Canberra and Brisbane to lead Australian hotel recovery

"Green shoots" of recovery tipped for H1 2021

Hotels in Canberra and Brisbane have been tipped to lead the struggling domestic hotel markets recovery as COVID-19 social distancing measures are relaxed, results from a new study have found.

According to Colliers International‘s inaugural Australian Hotel Investor Sentiment Survey conducted in April 2020 in the wake of the COVID-19 pandemic, investors surveyed believed that the green shoots of recovery were likely to emerge in the first half of 2021, lead by the nation and Queensland capitals.

Travel intent to those destinations is “underpinned by growth in domestic leisure travel as Australians looked to reconnect to their inherent desire to travel,” Colliers said.

Brisbane city skyline, featuring the W Hotel

“In Australia, the pace of change for the hotel and tourism sector was unlike anything that the sector has experienced before resulting in a sharp decline in trading during the first quarter of 2020, with the impacts widespread and indiscriminate across borders, cities and visitor segments,” said Gus Moors, Head of Hotels at Colliers International.

“As some Australian states and territories begin to cautiously relax social distancing measures, investors remain optimistic that 2022 will see strong performance across all geographies and segments. International tourism is expected to rebound but driven by the international corporate segment given the strong and salient relationships offshore.”

Moors noted that investors expect Q3 2020 to be the weakest quarter for hotel trading in Australia with sentiment for negative trading averaging nearly -80%. That compares to the view of -27% in Q4 2020, “which highlights the slow road to recovery which owners, operators, financiers and governments must navigate.”

Midnight Hotel, Canberra

Colliers’ report found that the overwhelming majority of investors expect it to take between 18 months and two years before the Australian hotel investment market reaches stabilisation.

“Although the majority of investors are adopting a ‘wait and see approach’ to hotel investments over the next six months, almost one-third of investors say their primary investment activity will be to ‘buy’, indicating that the Australian hotel transaction market is expected to heat up towards the end of 2020,” said Karen Wales, Director, Hotels at Colliers International.

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