City hotels pull out all stumps to beat the slump

Melbourne and Sydney have the lowest hotel occupancy rate of any capital cities, but they’re fighting back.

Kazuki Tabata welcomes a guest to the Four Seasons in Sydney, which has benefited from the staycation trend. Picture: Ryan Osland

There’s a great divide in Australia’s tourism industry. While visitors to Victoria’s Mornington Peninsula and Byron Bay in northern NSW may struggle to secure a bed and a dinner reservation, Melbourne and Sydney are awash with vacant hotel rooms and restaurant tables.

According to Tourism Australia, Melbourne and Sydney have the lowest hotel occupancy rate of any capital city, 33 per cent and 40 per cent respectively.

Hotels are on the front foot, however, rolling out tempting deals in a bid to lure locals into CBDs on the back of a City ­Escapes campaign launched by Tourism Australia and federal Tourism Minister Dan Tehan.

The InterContinental Hotels Group, which includes Crowne Plaza, Holiday Inn, InterContinental and Hotel Indigo, is slashing room rates by more than 25 per cent for reward club members, and at least 15 per cent for non-members, at its 36 hotels across Australia.

Leanne Harwood, managing director of IHG Hotels and ­Resorts Australasia and Japan, said bookings in the group’s metro properties were down 70 per cent compared with the same time last year.

While it was encouraging to see recovery in ­regional Australia, the latest federal government program of discounted flights to 13 select destinations would ­barely touch 10 per cent of IHG’s business in the country.

“It is not an even recovery and there is a tremendous amount of support and stimulus needed to keep our city hotels from bleeding,” Ms Harwood said. “The gap between our city hotels and ­regional hotels continues to be a very stark divide.”

Simon McGrath, chief executive of Accor Pacific, the largest hotel operator in Australia, said unemployment was the biggest issue faced by cities and warned thousands of people would be out of work unless JobKeeper was ­extended. “Our greatest concern is for our empty city centres, where hotel occupancies are at a historic all-time low,” he said.

Mr McGrath has been highly critical of the federal government’s latest tourism initiative.

“The government should be investing in our cities and regions equally,” he said. “This uneven stimulus package does not get to the root of the problem and further measures of financial relief are vital to save Australia’s city hotels and to save livelihoods.”

For the Four Seasons Hotel in Sydney, the staycation trend has seen occupancy surge to almost full capacity on weekends, but ­occupancy through the working week ­remains a challenge in the ­absence of business travellers and international tourists.

Marian Carroll, Four Seasons regional public relations director, said after months of border closures, peace of mind was paramount for guests. She cited the popularity of the hotel’s Sydney Escape package that offers moderate discounts of only 15 per cent but includes same-day cancellation without charge.

“People want that flexibility of knowing they can cancel, that they’re not going to be stuck chasing a hotel credit,” she said.

The latest consumer-sentiment research from Tripadvisor shows Melbourne, Sydney, Perth, Canberra, Adelaide and Brisbane are among Australia’s 10 slowest recovering destinations. The fastest include Airlie Beach and Port Douglas in far north Queensland, Yulara (Uluru), Pokolbin in NSW’s Hunter Valley, with Broome, WA, in the No 10 spot.

The loss to the national economy of spending on overnight trips for the year ending September 2020 is estimated to be $27.1bn compared with the previous year. In further evidence cities are being overlooked, booking platform Wotif said Easter reservations were focused on the Gold Coast, Victoria’s Great Ocean Road, Hunter Valley in NSW and WA’s Margaret River.

“For hospitality to survive we need support where it’s needed most: for business and city travel to resume, and for domestic borders to remain open,” Ms Harwood said.