Sydney's hotel industry to see 534 rooms completed in 2020
This is only 2.5% of Sydney’s total room stock.
Due to the material impact of COVID-19, Sydney market-wide occupancy has decreased to 53.6% on a moving average annual basis for the 12 months ending September 2020.
According to JLL, the severity of the demand shock is illustrated by the materially weaker occupancy performance in the Sydney market since the beginning of the pandemic (averaging 28.8% compared to 84.2% over the same period last year).
Here’s more from JLL:
We expect a total of 534 rooms to be completed in 2020 which represents 2.5% of Sydney’s total room stock. A further 2,024 rooms to be completed in 2021 and 2022. Notable additions to room stock include, but are not limited to, 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.
COVID-19 continues to significantly affect EBITDA
As at YTD September 2020, occupancy decreased 49.5% y-o-y to 43.0% and average daily rate (ADR) experienced a decrease of 16.0% y-o-y, resulting in a decline in revenue per available room (revPAR) of 57.6% to AUD 89.
Despite owners efforts to reduce costs within their businesses, the magnitude of the circumstances around COVID-19 continue to materially adversely affect EBITDA.
Outlook: Domestic market to lead recovery
With significant market uncertainty due to COVID-19, our market forecasts are being reviewed on a regular basis. Leisure markets are showing signs of growth with increased forward bookings. The extent of the recession, the pace of the domestic travel recovery and the timing of the return of international travel will affect the markets recovery.
Increased liquidity is anticipated in 2021. Despite concerns, there may be a softening of yields over the next 12 months, of the small number of transactions that have occurred or are in the pipeline to date, no significant shift in investment parameters is evident.