As the hotel industry continues its recovery path out the biggest disruptor in history, the general sentiment amongst hotel operators is optimism for 2023. While opportunity abounds, challenges remain and there is a clear focus on labour shortages, technology adaptation, ESG and more.

These are the findings of JLL Hotels & Hospitality’s inaugural Australian Operator Sentiment Survey in October 2022 where 30 key international and domestic hotel operators within Australia were invited to share their insights on the sentiment and trends shaping the hotel landscape.

“In what is great news for the sector, operators are reporting that, owing to strong ADR performances and improved operating efficiencies, most markets have already seen year-to-date Gross Operating Profit levels back to full-year 2019 results. The only exceptions are Sydney, Melbourne and Perth which are lagging slightly behind and will likely return to full-year GOP levels over 2023,” said Kyle Wheatley, Senior Analyst – Research.

Ross Beardsell, Executive Vice President – Asset Management, said, “Not surprisingly, over 80% of respondents indicated that labour and staffing shortages remain the critical challenge facing the industry, and most likely to hamper GOP performance in 2023. Currently the highest job vacancies include F&B staff, housekeepers and managers. However, it is expected that the return of inbound migration and steady recovery of overseas students and migrants should see these vacancies begin to be filled over the short term."

Other key themes identified in survey include:

• In line with trends experienced in the UK/Europe and Americas, operators have increased focus on sustainability, with 79% of respondents contemplating implementing new ESG initiatives. ESG is now a number one priority in hotel operations across the country. Operators are seemingly on the front foot when it comes to ESG and implementing action plans, with only 16% of respondents having not mandated any ESG initiatives in their corporate accounts.
• 68% of respondents are looking to improve guest experience and efficiencies with the use of new or innovative technologies. Hotel technologies continue to accelerate post-COVID, with major new functions set to be introduced by operators including; new initiatives to promote direct bookings through proprietary channels (35%), contactless F&B ordering and payments (23%), energy management and real time building level energy monitoring (22%) and keyless digital check-in and mobile entry (17%).
• 68% are considering the opportunity for possible refurbishment and/or repositioning upgrades. As the unprecedented supply cycle nears its end, it is anticipated there will be a shift away from new development and a renewed focus towards refurbishment and repositioning of existing assets. This is being mirrored by investors who are seeking strong upside potential, through refurbishment, rebranding or value-add opportunities, as well as the conversion or complete redevelopment of older assets.
• The return of workers and reactivation of CBD offices remain critical to the steady recovery of the corporate segment of the hotel market and is key to the sustained performance and growth of city hotels moving forward. Despite the rise in flexible working and the somewhat staggered return to the office, corporate travel and in-person conferences are showing positive signs of recovery to close out the year and this momentum is anticipated to continue into 2023. This sentiment is being mirrored by most operators, with close to 80% of operators are expecting residential conferencing to recover to 2019 levels over the course of 2023.
• Despite increased air travel facilitating the return of overseas holiday making, together with some concerns over consumer confidence levels, operators are of the view that this will not negatively impact regional markets over 2023. Over 70% of respondents anticipate RevPAR in regional markets to either remain the same or continue to increase over the coming year.
• Lease structures continue to remain relatively unpopular amongst key operators in Australia. This has always been the case in the hotel industry, with HMA’s and franchise agreements being the dominant operating arrangement for most owners and operators. Prior to COVID, only a quarter of operators have or had considered lease operating structures, and of those that had, 40% expect they would no longer consider lease structure moving forward.

For further information or to obtain a copy of JLL Hotels & Hospitality’s Hotel Operator Sentiment Survey 2022, please contact Ross or Kyle below.