Hotels will shut without urgent support, Accor boss Simon McGrath warns

Accor chief executive Simon McGrath has warned of closures of city and regional hotels across the badly hit tourism sector as the pandemic deepens.

Accor CEO Simon McGrath: ‘Business owners are at breaking point and there will be closures. Many don’t have the means to keep going beyond September.’ Picture: NCA NewsWire/Damian Shaw

The nation’s most powerful hotel boss Simon McGrath has warned of closures of city and regional hotels across the badly hit tourism sector as the pandemic deepens.

The chief executive of French hotel giant Accor Pacific said hotel occupancies had plummeted to 5 per cent at some of the 400-plus properties under his management and he called on Canberra to set a country-wide reopening date.

“Across the industry plans are rapidly accelerating today to hibernate and close hotels due to the lack of government support,” said Mr McGrath, the operator of 35 hotel brands including Sofitel, Ibis, Novotel, Mantra, and Mercure.

“Business owners are at breaking point and there will be closures. Many don’t have the means to keep going beyond September.

“The bickering between state and federal governments on border openings impacts the tourism industry greater than any other industry. We are calling on the federal government to resolve these differences, and to set an opening date to bring an end to the current uncertainty.

“Having the courage to commit to a date will give people confidence and unite our country behind a common goal.”

One of the country’s largest private hotel owners, Jerry Schwartz, on Tuesday shut his 310-room Rydges Sydney Central, which employs up to 400 staff, due to a lack of patrons.

“With the rising number of Covid cases we have no idea when people can leave their houses and start travelling again,’’ said Dr Schwartz, who owns 15 hotels in Sydney and the Gold Coast.

“Our pockets are pretty empty. We have found the second major shutdown has been much more devastating than the first one.

Private hotel owner Jerry Schwartz on Tuesday shut his Rydges Sydney Central hotel due to a lack of patrons. Picture: Lawrence Pinder

“We are dependent on government support to keep surviving. It really is a serious situation.”

Mr McGrath called on Canberra to urgently reinstate support packages such as JobKeeper, saying tourism was in a worse state than last year, when it commenced the funding program.

“When JobKeeper was first launched in April 2020, the federal government committed to helping our workforce and said: ‘We will give millions of eligible businesses and their workers a lifeline to not only get through this crisis, but bounce back together on the other side.’

“Today tourism, which employs around 662,700 people, is in a worst state than it was back in April 2020, and we are calling on the federal government to honour their promise and provide continuity of care to get people through to the other side.

“JobKeeper must be reinstated for tourism and hospitality to help people and their families, and this must happen within the next two weeks.”

Mr McGrath added that if the government wanted to take a more cautious approach than the rest of the world towards reopening state borders, that was fine, “but it must bring the JobKeeper scheme back”.

He said the present hot spot support package was designed for short, sharp lockdowns, and not the catastrophic situation the sector was facing.

“Financial relief must be delivered not by hot spot definition, but rather on a shortfall in revenue. This shortfall was previously based on a revenue drop of 30 per cent or more, and this benchmark must be restored to rescue the tourism and hospitality sector.”

Billionaire publican Arthur Laundy backed Mr McGrath, saying that while the majority of hotel keepers would survive, he knew a lot who were ‘very, very desperate’. Picture: David Swift.

Mr McGrath said cities such as Adelaide, Brisbane, Perth and the Gold Coast were not receiving any support because they were not deemed hot spots. Yet these cities were heavily affected because locked-down Sydney and Melbourne residents were unable to travel there.

Mr McGrath has also requested more aid for hotel owners and investors.

He said the owners of medium to large hotels, or anyone with a hotel portfolio domestically or from overseas, were not eligible for financial assistance despite investing in Australia for the past 20-30 years.

“This is illogical,” he said.

“These owners and investors have built our tourism industry. It costs owners and investors significantly to keep their teams engaged and properties operating.

“I would also urge the government to meet and listen to major investors in industry to keep jobs in Australia. By failing to listen they are crippling the tourism industry.”

Billionaire publican Arthur Laundy backed Mr McGrath, saying that while the majority of hotel keepers would survive, he knew a lot who were “very, very desperate”.

“Whether it is a JobKeeper, support is going to be essential, if they don’t want a lot of people to go broke,” he said.

Mr Laundy said in the Sydney suburb of Concord shopkeepers were already putting up signs saying they were no longer trading.

“In my case 1500-1600 staff have been stood down. They are getting support now.”

But Mr Laundy said the question was whether the government support provided to his stood-down staff was sufficient for them to survive.