Tourism and hospitality outlook: the long road to post-pandemic recovery is underway | Deloitte Australia
December 7, 2021: Australia’s tourism and hospitality industries have begun their long journey to recovery from the immense losses imposed by the COVID pandemic, but the road will be rocky for some time to come.
Publication of the latest edition of Deloitte Access Economics’ Tourism and Hospitality Market Outlook, Adele Labine-Romain, Partner at Deloitte Access Economics and National Tourism Leader at Deloitte, said: “Australia has achieved so much in the fight against the pandemic, but success on the health and economic fronts has placed a particularly heavy burden on our tourism and hospitality sectors.
“They were the first to be affected by the government’s public health responses to COVID, they will always be among the last to recover, and this recovery remains highly uncertain and dependent on many factors, local and international economic developments and the continued unpredictability of COVID.
“With the gradual easing of travel restrictions in most parts of the country and the lifting of our outbound travel ban, the recovery can hopefully gain traction, but the industry will remain under pressure until ‘until borders are fully open again and the relatively free movement of people in and within Australia can resume.
“As states and territories closed their borders to non-essential travel in March 2020, there was of course an immediate decline in domestic tourism, with overnight travel and spending down 67% and 80% respectively in during the June term,” Labine-Romain said.
“There were then early signs of recovery from the September 2020 quarter as restrictions began to ease in some states, but more so in the leisure segment than in the business segment. This continued for most of the June quarter of 2021 before the Delta-induced lockdowns and border closures began. They may have tried to contain the spread of Delta, but they halted the domestic tourism recovery almost in its tracks.
“Globally, a significant portion of consumers are still not ready to go overseas. Apart from India, less than 30% of consumers in Australia’s main source markets show a likelihood of traveling overseas for leisure purposes, indicating that the effects of the pandemic on global tourism will take some time. time to dissipate and a slower recovery for our inbound and exporting, dollar-generating travel industry.
And the prospects?
“It’s fair to say Australians are desperate to travel, particularly as we approach the traditional peak holiday season, and into 2022,” Labine-Romain said.
“There is growing hope for the recovery of Australian tourism given our relatively high vaccination rates and state and territory reopening plans. However, authorities have again put the brakes on the reopening, with travel bubbles planned with Korea and Japan, and the return of international students, now pushed back to December 15 to allow more time to learn about the new variant.
“Certain market segments are expected to recover faster than others, led by the vacation segment and those looking to reconnect with friends and family, and initially from the region’s short-haul source markets.
“Virtual meeting technologies, cost savings and organizations’ growing awareness of sustainability will see business travel face a slower comeback than leisure travel.
“Overnight travel to Australia is expected to reach 94 million by the end of 2021, down from previous forecasts thanks to Delta setbacks, and is expected to exceed 2019 levels and reach 124 million trips by the end of 2021. by 2022 and 132 million trips by 2023. .
“The recovery of international tourism is going to be slower than expected and than the industry would like. While arrivals are expected to reach around 6.6 million by the end of 2022, or 76% of 2019 levels, this early recovery driven by pent-up demand is expected to moderate after 2022 and only return to 2019 levels in 2025.
“To make up for the shortfall from international visitors, any increase in domestic travel by Australians must exceed the already high levels of domestic tourism activity. It would take approximately seven overnight domestic trips to generate the equivalent expenditures of an international visitor. And that should be on top of the average 14 domestic trips Australians typically take in a year. This represents a significant challenge for policy frameworks and the sector.
“The delta lockdowns in Sydney and Melbourne have devastated the hotel markets in those cities,” Labine-Romain said. “They have reduced occupancy rates to around 20% and put additional pressure on smaller markets such as Adelaide, Canberra, Darwin and Hobart based on interstate travel demand.
That said, state and territory government incentive programs to encourage intrastate and territorial travel have been warmly welcomed by the industry and have had a strong and positive impact on occupancy rates.
“A number of hotel projects in development in the years before the pandemic saw around 3,700 new rooms added to the market in 2021. In Melbourne, new brands included the W Hotel, which opened in early 2021 and the Hyatt Centric , which has been posted online. in December. Marriott’s The Tasman opened in Hobart and Sofitel debuted in Adelaide.
And the prospects?
“Looking forward, it is possible that approximately 15,000 new rooms in probability-adjusted terms will be added to the room inventory across the country in the coming years, of which approximately 5,000 are expected to open in 2022,” Labine said. -Roman.
“These are significant numbers, particularly in certain markets with 60% of new stock concentrated in Melbourne, Gold Coast and Sydney. The pipeline is weaker than our outlook at the start of the year, due to the shift of some developments from hotel to residential and delays in engaging investors for projects that are not yet in the final stages of planning or construction.
“The pace of hotel recovery will vary across city markets. Brisbane, Perth, Gold Coast, Canberra and Darwin are expected to see occupancy rates return to 2019 levels by 2023. Sydney and Melbourne will take slightly longer due to their high pre-pandemic occupancy rates, their greater reliance on demand from international tourists and business travelers and significant new supply to come.
“Average room rates are expected to recover faster than occupancy, returning to 2019 levels ($194) by the end of 2022 for all markets, as properties have mostly maintained their rates even during periods when demand was tight.”
About the report
Tourism and Hotel Market Outlook uses the forecasting, modeling and analytical expertise of Deloitte Access Economics and also draws on Deloitte’s experience and knowledge of the real estate industry, as well as a range of other sources including hotel performance and pipeline data collected by STR Global Limited.
The comprehensive breakdown and forecast of tourism and hotel performance, including RevPAR, room rate and occupancy for 11 key markets, is available to paying subscribers.