18.03.2021Accommodation sector: a longer Road to Recovery

On Tuesday, March 16 the Committee for Melbourne Visitor Economy reference group members attended the Accommodation Association COVID-19 forum held at the Sofitel Melbourne On Collins to get a real understanding of the state of our Visitor Economy through the lens of the accommodation sector.

It was wonderful to meet industry colleagues face to face again and share the challenges ahead.

The forum provided a detailed analysis of current market trends and insights into the Melbourne and National regions and the performance outlook for Melbourne City and Greater Melbourne hotels.

Record low occupancy, revenue and low forecast demand issues dominated the agenda.

There is a strong concern that the slow recovery of our leisure, corporate business events and major events travel demand is harming Melbourne more than any other city or region in Australia.

Here are some of the key out takes from the forum that the Committee’s Visitor Economy Reference Group will incorporate into our ongoing advocacy:

  • The past twelve months have been particularly difficult for Melbourne and along with Sydney has trailed the other state and territory capitals. This is in part to the larger impact of restrictions and overall impact of fewer corporate, groups, event and international travellers.
  • The regions, as opposed to Melbourne, have seen strong demand once Victorians could get out of their homes. And they were prepared to pay with stronger average rates. recorded relative to prior years. This is a sign that when travellers can travel, they want to and are happy to pay.
  • There is a lack of confidence to visit Melbourne and concern about continued ‘snap lockdowns’ and ‘border closures’
  • The recovery will continue to be bumpy and the forward outlook still remains soft with no sign of corporate travel returning in volume. There are small weekend peaks, but overall Melbourne continues to trail the majority of other state capitals.
  • Segment mix will determine speed of recovery for each property. We are seeing a multi-speed sector at the moment where properties that have a strong domestic leisure demand segmentation are recovering much faster.
  • The large room supply pipeline is going to delay recovery of revenue per average room for the Melbourne TR hotel market.
  • Forecasting future performance levels for the market need to be updated regularly as new data becomes available. Forecasts should be used as a guide and planning tool for the industry moving out of the pandemic and not purely to predict future performance levels.
  • State and Federal recovery packages are making noise but not necessarily providing tangible product offers and incentives that induce travel to Melbourne.
  • Melbourne’s restricted seating capacity at major events and exhibitions is directly impacting on accommodation bookings and economic impact, as compared to other cities.
  • Proactive activation of aviation capacity, event seating capacity, exhibitions and conferences are crucial.
  • It is forecast that it will take more than five years to return to the occupancy and revenue levels of 2019.

For more information on our reference group or to register your interest contact us.

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