Revenue per room falls to $33 for city hotels

Melbourne’s hotel occupancies plunged to a historic low of just 28.8 per cent in April.

JLL Hotels executive vice-president Peter Harper Picture: Jono Searle

Melbourne’s hotel occupancies plunged to a historic low of just 28.8 per cent in April, but the Victorian capital still recorded the second-highest occupation of any Australian city that month.

Revenues per available room plummeted to an average of $33.16 a night in April, down from $177.74 a night last November, according to STR data.

“Showing how far levels have fallen across the country, Melbourne’s occupancy was the second-highest across Australia’s state and territory capitals, just behind Perth, which was the only capital to record greater than 30 per cent occupancy in April,” STR said in a statement on Monday.

Hotel investors and developers will be watching Melbourne’s performance post COVID-19 given the city has the biggest hotel development pipeline in Australia with 25 hotels comprising about 5500 rooms.

JLL Hotels executive vice-president Peter Harper said hotel projects under construction such as the Ritz Carlton on Spring Street, the Shangri-La on Exhibition Street and the Next hotel on Little Collins Street would proceed.

“(But) the feasibility of any project not yet under construction will be seriously questioned,” Mr Harper told The Australian on Monday.

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Melbourne has the strongest hotel pipeline in Australia because of the numerous fundamentals the city offered, including a strong corporate business presence as well as a big calendar of events, Mr Harper said. The city also has numerous infrastructure projects under way, and a growing population and air passenger movement.

Mr Harper said Melbourne had achieved the near 30 per cent hotel occupancy because its hotels had been used to quarantine residents returning from offshore. But he added that the one month-long federal government quarantine contracts were slowly being phased out.

According to STR, Melbourne’s hotel occupancies plunged from 86.5 per cent in November to 28.8 per cent in April; the average daily room rate fell from $205.41 in November to $115.22 in April, while revenues per available room fell from $177.74 to $33.16 within the past six months. “The absolute levels across the three metrics are the lowest for any month in STR’s Melbourne database. The occupancy level was down from 47.8 per cent in March,” STR said.

Meanwhile, Singapore-based hotelier Far East Orchard, which operates the Adina, Vibe and TraveLodge hotel brands across Australia, Singapore and Germany, has reported a double-digit fall in revenue per available rooms in the first quarter.