APPD Market Report Article

Sydney

February 28, 2022

-10.8%

AUD 76

RevPAR
Rising

Domestic leisure continues to lead the recovery

  • With the easing of restrictions, domestic leisure demand continues to lead the recovery however, green shoots in respect to emerging corporate demand were becoming evident prior to the most recent Sydney Lockdown. Whilst operational restrictions are easing, some concerns in respect to resurgence of COVID-19 (Omicron) and the pace of recovery remain.
  • The market continues to be materially affected by the ongoing impact of COVID-19, illustrated by YTD December 2021 occupancy of 35.4% versus 42.4% for the same period last year; however, materially below the same period in 2019, which was 85.6%.

One new hotel scheduled for opening in 4Q21

  • A total of 633 opened in the 12 months to December 2021 representing 3.0% of Sydney’s total room stock. A further 1,732 rooms are currently under construction, representing an increase of 8.3% on existing stock. With the expiry of quarantine hotel contracts in 4Q21, an enhanced competitive environment is anticipated in 2022.
  • Of the 1,732 rooms under construction, most are anticipated to open during 2022 (6 hotels).

COVID-19 continues to significantly affect EBITDA

  • Whilst vaccination rates are climbing and travel and social distancing restrictions are easing, some concerns in respect to resurgence of COVID-19 and the pace of recovery remain.
  • Owners and operators continue to be required to contain operational costs whilst positioning their business to capitalise on the emerging recovery.

Outlook: Progressive recovery anticipated

  • Trading conditions will continue to be constrained over the near term.
  • Investors continue to seek acquisition opportunities for quality assets and transactional activity has been increasing signalling confidence in a medium to longer-term recovery. Some transactions of non-performing assets are occurring for alternate use/redevelopment and we expect that to continue whilst the sub-optimal trading conditions exist.

Note: Sydney Hotels refers to all grades of accommodation and includes both hotels and serviced apartments.

Talk to us 
about real estate markets.