Melbourne’s Two-Speed Hotel Recovery

Like the rest of the world, 2020 was one of the most challenging years for Melbourne city hotels. The city that consistently ranks as one of the most livable cities in the world ended the year with an average hotel occupancy rate of just 38%. This compares to a much more respectable 84% in 2019. 

Average RevPAR (Revenue Per Available Room Night) for Melbourne city hotels declined 64% in 2020. With an estimated hotel room inventory of 35,000 rooms in Greater Melbourne, the city hotel sector is looking at a revenue loss of some A$30 million each day for the entire year.

Regional Victoria fared much better. The rural and outback areas are less reliant on international travellers and in 2020, saw occupancies declined by only 5%. Even more unexpected is that average room rates were up 17%. RevPAR was up by an impressive 11% making it a bonanza year for outback accommodation.

For city hotels, there may be light at the end of the tunnel as lockdown restrictions ease in response to improving COVID-19 numbers across the country. Daily cases are now down to near zero across most states.

However any meaningful improvement for city hoteliers still hinges on the international market. Furthermore the corporate hotel market continues to struggle as cities all over the world adjust towards remote working.

Apart from Victoria, regional hotels have also done well in Western Australia and Queensland towards end of 2020. There is pent up demand as people have been wanting to go out to explore the backyard in their home states. Margaret River and Albany in WA were a strong drawcard for the state. Further away from Perth, the Kimberleys, Pilbara and Goldfields to Esperance stretch also experienced noteworthy increase in room demand of around 10%.

Source:
1. Sydney Morning Herald
2. ABC Network