Demand for hotel assets increases as travel returns and occupancy levels increase

A rapid increase in domestic and international travel has driven hotel occupancy rates sharply higher and increased demand for hotel assets.

Ray White Commercial, head of research, Vanessa Rader said domestic passenger movements were approaching pre-COVID levels, with 4.52 million passengers carried for the month of June, up 92% on the year and slightly behind the 5 million reached before 2020.

“These results are encouraging for our domestic hotel market, with most air travel being for domestic movements and inbound international passengers, giving our local tourism industry a much-needed boost,” Ms. Rader said.

Ms Rader said the surge in travel has had a ripple effect with higher hotel occupancy rates across the country.

“The improvement in hotel occupancy has been remarkable over the past 12 months, with the main winter school holiday tourist nodes of Darwin and Cairns seeing occupancy up to 83.5% and 82.8 respectively. %, after hitting just over 50% in July 2021,” she said.

“This resulted in large ADR (average daily rate) increases of over 24% for each market to $294 per night in Darwin and $263 per night in Cairns.

“Canberra continues to recover as government activity levels return to pre-COVID-19 levels, along with the booming tourism market, resulting in occupancy now at 80.3%, after having settled at 22.4% just 12 months ago, with ADR up 27.8 percent to $223 per night.

Despite the cooler weather, Gold Coast and Brisbane also saw strong increases in occupancy, which saw room rates increase by up to 25% over the same period, with this market benefiting holidaymakers as well as those visit friends and family and business and conference areas.

“Sydney stood out for daily room rate growth, up 34.7% to $241 per night, although occupancy was still one of the lowest in Australian markets at 66.2 %,” she said.

“A further recovery in business travel is needed to improve vacancy rates in Sydney and Melbourne, which in turn will increase RevPAR (revenue per available room) levels.”

Ms. Rader said the improved segment continues to drive demand for buying hotel assets.

“Overseas buyers have been active investors in the Australian tourism market, however, after a few quiet years for the asset class, investment is expected to pick up,” she said.

“Recalling that nationwide, occupancy is 68.9%, down from 38.5% a year ago, while average daily room rates increased 22.3% to over $230 per night.

“These continued improvements in occupancy and revenue, along with improved international aviation and domestic travel statistics, make it an attractive investment choice.”

Comments are closed.