” Ercan said.

“Our expectation, once the recovery gains momentum, is that a rebound will take place within six to 12 months.”

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