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The hotel industry rebounds as tourism nears pre-COVID levels

The hotel sector is showing signs of a return to pre-Covid occupancy levels, while room rates are also forging ahead.

Ray White Commercial, Head of research, Vanessa Rader said the tourism market has picked up after government-imposed lockdowns ended, despite the high inflationary environment and increases in interest rates dampening some domestic demand.

“For hotel occupancy, the uplift has been outstanding over the past year,” Ms Rader said.

“Despite many households tightening their belts given inflation pressures and rising interest rates, holidaying has remained a high priority for many Australians. 

“Similarly, work-related travel has come back online after Zoom fatigue set in, virtual conferences started to wrap up seeing corporate travel rebound.”

Ms Rader said hotel occupancy has been up across most markets, albeit not back to pre-pandemic rates. 

“Busy tourism locations such as Hobart and Darwin have shown some slowing after a busy 2022 period which saw travellers opt to explore domestically with rules and uncertainties around international travel continuing,” she said.

“The Gold Coast, however, has remained steady as an attractive visitor location over the last couple of years.

“Perth and Sydney tourism regions have seen strong improvement to average annual occupancy at 74.9 per cent and 74.5 per cent respectively for March 2023.”

She said Perth was one of the markets achieving occupancy back to pre-pandemic results, averaging 72 per cent in March 2019, while Sydney still has some way to go to achieve the 85.5 per cent average achieved in the same period. 

“Melbourne is in a similar situation with 2019 results of 85.5 per cnet well ahead of current averages of 68.4 per cent,” she said.

According to Ms Rader, although occupancy may not have fully recovered, ADR has continued to grow across all regions setting new benchmarks in rates. 

“A combination of difficulty in staffing causing wage pressure and inflationary increases on goods has been the catalyst for this growth,” she said.

“The Gold Coast is currently home to the most expensive accommodation at $282.18 per night, up 7.24 per cent in the last year, but more than 40 per cent up on the annual average rate in May 2019. 

“Markets such as Sydney and Melbourne have increased in the last year to $265.79 and $226.97 per night respectively, however, since 2019 growth has been sub 20 per cent, highlighting increased demand in tourism nodes such as Gold Coast and Hobart over business travel hotspots.”

Ms Rader said business travel and international visitors have also had a positive impact on the broader tourism market, which has been aiding the hotel sector.

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.