Hotel owners warn of temporary shutdowns in struggling industry

Staff are already struggling to pay bills with work drastically cut back and now major hotel owners warn entire buildings might soon be mothballed.

Martin Gribble, the owner of Miller Apartments on Hindley Street. Picture: Naomi Jellicoe

Several of Adelaide’s biggest hotels are on the verge of temporarily closing as occupancy levels drop to record lows, prompting calls for urgent financial support.

Hundreds of staff already are working drastically reduced hours to avoid losing their jobs as the hotels experience unprecedented financial losses caused by interstate travel bans.

One of the country’s biggest hotel operators, Accor, has threatened to mothball some of its operations unless state leaders agree to reopen borders across the country.

Another major hotel chain, Sofitel, has delayed opening a new hotel on Currie St for the third time because occupancy levels have fallen to 10 to 15 per cent across the city.

A submission has been prepared by the Australian Hotels Association calling for the borders to be reopened to enable interstate visitation to resume.

AHA (SA) chief executive Ian Horne said domestic corporate travel was the backbone of the CBD accommodation sector. He said accommodation providers in the CBD were losing between $50,000 and $360,000 each month as borders remain closed and interstate lockdowns continued.

“Business owners are at breaking point, having depleted their cash reserves and there will be closures,” he said.

“The grim reality is that significant job losses are occurring right now and will only build in the weeks and months ahead without targeted government support.”

Mr Horne said business travellers and conventions provided hotels with guests during the week, while tourists were the “icing on the cake” at weekends.

“The accommodation sector, in particular the CBD properties, are essentially in a de facto lockdown despite being open for business,” he said.

“Closed borders denies these properties access to their core markets of Melbourne and Sydney business, events and leisure travellers.”

Mr Horne said a survey conducted by the AHA had confirmed shifts for hotel workers had been heavily reduced across the Adelaide CBD while staff numbers also had been cut.

“These properties are employment generators but hours and shifts for their teams have been decimated,” he said.

“Another one, two or three months of border closures or lockdowns will see long-term damage.”

Mr Horne said maintaining a skilled workforce within the accommodation sector was vital to ensure it could “recover and compete nationally and globally post-Covid”.

Under national cabinet’s plan, statewide lockdowns and border closures would end once vaccination rates hit 80 per cent.

Premier Steven Marshall supports that model but Queensland Premier Annastacia Palaszczuk and Western Australia Premier Mark McGowan have cast doubt on opening up their states to the rest of the country.

One Adelaide hotel general manager, who asked not be named, said all of her staff were on reduced hours, with the average person working just eight hours a week.

“We are all hurting, we are all struggling,” she said.

“Nobody can survive on eight hours’ work a week.”

Independent Adelaide hotel operator John Culshaw said the situation was becoming increasingly bleak.

“Currently CBD hotels are trading below 20 per cent occupancy,” he said.

“Hotels need to be trading at between 65 to 67 per cent to break even on cost.”

Mr Culshaw, who owns the Majestic Roof Top Garden Hotel, said most of his competitors were trying to retain some staff to ensure they could operate when the borders were reopened.

“They can see the light at the end of the tunnel but without any JobKeeper type of support it is making life very difficult,” he said.

“The effect of low occupancies in hotels is magnified in not only support services but also other ancillary businesses like cafes and bars, which are underpinned by the hotel industry.”

Martin Gribble, the owner of Miller Apartments. Picture: Naomi Jellicoe

Independent serviced apartment owner Martin Gribble said while government vouchers had helped the accommodation industry, they had a “small impact on a hotel’s overall occupancy”.

Mr Gribble, who owns Miller Apartments and Franklin Apartments in the CBD, warned hundreds of jobs would be lost “without ongoing wage support”.

“Staff are being stood down and hours are being cut,” he said. “They are struggling to pay bills.”

Mr Gribble said successful businesses were “being brought to their knees by government-imposed restrictions”.

“The fact of the matter is, if an ongoing wage subsidy cannot be negotiated with the federal government for CBD hotels then, without a doubt, businesses are going to fail and South Australian jobs will be lost,” he said.

Accor Pacific chief executive Simon McGrath said there would be mothballing of hotels, including those operated by his company.

“Across the industry, plans are rapidly accelerating to hibernate and close hotels due to the lack of government support,” he said.

“Business owners are at breaking point and there will be closures.”

Mr McGrath’s warning comes as latest industry data shows hotel occupancy levels in SA are expected to remain at an average of 18 per cent for the next three months.