Is Sydney’s hotel market finally starting to recover?

The 48.8% occupancy in March 2021 is slightly higher compared to last year.

In a recent report, Colliers says the increasing interstate travel should improve Sydney hotel performance. In 2019, hotels in Sydney achieved year-round occupancy levels of 85.4%. In 2020, however, full-year occupancy levels were significantly down at a historic low of 43%, compared to the same period in 2019, as the restrictions on travel due to COVID-19 were realised. 

Demand for hotels in 2020 was predominantly from those undertaking the mandatory quarantine period in hotels and a small proportion of intrastate leisure demand. In the month of March 2021, Colliers says Sydney hotels recorded a higher occupancy compared to March 2020, where occupancy levels were 48.8%, compared to 47% in March 2020. This may signal that the market is starting to recover. 

According to Colliers, Sydney City currently has seven hotels under construction totalling over 1,416 new rooms (four hotels of which are due to open in 2021). This is in a current market of 152 hotels with approximately 24,000 rooms. Hotel projects under construction, for example, include the Aiden Darling Harbour, Ibis Budget Sydney and W Hotel & Apartments at Darling Harbour, which are all going ahead; however, feasibility of any project not yet under construction is anticipated to be strained.

Gus Moors, Colliers Head of Hotels, Hotel Transaction Services, Australia, commented: “The current demand for hotel is predominated by guests serving their mandatory quarantine period and a small proportion of instrastate leisure demand. Recent hotel performance figures for March 2021 do show some improvement, and as interstate travel builds, this performance is anticipated to improve over the course of the year. With more people getting vaccinated and travel restrictions ease, travel demand from domestic and international travellers is likely to increase.”

Click here to download the Hotel Insights Q2 2021 report.