Work-from-Home Pulling Down Hotel Revenue

Work-from-home has affected more than the office sector, with a distinct correlation between its rise and dips in CBD hotels’ bottom lines.

Speaking at The Urban Developer’s Hotel Development vSummit, STR’s Pacific region manager Matthew Burke said there was a definite correlation between STR’s data on hotel occupancy and the Property Council of Australia’s data on office occupancy for Brisbane and Sydney. 

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

Business travel sentiment remained low, down by 53 per cent for February, as well as a 31 per cent decline in people's expectations of travelling for business.

STR’s data also showed a rise in weekend occupancy versus mid-week. 

Burke said this reflected that the hotel sector's core night were predominantly Mondays to Wednesdays—the days most booked for business or corporate travel. 

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

“The midweek, Mondays to Wednesdays, and shoulder, Sundays and Thursday, are really the ones where we haven't seen any meaningful comeback.”

In Melbourne for February, the average occupancy rates for weekend was 62 per cent, 42 per cent for the shoulder and 36 per cent for midweek nights.

Melbourne hotel occupancy rates

_{^ Source: STR}

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

“When people are not in offices then generally the reasons to be traveling around to see clients in various cities changes,” Burke said.

“As more people return to the office, that's going to encourage a greater need for corporate travel with either internal meetings or external clients, so joining those two together is critical.”

Burke also said it would be interesting to see if commercial travel picked up on the back of more people returning to the office during March.

“As a business traveler myself, I spend most of my time seeing clients so it's much easier when they're in the city or in their offices than meeting in the local cafe,” he said.

“What we have seen in the US, and we're starting to see here in Australia, is the hybrid connection where certain teams will get together, and you're doing it together, but you're in two or three locations. 

“That sort of hybrid view of things will start to take shape—and if you aren't in the office all the time, you need to get together and do more team building.”