September 27, 2021

STR: Australia’s Latest Lockdowns Curtail Hotel Bookings

The emergence of a new variant of coronavirus and imposition of latest lockdowns in parts of Australia has adversely affected hotel occupancy levels in key markets of the country, according to data from STR’s Forward STAR, which benchmarks hotel occupancy worldwide.    

Among the most notable cities to be hit is Sydney, whose occupancy on the books is down an average of 13.8 percent when comparing the June 28 data update with the data release from June 21. Occupancy for the week ending July 3 is unlikely to exceed the 20 percent mark, which would be a 50 percent decline from previous weeks.

“Since the second week of June, the delta strain of the virus emerged in the community, and lockdowns in Victoria followed by New South Wales, Queensland, Northern Territory and Western Australia have taken a toll on occupancy,” said Matthew Burke, STR’s regional manager for the Pacific region, in a press release. “The lockdowns have been particularly damaging for what was expected to be a rise in demand entering a strong leisure period with winter school holidays.”

One of the highest-performing countries during 2021, Australia was seeing a surge in midweek demand while continuing to stay strong across weekends. Year-to-date through May, Australia’s revenue per available room (RevPAR), the key top-line performance indicator, had reached 74 percent of 2019 levels.

“The Gold Coast was not yet in lockdown at the time we processed this latest forward-looking data, but because the Sydney basin is a large source market, the Gold Coast too saw more cancellations than new bookings for the coming two weeks,” Burke said. “North Queensland has been affected three straight weeks with cancellations outweighing new bookings even though this is peak season when people escape north to find the warmer weather. Occupancy on the books for July is presently at 77 percent but isn’t likely to be as strong as expected a month ago because of the cancellations.”

The typical booking pace for the upcoming month has slowed dramatically across all Australian markets, leading to a lagging but sustained impact on actualized occupancies. For example, on a weekly basis, Adelaide was averaging an 11.4 percent nightly pickup (change in bookings from one data collection to the next). In this past week’s update, pickup was just 3.4 percent.

“Although Adelaide isn’t in lockdown, the uncertainty and lockdowns in other parts of the country have affected all markets,” Burke added. “To date, the silver lining in the data is that cancellations to this point seem to be isolated to the next two weeks. For now, if there are bookings beyond the next two weeks, consumers appear to be holding them, hoping that their travel won’t be affected. But if restrictions are extended, it will show through in more cancellations. The immediate impact is clear but there is a tail.”

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