With hotels having worked to restructure their cost base in light of the Covid-19 impact on all hotel revenue streams, it is time to think about recovery and how to take advantage of the knowledge hotels have garnered during this hardest impacting period of Covid-19 on the tourism industry.
Permissable activities will drive growth
As governments across Australia relax social distancing measures and open intrastate and interstate travel, we are seeing interest from domestic leisure travellers in making bookings for weekend getaways and school holidays as we exit this long period of imposed hibernation.
Hotels located in the Sydney surrounds drive market (includes Blue Mountains, Hunter Valley, Newcastle and Wollongong) have experienced strong spikes in weekend demand with occupancies above those being recorded in the Sydney CBD. Similarly, Canberra saw a strong spike in demand over the Queen’s Birthday long weekend owing to its proximity to Sydney.
In considering all the channels hotels source business from, these first signs of recovery through domestic leisure travel are most encouraging. This segment will underpin hotel revenue streams and over the course of 2020 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.
We note particularly the reference to business returning from domestic sources as international business is not anticipated to be a factor until the Australian Government reopens the international border, now anticipated to be in 2021. Notwithstanding, 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 nights.
Cost mitigation will be key
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.
National Director | Hotel
For 30 years, Nigel’s career in the hotel industry has spanned hotel operations and finance, working for leading hotel operators and more recently, heading two of Australia’s leading wholesale hotel investment funds.
Prior to joining Colliers, Nigel spent 10 years as the Fund Manager of Eureka Fund Managements First Core Fund. The fund comprised hotel investment in branded hotels such as InterContinental, Four Seasons, Crowne Plaza and Holiday Inn. He led the fund team in establishing an investment in over $1.0bn of hotels in Australia and New Zealand. Nigel was responsible for the entire fund strategy of acquisition, repositioning, asset management, equity and debt capital strategies and exit strategy.
Nigel commenced the hotel investment stage of his career with Colonial First State Property as an Asset Manager for the portfolio of Marriott hotels in Australia before taking the funds lead role as Fund Manager.
In the early part of Nigel’s career, he held a number of Finance Director roles for Southern Pacific Hotels Corporation (now IHG) in Australia and the Pacific. After a period, as Regional Director of Finance for the Northern half of Australia he established his own hotel finance consulting group which provided accounting and financial related services to hotel operators and owners in Australia, New Zealand, Vanuatu and Fiji.
'Charting the Course' series
Colliers International Hotels team have put together a series of articles to help the hotel and tourism industry chart the course to recovery, as one of the sectors most acutely impacted by social distancing measures introduced in response to Covid-19.
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