2020 was a year like no other for Australia’s hotel markets. Occupancy levels dropped to historic lows over autumn as the nation went into an extended lockdown to prevent an escalation of the pandemic. At the same average rates declined in response to the demand collapse and overall dilution arising from lower yielding hotel isolation business. The latter part of the year saw tentative signs of recovery emerge albeit under the weight of ongoing uncertainty arising from state borders opening and closing at short notice.
Not surprisingly, investment volumes declined over the course of 2020 and by year end were well below the long term average volume levels as buyers and sellers alike adopted a cautious approach against a background of intense uncertainty.
The outlook for 2021 is for a gradual recovery in trading markets as the vaccine rollout gathers momentum, giving people the confidence to lock in plans for travel after an extended period of plans being on hold. Transaction volumes are expected to rebound as select owners take the opportunity to reduce debt and purchasers look to secure investment grade assets in an environment of all time low interest rates.