Sydney hotel room revenues slump as coronavirus and bushfires crimp demand

The double whammy of the catastrophic bushfires and coronavirus have hit the hotel sector, with Sydney hotel room revenues almost 7 per cent down in January compared with a year ago.

A small increase in room supply (1.7 per cent) last month coincided with a 3.2 per cent fall in demand, with hotel occupancy rates falling to 75 per cent in Sydney, according to preliminary figures from hotel market data firm STR.

The result was a 4.9 percentage points drop in occupancy rates to 75.7 per cent while the average daily rate fell 2.1 per cent to $206, leading to a 6.8 per cent drop in revenue per available room (revPAR) to $156.

January marked the 25th consecutive month of occupancy declines in the Sydney market, due mainly to increased supply, according to STR analysts.

The NSW bushfires and the outbreak of the coronavirus acted as a brake on demand growth.

The period of weak demand is set to continue with the ongoing travel ban on people from mainland China likely to be extended, the analysts said.

The picture is worse for hotels outside Sydney, with hotels within a two-hour drive south of Greater Sydney seeing room revenue drop more than 30 per cent to just $102 a night, according to STR’s December figures.