High room rates cushion the blow while hotels wait for return of international travel


Hotels in Sydney and Melbourne still have a long way to go before returning to pre-pandemic levels of occupancy with the return of international travel the key to climbing back above 80 per cent.

While 2022 saw a surge in domestic travel as borders reopened, hotels in the two biggest capitals still only recorded average occupancy rates below 65 per cent for 2022, according to the latest data by STR.

Leanne Harwood, managing director of IHG Hotels & Resorts in Japan, Australasia and the Pacific, said the return of 2019 occupancy levels was unlikely until international travel had fully recovered.

“The accommodation industry had a stellar year in 2022 in many respects, particularly in regional leisure destinations where we’ve seen the majority outperform 2019 levels, and we expect that largely to continue throughout 2023,” she told the Australian Financial Review.

“The big cities are a different story, and occupancy levels are still well behind 2019, predominantly due to lower business and MICE travel.

“While we expect some recovery throughout 2023, with international airlift still down by as much as a third, occupancies are unlikely return to 2019 levels until we see the full recovery of international travel, especially from key markets like China.”

While occupancy levels were still down on 2019 levels in Sydney and Melbourne, average daily rates were higher than before the pandemic boosting revenue per available room (revPAR).  Sydney hotels averaged $250 a night and Melbourne $216. This was repeated across all the capital cities with Brisbane, Perth and Adelaide all recording revPAR above 2019 figures.

Sean Hunt, Marriott International’s local boss, said they were tipping revPAR to be up 20 per cent on 2022 figures supported by “a really good calendar of events coming up”.

“It’s still a domestic led recovery, but we are also seeing big returns of international travellers especially to Melbourne for the tennis – our US visitor business is up 65 per cent year-on-year – and we’ve also had a pretty good start in Sydney with the cruise ship market returning,” Hunt told the Australian Financial Review.