Working from home drives down hotel revenue

Work from home has affected more than the office sector, with a distinct correlation between its rise and the decline in CBD hotel results.

speaking to The urban developer vSummit Hotel DevelopmentSTR Pacific Region Manager Matthew Burke said there was a definite correlation between STR’s hotel occupancy data and the Property Council of Australia’s office occupancy data in Brisbane and Sydney .

He said the data showed that as the use of office space declined between July and October 2021, hotel occupancy rates also declined, compared to pre-pandemic levels in 2019.

Business traveler sentiment remained weak, down 53% in February, along with a 31% drop in people’s expectations for business travel.

STR’s data also showed an increase in occupancy on weekends compared to midweek.

Burke said this reflected the fact that the main night for the hospitality industry was mainly Monday through Wednesday, the days most booked for business or corporate travel.

“Business travel is a fundamental part of what fills our city hotels, especially during the week,” Burke said.

“Midweek, Monday to Wednesday, and shoulder, Sunday and Thursday, are really where we haven’t seen a significant return.”

In Melbourne in February, the average occupancy rate for the weekend was 62%, 42% shoulder and 36% midweek nights.

Hotel occupancy rates in Melbourne

Burke said this was due to a decrease in business travel as people worked from home.

“When people aren’t in offices, the reasons for traveling to see clients in different cities usually change,” Burke said.

“As more people return to the office, this will encourage a greater need for business travel with internal meetings or external clients, so bringing them together is essential.”

Burke also said it would be interesting to see if business travel picks up thanks to more people returning to the office in March.

“As a business traveler myself, I spend most of my time seeing clients, so it’s a lot easier when they’re in town or at their offices than meeting in the local coffee shop” , did he declare.

“What we’ve seen in the United States, and we’re starting to see here in Australia, is the hybrid connection where some teams will come together, and you do it together, but you’re two or three places.

“That kind of hybrid view of things will start to take shape – and if you’re not in the office all the time, you need to come together and do more teamwork.”