Impact of COVID-19 on Australia’s Hotel Sector (How Hoteliers Can Respond)

Impact of COVID-19 on Australia’s Hotel Sector (How Hoteliers Can Respond)

COVID-19 not only affected our health and well-being but also businesses, especially the hotel sector. Due to border closures, movement and gathering restrictions within every one of the Australian States, have had an important impact on tourism, and as a result, the practicability of hotels of Australia. 

In this article, we’ll be discussing the effects of COVID-19 restrictions on the Australian hotel sector, things hoteliers can do to respond to these changes, and how the market is most likely going to react in order to move forward. 

Singe digit occupancies 

Many hotels in Australia had moved from 80 per cent occupancy numbers to ‘single-digit occupancies’ as an outcome of travel bans and other lockdown measures that are badly affecting the tourism industry. Many of these hotels have now transformed for the better from offering a luxury service to a piece of essential infrastructure. 

The decline in international and interstate tourism 

Sydney, Opera House during daytime

The evident trend that we are seeing right now that affects the Australian hotel sector is the turndown in interstate and international tourism as a result of travel restrictions and border closures. Interstate tourism has been slowly recovering as few interstate borders have resumed since the start of the pandemic, but, inconsistency in border policies, specifically about the states shutting their borders to other states has somewhat hindered this recovery. 

However, domestic hotel operators have witnessed growth in intrastate tourism. This developing increase has primarily benefited hotels placed outside of major city centres. As a matter of fact, several hotels in known regional tourism destinations are currently as busy as they’ve ever been. The increasing demand has resulted in a subsequent increase in prices for several hotel rooms. 

However, there has been a common decline in demand for Australian hotel services, together with occupancy rates dropping to less than 60%. Like what we’ve previously mentioned, as an effect of COVID-19, the market is continuously rising and falling as border closures and other travel restrictions change. The hotel industry is taking a more careful approach when renewing or settling hotel management agreements with a bigger focus placed on initial termination rights, force majeure supplies and more firm performance tests. Historically, operators have been hesitant to grant such modifications, however, there has been presently adopting substantial flexibility given the climate.

How hotels can ensure guests they’re safe 

Hoteliers today are forced to operate with reduced capacity. Hotels will implement strict social distancing measures, especially in indoor gathering places like breakfast buffets and restaurants. Hotel accommodations must also put stress on increasing their attention on cleanliness and hygiene and apply additional precautions to make sure that their staff have a better working environment. Plus, ‘room service’ dining will be more necessary in relation to implementing social distancing measures to reduce the capacity of restaurants, and diners will not gather in communal spaces. 

Despite this, there are strategies that hotels can do to boost revenue amidst the pandemic. As COVID-19 is far from over and restrictions continue to change, here are some things hoteliers can consider: 

  • Underperforming hotel rooms can be turned into longer-term rentals 
  • Creating COVID-friendly apartment types, including standalone villas with longer-term stays (local government authorities                                                       
  • Giving more focus on intrastate and interstate tourists
  • Making sure that hotels are constructed in a COVID safe manner (communal areas must have big, outdoor spaces instead of small rooms) 
  • International arrivals can be accepted but must be quarantined in a hotel for at least 14 days (as required by the Federal Government) 
  • Acquire every applicable government subsidies and benefits 

The demand for Australian hotels will soon come back to the pre-COVID level, in long term. Meanwhile, for the short term, there will be challenges that hotel owners will face, such as diligently assessing their performance test and force majeure clauses. 

Corporate travel will most likely remain under pre-COVID levels for a longer time, and bigger events like sports and conferences will be hard to organise for the foreseeable future. Intrastate and interstate tourism is most likely going to grow as restrictions are easing, and interstate borders are opened, but, international tourism will remain low for a prolonged period. 

Despite this, there is still hope in lifting COVID-19 restrictions since COVID-19 vaccines are being rolled out across the globe, following the recovery of not just the hotel sector of Australia but also other countries around the world will come sooner. 

The hotel industries today have are exerting their effort to keep their guests safe. To read more about it here are New COVID-19 Safety Amenities Hotels Provided For Their Guests.

Ivandrea Ollero

Ivandrea Ollero is a content writer who researches and writes custom content about home improvements, travel, finance, law, fashion, health, and beauty. She graduated from St. Scholastica's College, Manila, with a Bachelor's Degree in Broadcast Journalism in 2016. Ivandrea provides helpful tips and hacks on various topics for her readers. If she's not in the mood to write, you can find her eating ice cream while listening to rap music

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