Australian hotel bookings increase as supply headwinds loom - Colliers International
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Australian hotel bookings increase as supply headwinds loom - Colliers International
A new report from Colliers has found Australia’s hotel booking volumes increased throughout October, with further growth predicted as the country heads into the peak summer season, offsetting a slew of new rooms which are now anticipated to open over the next six months.
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Colliers InternationalColliers International has released new research showing an increase in the number of Australian travel bookings in October.
The volume of hotel bookings in Australia increased through October to surpass the global average, new research has found.
Colliers International’s Australian Hotel Markets Performance Dashboard indicated hotel bookings in Australia were at 60.3 per cent of the level recorded in 2019, up from 57.7 per cent at the end of September and just slightly below the June 2020 peak.
According to Colliers, this has led to the level of bookings in mid-November being on par with what as seen in mid-March – just before mandatory quarantining for returning overseas travellers was imposed.
But Colliers International National Hotels Director Karen Wales said the booking window remained very short, with most bookings made within two weeks of the stay, excluding the Christmas and New Year period, which had a clear spike in bookings due to many Australians mandated to take annual leave and a pent-up demand to travel.
“We expect this to continue to increase once Victorians can cross state borders and when Sydneysiders are permitted to travel to Queensland without quarantining,” she said.
“Hobart has recorded a significant spike in bookings since reopening this month with bookings currently at 86 per cent of the levels in 2019. This indicates a strong peak season.”
Although the unfettered expansion of Australia’s accommodation market looked set to continue for some years to come, COVID-19 has brought an abrupt halt to the expansionary phase of the hotel market cycle.
Colliers International Head of Hotels, Gus Moors, said interruptions to global supply chains, lockdowns, closed international and state borders, the introduction of social distancing on construction sites and capital inertia had all impacted the delivery of new accommodation rooms.
“Some owners have made the difficult decision to close hotels or delay opening when staring down the barrel of low room night demand," he said
“Combined, these factors have caused a fundamental shift in Australia’s accommodation supply base and pose fundamental challenges to hotel market forecasting and budgeting.”
Whilst hotel openings have been pushed back through 2020, the Colliers Australian Accommodation Supply Update report has identified that 5,004 rooms are now scheduled to open during Q4 2020 (2,540 rooms) and Q1 2021 (2,464 rooms), placing additional downward pressure on city hotel markets.
Ms Wales said although Adelaide, the Gold Coast and Sydney would each see a quantum of new rooms, Melbourne topped the list with 2,011 new rooms due to open in the CBD and a further 712 rooms across the wider metropolitan over the next six months.
“New openings are expected to moderate through the mid-part of 2021 before spiking up again at the end of the year, particularly in Sydney and Melbourne," she said.
“Offsetting this has been a significant reduction in Short Term Rental Accommodation (STRA). Sydney and Melbourne account for the lion’s share of reduced listings with 6,827 and 5,484 fewer active listings respectively in the CBD than when compared to the start of the year.
“Much of this STRA stock has moved to the long stay rental market which can offer a greater certainty of income whilst representing a discount to pre-COVID nightly STRA room rates."
Mr Moors said 2021 now presented as the "peak of the supply cycle" with considerably fewer rooms under construction and scheduled to open in 2022 and 2023.
“Whilst some city hotel markets will be challenged by new supply opening over the next few years, it will provide the culmination of the rejuvenation of the sector after decades of under-investment," he said.
“New openings will likely be offset by further closures, particularly older stock, which is no longer considered fit for purpose in a post-COVID world or those hotels whose business plans have fundamentally changed.”
Click here to download a copy of the report.
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