Demand may be moving markets during Australia’s summer season

Australia has been much more successful than most countries when it comes to COVID-19 case mitigation. As a result, the country has been able to operate with a greater sense of normalcy, as evidenced by sports stadiums packed with fans, restaurants full of customers and travelers moving around the country to stay in hotels.

Australia is a vast land, and restrictions have varied by state and in their impact on hotels. Victoria, the epicentre of Australia’s second wave, went into lockdown for 111 days until the end of October, while other states saw looser restrictions and a return of travel and demand. In Victoria’s capital, Melbourne, occupancy has been trending well below the rest of the country since June as travelers opted for less-restricted cities or regional markets with more open space. The latter is a trend we have seen in many parts of the world.

Now with the summer season in Australia underway, we look to Forward STAR to determine if a new trend will develop in the coming months. STR’s forward-looking benchmarking tool tracks occupancy on the books and pickup at the submarket, market and country level.

As of 7 December, Australia’s occupancy on the books was trending between 33% and 56% for the remaining days of December. The highest occupancy days are the next seven as well as in the final days of the month, suggesting strong demand for hotel stays in the run up to New Year’s Eve and the Boxing Day Cricket Test between Australia and India (26-30 December).

In Melbourne, occupancy on the books is trending below the national level until mid-January, at which point the market shows higher levels.

The impact of easing restrictions and the ability to travel is best illustrated in Melbourne’s moving average of absolute occupancy on the books for the next 14- and 90-day periods. This illustrates that from October, as the first of restrictions were eased, occupancy began to rise and continued each week to a new plateau of 22% across the 90-day window and 34% for the 14-day period. The Australian Open has been delayed from January to February, and with the corporate travel booking window for February stays not opening until mid-January, we may not see a further increase in average occupancy on the books for some time. That timeframe is contingent on internal borders remaining open and a continued absence of COVID-19 in the community.

With the summer season in full swing and Australia seeing domestic travel in most parts of the country, forward-looking data shows one caveat that hotel demand is still affected by the uncertainty around COVID-19.

For further insights into COVID-19’s impact on global hotel performance, visit our content hub.