'Revenge spending' to assist with Australian hotel recovery - Colliers International
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'Revenge spending' to assist with Australian hotel recovery - Colliers International
Colliers International's Karen Wales, Gus Moors and Nigel Greenaway have outlined the areas hotel operators need to focus on as they welcome back guests following the easing of travel restrictions.
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Colliers InternationalColliers International has analysed new STR figures in relation to Australia's hotel sector/.
Greater cost assessment and increased communication between owners and operators are key to the recovery of Australian hotels from COVID-19, according to experts.
A new analysis of STR Global Figures from Colliers International found the pace of change for the Australian hotel and tourism sector as a result of the pandemic was unlike anything that had been seen before, resulting in a sharp decline in trading during the first four months of 2020.
The data found that performance declines in Australia have been largely due to the contraction in demand with occupancy declines in April, ranging between -14.6 per cent in Perth to -39.5 per cent on the Gold Coast, when comparing the month-on-month 3M rolling average.
At a glance:
- New global data from STR has found that performance declines in Australia have been largely due to the contraction in demand with occupancy declines in April, ranging between -14.6 per cent in Perth to -39.5 per cent on the Gold Coast, when comparing the month-on-month 3M rolling average.
- Colliers International believes hotel owners and operators should have already stepped through every market segment and contacted every account within each segment to determine what, if any, room night demand exists.
- The firm also believes Australia’s tourism industry has the potential to rebound strongly from COVID-19, due to ‘revenge spending’.
Markets such as Sydney and Melbourne have been more significantly impacted however by a fall in Room Rates with replacement quarantine business charged at a significantly discounted room rate when compared to the first quarter average.
But Colliers maintains there are several steps that hotel owners and operators should have already implemented in regards to the demand shock.
Colliers Hotels National Director Nigel Greenaway told WILLIAMS MEDIA COVID-19 had introduced a new era of owner oversight of hotel cost structures.
"Having worked with operators to mine for expense relief to soften the blow on bottom-line losses, will see a future for the hotel sector that is much more consultative between owners and operators and focused on the cost base of hotels," he said.
"The conclusion we have drawn is that the fixed labour cost required to remain open is not that different to the skeletal staffing needed even when the hotel is closed.
Colliers Hotels National Director Nigel Greenaway. Source: Colliers International
"It is also important to retain the key management team that will enable you to ramp back up once the lockdown lifts.
“Once completed, this combination of realistic revenue forecasting coupled with the granular expense review would have allowed you to understand your future cashflow outlook and you should, therefore, be able to understand if further equity injection is required and when.”
Head of Hotels at Colliers International, Gus Moors, said hotel owners and operators should have already stepped through every market segment and contacted every account within each segment to determine what, if any, room night demand exists.
"If those accounts have indicated ongoing demand, you should have determined their stay patterns as well as their food and beverage requirements whilst at the hotel," he said.
"Owners and operators should also have explored new revenue opportunities, particularly from government channels.
“Having honestly assessed the likely income expected over the past two months and the coming three months, the next step you should have undertaken is to restructure the cost base to match that revenue outlook."
Head of Hotels at Colliers International, Gus Moors. Source: Colliers International
Despite the recent downturn, Colliers insists the industry is already beginning to show green shoots of recovery.
The firm's analysis of Site Minder booking data for May showed volume of hotel bookings in Australia had risen throughout the month to be at one third of the level recorded in 2019 as at Saturday 23rd May.
Karen Wales, Director, Hotels at Colliers International believes that Australia’s tourism industry has the potential to rebound strongly from COVID-19, due to ‘revenge spending’.
“Revenge spending is a term which was coined to describe pent-up Chinese consumer demand in the 1980s that was unleashed after the chaos and poverty of the Cultural Revolution.
“The anticipation of revenge travel over the next 6 months to the end of the year prior to the opening up of international borders.
Colliers International Hotel Director Karen Wales. Source: Colliers International
“Fast-forward to today’s unique situation and every Australian who’s been stuck in isolation has probably quaran-dreamed about the places they’ll go, when we can finally leave our houses.
“With many investors expecting the domestic leisure segment to lead the recovery, hoteliers are hoping for a swift turnaround when we finally elbow bump goodbye to the coronavirus.”
“NSW and Victoria expected to lead the recovery given border restrictions in other states and being the largest intrastate holiday markets, representing nearly 60% of Australian hotel stays in 2019.”
Click here for more information on Colliers International's Charting the Course series.
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