Sydney hotels' occupancy rates down to 66.6% in the year ending June 2020
The COVID shock was most apparent in April as occupancy dropped to 21.8%.
Due to the material impact of COVID-19, JLL reveals Sydney market-wide occupancy has decreased to 66.6% on a moving average annual basis for the 12 months ending June 2020.
The severity of the demand shock was illustrated by the materially weak occupancy performance in the Sydney market for the months post announcement of the pandemic (i.e. April & May) which were 21.8% and 23.8%, respectively. The previous corresponding monthly occupancies last year were 84.1% and 84.9%, respectively.
Here’s more from JLL:
No major opening in 2Q20 with delays expected
We expect a total of 705 rooms to be completed in 2020 which represents 3.3% of Sydney’s total room stock. A further 1,777 rooms to be completed in 2021 and 2022. Notable additions to room stock include, but are not limited to, The Crowne Plaza Sydney (152 rooms), The Crown Sydney Hotel Resort (349 rooms) and The W Hotel Darling Harbour (593 rooms).
Going forward, we expect market conditions will result in some delay and/or cancellation of some projects (supply attrition) which will assist longer term market recovery.
Recent events have significantly affected EBITDA
On a moving annual average basis, revenue per available room (revPAR) was recorded AUD 162 for the 12 months ending June 2020, a decline of 25% from June 2019 of AUD 217.
As at YTD June 2020, occupancy decreased 43.4% y-o-y to 48.5% and average daily rate (ADR) experienced a decrease of 11.4% y-o-y, resulting in a decline in revenue per available room (revPAR) of 49.9% to AUD 108.
Outlook: Recovery expected after short-term trading weakness
With significant market uncertainty due to COVID-19, our market forecasts are being reviewed on a regular basis. The severity of the downturn, the effect on the economy, and the timing of the return of domestic and international travel will affect the pace of recovery.
Whilst there is anticipated to be a lack of hotel transactions in the early phases of this demand shock, given previous historic demand shock events and that purchasers may have to contribute more equity than debt to fund an acquisition, there may be a softening of yields over the next 12 months.