Coronavirus has seen hotel occupancy rates plummet, and the solution may be close to home
The Hyatt Regency in Sydney is Australia’s biggest hotel, but you wouldn’t know it from the vacant foyer.
With travel bans causing business travel to plummet, most of its 892 rooms, as well as its large function rooms, have remained dormant since March.
“We had some events that were ready to happen in March and April, so yes we saw immediate impact when those borders closed,” says the hotel’s general manager, Jane Lyons.
Although the pandemic has transformed the way many people work, Lyons is optimistic that corporate travellers will return when they can.
“I don’t think you can replace that emotional connection of getting together and we’re definitely getting that feedback from our corporate clients.”
Luring a new kind of guest
In the meantime, the hotel has had to innovate and target a new market.
“It’s all about staycation,” Lyons says. “We’re used to going abroad and spending our holidays overseas, but I think we sometimes need to be reminded of how much Sydney has to offer.
“We’ve been targeting families, the bed and breakfast packages that traditionally hotels might have steered away from.”
The Hyatt is not the only capital city hotel that is much quieter than usual.
Hotel occupancy data supplied to the ABC by industry analytics company STR shows that outside of Victoria, where accommodation remains heavily restricted, Sydney hotels are at the bottom of the pack.
At the start of September, hotel bookings in Sydney were down 64 per cent on the same time last year.
A two-speed recovery
Matthew Burke, STR’s Australian manager, said when the pandemic first hit, the hotel industry saw occupancy rates decline by as much as 90 per cent.
“The capital cities and Sydney in particular, like other global gateway cities, have struggled,” he says.
While leisure travel has resumed within the borders of most states, the decimation of business travel has upended usual accommodation patterns.
“Prior to COVID-19, capital cities were much busier than their regional peers,” Burke says. “The opposite is being seen now.”
And some regions are doing better than others.
Regional WA and Queensland see strongest demand
Southern and south-west Western Australia — including the Margaret River wine region and Albany on the south coast — have seen the biggest rebound so far.
In fact, hotels in the region are nearly 37 per cent busier on average than they were in 2019.
“You are seeing people want to get out and explore, and particularly as the weather starts to warm up [and] as people get confidence you will see an uplift, firstly to the regions,” Burke says.
Western Australia and Queensland, both states that have held a tough border stance through the pandemic, dominate the top regions.
Albany hotel director Martin North says he was initially nervous about the Western Australian government’s hard border restrictions.
But he said when internal travel bans within the state lifted, business took off.
“Our July this year was certainly busier than the previous January … we weren’t expecting it, we’re a very seasonal town,” he said.
“Normally July is one of our quieter months.”
Like hotels in Sydney, Mr North’s clientele has also changed.
“We’re finding that the leisure market that is coming to the region at the moment are more families and more younger people.
“September is wildflower season in this part of the world, we’re normally very, very busy with interstate and international tourists.
“Obviously we’ve got none of those at the moment, but the local market has certainly supported the region and we’re finding that we’re tracking almost where we were last year.”
The Bundaberg, Capricorn, Fraser Coast and Gladstone regions in Queensland have all reported more hotel bookings than normal, as have the Goldfields-Esperance and Kimberley and Pilbara regions of Western Australia.
The pattern of increased travel to regional areas can also be seen in Australia’s flight traffic.
The air corridor between Sydney and Melbourne is usually the busiest domestic route in the country, but now less than 7 per cent of the usual number of planes are traversing the cities.
In the first four weeks of August, the busiest route in the country was between Brisbane and Cairns.
But one group of travellers is yet to return
Hotels catering largely to corporate travellers might struggle for a while yet.
“Come the end of November, largely corporate travel starts to subside, so it may be into 2021 when we have the borders open that you’ll start to see the impact of corporate travellers starting to come back,” Burke says.
Australia’s domestic borders will likely reopen well before international ports are again allowing entry to visitors.
That could cause problems for the upper end of the hotel market, targeting a market that no longer exists.
“Australia is building and opening a lot of new hotels which were geared to attracting that [international] market,” he said.
“There have been a number of new hotels that have opened over the past two years and the peak of that construction boom happens this year and next year. There are a lot of luxury international [hotels] opening up in Sydney and Melbourne in particular.”