Skip to main content Skip to footer

Australia’s hotels on the road to recovery

Australia’s hotel sector is well placed to recover from the effects of COVID-19 given the size of its domestic tourism market, and Australians’ unwavering thirst to travel.

Cairns saw the biggest spike in hotel bookings over the past month, up from 18% of the 2019 levels at the start of May to 54% by the end of June.  The relaxation of social distancing measures in Queensland, the sale of cheap flights and the upcoming school holidays for the southern states are boosting domestic travel.

“Bookings are picking up in line with the relaxation of social distancing measures with demand expected to peak during the July school holiday period,” said Karen Wales, Director, Hotels at Colliers International.

“Queensland is a bright light, particularly Cairns and Gold Coast, but whether bookings materialise will depend on the reopening of borders.

“The Gold Coast and Darwin have both experienced a doubling in hotel bookings over the past month.  Canberra continues to lead the major centres with strong gains in bookings each week, followed closely by Perth, Sydney and Brisbane.”

“Bookings for Melbourne remain very low at only 20% of the 2019 levels and having reduced over the past week as social distancing restrictions were reintroduced. With more than 1,200 rooms due to open this year, additional government support will be required to support the sector whilst restrictions remain.”

Nigel Greenaway, National Director, Hotels at Colliers International, says that the first signs of recovery are indeed emerging through domestic leisure travel.

“This segment will underpin hotel revenue streams over the course of 2020 and be augmented by other segments such as domestic corporate, group and to a lesser degree MICE business.”

“For example, positive signs such as the reopening of stadiums in Queensland from 20th June, albeit to a limited number of attendees, as well as the reopening of theme parks will provide more reasons for Australians to travel.”

“As a result, sentiment for the reactivation of domestic business among hotel operators remains very strong with more than 100 million domestic visitor nights spent in hotels nationally in 2019, which is considerably more than the 32 million international visitor nights.”

 “As we move towards recovery with the reopening of borders and as Australians start travelling again, it will be important for owners and operators to understand where and to what extent temporary closures have occurred as this will have a material impact on performance during the second half of the year, particularly when coinciding with the opening of more new hotels.”

The market will face challenges however absorbing significant new accommodation supply, which will coincide with the reopening of temporarily closed hotels in a low demand environment.

Research undertaken by Colliers in mid-April 2020 (of over 700 properties with 100,000 rooms) found that close to 30% of hotel rooms across Australia were temporarily closed or placed into ‘hibernation’ in response to COVID-19 with other hotels operating with limited inventory. Most closed hotels are not scheduled to reopen until the end of June.

Historical performance trends from STR highlight the ongoing demand contraction that resulted from COVID-19 with occupancy declines ranging between -32.8% in Darwin to -69.5% on the Gold Coast since the start of the year.  Declines in ARR also became more pronounced in May, ranging between -8.5% in Darwin to -34.4% on the Gold Coast, with room night demand largely limited to quarantined travellers.

Furthermore, Australia’s hotel development cycle has been in full swing over the past couple of years with supply increases expected to peak through 2020 and 2021. 

Colliers’ analysis found that 30% of hotels due to open in Q1 and Q2 of 2020 have now been pushed back to later in the year and will coincide with the reopening of hotels which were temporarily closed.

“Australia’s accommodation industry has undoubtedly been one of the hardest hit sectors due to the impacts of the travel restrictions in place to curb the spread of COVID-19,” said Gus Moors, Head of Hotels at Colliers International.

“As a result, some owners have made the difficult decision to close hotels temporarily as they have sought to navigate the low demand environment across Australia and with the mandatory closure of licensed premises within hotel operations.”

“We have seen a wide variance between major city centres with resource or defence locations seeing less reductions in demand with corporate travel viewed as ‘essential’ and hence had lower percentages of temporary hotel closures.”

“Demand in Perth was also boosted by ‘Fly In Fly Out’ (FIFO) business within the State. Canberra also experienced a lower level of closures, due to the extent of government demand which has remained constant during these unprecedented times.”

“The reopening of state borders will be critical if new accommodation supply is to be absorbed.  Other markets which will see considerable new supply include Adelaide, Melbourne and Perth.”

Colliers’ examination of the major accommodation markets of Australia highlights that Hobart saw the most closures, with 55% of rooms surveyed reported to be closed.

Longer term Colliers anticipate that the interruption of COVID-19 will result in a substantial reduction in the accommodation supply pipeline across key Australian markets with only those hotels which are under construction now expected to proceed.

For further insights, please click here

Related Experts

Gus Moors

Head of Hotels | Australia


Having joined Colliers in early 2014, I have subsequently sold over $180 million of hotel assets across Victoria and NSW, including the largest hotel transaction in Victoria since 2008, being Bell City Preston for $143 million.

Prior to joining Colliers, I was Director of Asset Management for Tourism Asset Holdings Limited (TAHL), Australia's largest hotel owner and responsible for selling down this portfolio totalling over $1.5 billion.

Before TAHL, I was with Jones Lang LaSalle Hotels for 7 years, as Head of Asset Management and Chief Operating Officer for the Hotels group across Asia Pacific.

View expert

Karen Wales

National Director, Asia Pacific | Hotels Transaction Services


Karen has over twenty years of experience in the hotel industry and holds a Masters of Business Administration (MBA) from the Australian Graduate School of Management. She brings with her a specialised knowledge of the Asia Pacific hotel investment market and an ability to drive fresh capital into Australia’s hotel markets. She has developed an exceptional network over the past two years across Asia and the Middle East and within government, in her capacity as Senior Investment Specialist Tourism Infrastructure at Austrade and her knowledge of new entrants into the growing Australian tourism sector is second to none.      

View expert