Sydney hotel market ‘worst in Australia’ with revenue down 67 per cent

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Sydney hotel market ‘worst in Australia’ with revenue down 67 per cent

By Michael Koziol

Sydney’s hotel market is “the worst performing in Australia” and faces catastrophic losses when JobKeeper ends at the end of the month, according to the industry body, which has made a last-ditch plea to the federal government for more support.

Accommodation Association boss Dean Long said rooms in Sydney and Melbourne were 91 per cent vacant after Easter on current bookings and hotel revenue in Sydney – normally the country’s most lucrative market – was down 67 per cent.

Sydney city hotels were identified as “the worst performing in Australia” by the Accommodation Association.

Sydney city hotels were identified as “the worst performing in Australia” by the Accommodation Association.Credit: Getty

Mr Long said it “makes no sense” for the federal government to offer half-price flights to regional destinations such as Cairns or Merimbula but leave out Sydney and Melbourne, as those markets were faring worst of all.

The association, which represents 3500 hotels including the major IHG and Accor groups, wrote to the Prime Minister, Treasurer and Treasury last week warning of significant job losses “largely impacting skilled middle and senior management employees” when JobKeeper ends.

It said the resulting redundancy payments could cripple hotels. “The cost of redundancies at a time when revenue is failing to meet fixed costs will mean the closure of businesses for a number of owners who have exhausted their balance sheet reserves in 2020.”

The association warned the government thousands of businesses in the “hotel ecosystem” would consequently close or shed jobs, such as linen hire and laundry services, caterers and audio-visual suppliers.

Mr Long also told The Sun-Herald several hotels were poised to pull out of the hotel quarantine program relied upon by government to safely process returning Australian travellers, because it would no longer be feasible to retain the staff required once JobKeeper ended.

He said an additional support package of $270 million would get the industry through the next three to four months and “we believe ... we wouldn’t require additional handouts” thereafter.

The dire figures from the accommodation industry were also contained in a separate letter sent to Prime Minister Scott Morrison on Friday by lord mayor Clover Moore and state MP Alex Greenwich requesting a six-month extension of JobKeeper for affected industries in central Sydney.

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More than 20,000 businesses in the City of Sydney were still on JobKeeper and “ending [it] could put thousands of jobs at risk”, the letter said. “Coupled with the end of temporary insolvency provisions and rent moratoriums, the likelihood of business closures is high,” it said.

“Their loss would undermine Sydney’s and Australia’s ability to maximise the benefits from international travel once entry into Australia is relaxed.”

The letter was co-signed by Business Sydney executive director Katherine O’Regan (who was Mr Morrison’s pick to be the Liberal candidate for Wentworth in 2019), Mr Long and the heads of the Night-Time Industries Association, the Exhibition and Events Association, Theatre Network NSW, Save Our Stages and other groups.

Tourism Minister Dan Tehan said the destinations for cut-price flights in the government’s $1.2 billion tourism and aviation recovery package were chosen in consultation with airlines using Austrade data to determine the most impacted regions.

“Discussions with the aviation industry highlighted that there are many cheap and discounted flights already available between our capital cities,” he said.

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Mr Tehan said the government could yet add to the list of destinations, but suggested state and territory governments should do more to support the recovery of their capital cities.

“States and territories could, in particular, take a leadership role in getting all of their public servants back to the CBDs as soon as possible,” he said.

Cr Moore’s letter also cited modelling by Equity Economics for the Everybody’s Home campaign that suggested rising unemployment and the end of the JobSeeker supplement could increase homelessness across Australia by 9 per cent.

But since that modelling was conducted, employment has tracked better than expected, with another 89,000 full-time jobs added in February and unemployment dropping half a percentage point to 5.8 per cent – the best result since March last year.

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