Hotel sector facing two year recovery to pre-Covid 19 levels

The tourism sector will not recover to pre-Covid-19 levels until 2022 at the earliest, according to a new report by the Accommodation Association (AA).

A partnership between the AA, AHS Advisory and Horwath HTL, the ‘Australian Hotel Industry Sentiment Survey, Impact of COVID19’ canvassed 90 members which correlated to around 15,160 rooms across various market sectors in Australia.

The majority of respondents had a “bleak” outlook for the rest of 2020, with some hope of improvement in the final quarter if state and territory governments act quickly to remove border restrictions.

Demand for domestic travel across the corporate, leisure and business events sectors are expected to be the fastest to recover.

Hoteliers operating in the Luxury and Upper Upscale category are expecting the biggest hit to Average Daily Rate (ADR) over the calendar year, compared to Upscale and Upper Midscale properties.

The majority of hoteliers believe the impact of Covid-19 will impact ADR between zero and 25 per cent, while revenue and occupancy for at least the first half of 2020 are expected to sustain bigger hits of 81 per cent and above. Occupancy is expected to fall by more than half until at least the end of the year, according to survey.

Despite the tough operating conditions, 82 per cent of hotels still operating are planning to remain open, while those hotels currently closed are looking to reopen in the third quarter of 2020 with only seven seeing the last quarter of 2020 or the beginning of 2021 as the best time to resume trading.

Almost every hotel (99 per cent) had implemented some form of cost control measures to help bolster their cash flow.

While hoteliers are looking at 2021 before international borders reopen, hopes were high that New Zealand would become a key player in helping the industry recover if travel restrictions between the two countries resumed sooner than other parts of the world.

“If the tourism economy is to emerge from this global pandemic as a strong contributor to the economy, we need to map the road to recovery with Federal and State governments to ensure measures are in place to stimulate confidence and drive demand in the domestic economy, followed by targeted activation of key international markets,” said Accommodation Association CEO Dean Long.

AHS Advisory managing director Ron de Wit said hotel owners and operators “are currently looking at an empty horizon”.

“While nobody knows the answer to this, we believe that the collective thoughts of the industry can provide some guidance over the coming weeks and months as we all seek to understand the scale of the situation,” he said.