Hotels face long road to recovery

A new report on how the Covid-19 restrictions will impact hotels across Australian has forecast a gloomy outlook for hoteliers with losses of up to 30 per cent until 2022.

Hotel consultancy firm Dransfield has forecast that hotel rates could be slashed by up to 50 per cent while travel bans remain in place, with room rates as low as $80 per night in Sydney and $50 in Melbourne.

“There will be material downward pressure on rates as long as demand is impacted and competition for guests is high,” the report said. “This is likely to sustain over the medium term in many cities.

“We anticipate FY2021 rates will remain challenged through the first 3 quarters, before discounts begin somewhat unwinding as we move through the calendar year and the months already impacted in FY2020 are the new baseline. Rates will be adversely impacted by the reopening of closed hotels, from a cold start, in low occupancy markets.”

Dransfield stated that more than 400 hotels temporarily closed amid the lockdown, with some never reopening due to a slow recovery period.

“The recovery will be gradual and in stages as travel restrictions and social distancing measures are lifted,” the report said.

“There remains uncertainty about when these will start within a probable three to nine-month window, and how long it will be before we are largely unrestricted, with international markets taking much longer than domestic.”

The pipeline of new hotel rooms will also be affected, with 25 per cent of supply under construction delayed by 12 months and in some cases stop altogether, according to the report.

“Constructions will delay or fail, proposals and future projects won’t eventuate at the same speed or volume,” the report said.