Things have been especially challenging here in Australia with the pandemic and worker shortages putting the industry under strain. Thankfully, the industry is now on the up, transforming for the better. The opening of China’s border is also extremely promising as 1.4 million Chinese tourists entered Australia each year before the pandemic (Statista).  

In this article, we’ll take a look at some key statistics about the market in general, and the situation regarding our recovery from the pandemic. We’ll also discuss some predictions for the years ahead and some ongoing trends to keep in mind.  

Market Overview

Our country has come a long way since the first cruises between here and NZ began in 1934! When international flights were introduced we started to have a huge surge of visitors, then from 1992 and 2019, the number of visitors doubled. But where are we now?   

Currently, Australia’s hotels and resorts industry is worth $1.3 billion and is expected to grow by 13.3% in 2023 (IBISWorld). The contribution to GDP of the tourism industry on the whole is currently 1.6% (Statista).   

Other figures from Statista are as follows:  

  • Australia’s hotel segment specifically is forecasted to see revenues of US $6.75 billion in 2023.  
  • Revenue is forecast to have an annual CAGR of 1.85% between now and 2027.  
  • 23% of bookings are currently made offline.  
  • 91% of total revenue will be generated through online sales by 2027, reaching a market volume of US$7.27 billion by 2027.   
  • As of January 2023, the most popular Online Travel Agents in Australia are: Booking.com (35%), Expedia (15%), Trivago (15%), Agoda (10%), Hotels.com (10%), Wotif (5%), other (10%).    
  • By 2027, the average revenue per user (ARPU) is expected to be US$0.57k. 
  • 47.7% of customers are male and 52.3% female. 
  • 41.3% of customers are of high income status, while 34.4% have medium income and the remaining 24.3%, low income. 
  • 14.1% of customers are ages 18-24; 27.8% are 25-34; 27% are 35-44; 17.5% are 45-54; and 13.6% are 55-64.  
  • In 2022, New South Wales was the state with the highest number of domestic overnight visitors (24.89 million in total), followed by Queensland and Victoria.  
  • In 2022, 177,000 visitors were from New Zealand and almost 130,000 were from India. 
  • Of all European countries, the UK brings more visitors with just over 124,000 arriving in 2022.   

 

Recovery from the Pandemic  

COVID was especially problematic in the Asia Pacific Region on the whole due its reliance on international travel as well as extensive COVID-related restrictions. From 2018-2023, the industry within Australia declined by 4.9% annually, faster than the overall economy (IBISWorld).  

An analysis by the World Travel and Tourism Council (WTTC) states that in 2019, the sector contributed more than $4.5 billion to Perth’s economy, $10 billion to Melbourne’s, and $13 billion to Sydney’s. In 2020, GDP dropped by almost half in Perth, two thirds in Melbourne, and three quarters in Sydney. On the bright side, the three cities are recovering.  

Industry performance soared during Q1 and Q2 of 2022 due to the relaxing of travel restrictions. The result was increased occupancy, which continued throughout the year and along with an increase in average daily rates. According to Tourism Australia, there were 2.2 million visitors for the year ending September 2019; this was a 77% decreased compared to the previous year, but a 1184% increase compared to 2021.  

Data from STR shows that performance has been consistent across cities, regions and hotel classes and around the time of New Year 2022, RevPar was almost as high as pre-pandemic levels in Sydney, Melbourne, Brisbane, Adelaide and Perth. 

Overall performance so far this year looks promising. Pricing has also increased due to inflation and is expected to rise further due to increased demand. 

Market Forecasts 

Despite recent challenges, Australia’s hotel and resorts market is forecast to grow by 13.3% in 2023, with domestic travel increasing by 16.9% since last year (IBISWorld). Below are some predictions about how each state will get on over the next few years.  

Forecasts by State   

A report by Deloitte forecasts the economic outlook by state:  

  • Australian Capital Territory: Forecast to have the greatest Gross State Product (GSP), it is also predicted to see the highest number of international tourist arrivals and be the first to see pre-pandemic levels before the year is out.  
  • Northern Territory: Things are predicted to improve in this state due to increased government spending, among other factors. The situation regarding international tourist arrivals is as promising as with Australian Capital Territory, with a recovery due by 2024. 
  • Queensland: Third position in terms of GSP recovery, it is due to have recovered its international tourism levels by 2026.  
  • Western Australia: WA falls short of Queensland in terms of GSP recovery, but some hotel groups such as Accor having especially optimistic projections about their overall revival. 
  • Tasmania: This state suffered less during the pandemic due to the lower number of COVID-19 cases, but it is not due to recover until 2025. It may see ongoing difficulties due to its low population and labour participation.  
  • New South Wales: NSW is expected to recover by 2025, but possible challenges ahead are maintaining demand despite inflation and high energy costs.  
  • Victoria: Victoria saw the largest deficit in internal migration but the return of migrants and students is helping. The state is predicted to recover its international tourism levels by 2024. 
  • South Australia: GSP expected to grow faster than in previous years and international tourism levels should recover by 2025.  

Current Trends   

We recently discussed some trends the industry could expect this year – below are several more.   

Direct Bookings Are on the Rise 

Consumers expressed a lot of dissatisfaction with OTAs during the pandemic and this has caused an uptick in direct bookings. But it gets better – direct bookings are expected to make up the majority of bookings throughout 2023.  

Many properties are now investing more in promoting direct bookings to customers in order to capitalise on this trend. These include having branded booking engine software integrated with their websites as well as bringing more incentives into their loyalty programmes to encourage customers to book direct. Here are some tips to boost bookings all year long.  

Focusing on Staff Retention  

Due to the worker shortages this country is facing, more needs to be done to retain staff. This includes addressing issues such as burnout and mental health, providing more flexibility, and offering greater opportunities for professional development. In addition, technology makes up for worker shortages, taking pressure off hotel staff in many ways.  

Increased Interest in Visiting Culture Capitals 

Expedia’s 2023 travel trends report indicates that customers are increasingly booking trips to the world’s culture capitals. Sydney is sixth on their list of top destinations, so properties in this area may see an influx of guests. 

To make the most of it, these properties need to have robust hotel booking systems along with channel manager software. Partnering with local tour operators and attractions may help them to make the most of this trend.  

Diversification 

Many properties are diversifying their services, offering more than a place to sleep for the night. As well as leasing meeting and coworking spaces and renting rooms by the hour, some are making their on-site gyms available to the public. Moreover, the expansion into real estate development is becoming more popular. Increasing revenues in this way is beneficial for countries such as Australia that have missed out on international tourism for several years.   

Conclusion 

The future of our hotel industry is still somewhat uncertain but things are looking good for now, with solid predictions for growth. There’s also the good news that those coveted direct bookings are on the rise, reducing your OTA commissions.  

The industry’s success will depend on our ability to adapt to changing customer expectations, and this includes adopting technologies that improve the customer experience such as self-check-in options.  

Our Property Management System not only helps you provide the best guest experience, but it also automates tedious repetitive tasks that waste time and drain staff morale. Contact us today to book a free demo! 

roomMaster is an easy to use, all-in-one, pure cloud reservations software solution for hotels, motels, and guesthouses. It’s ideal for small and medium properties (or group properties) needing a pure cloud PMS, with a highly intuitive user interface with powerful rate and customer management tools. Many optional add on features are available and the PMS can be used from ANY device from desktops & laptops to smart devices. This next generation technology which is constantly evolving includes:  

  • Configurable booking chart with drag/drop functionality 
  • Group bookings with online group portals for easier management 
  • Auto pre and post stay emails and full guest communications 
  • Powerful rates management with flexible change options 
  • Digital Guest Registration with the ability to store identification documents 
  • Seamless connectivity with POS systems like H&L 
  • Multiple payment gateway options for easy in app payment processing 
  • In-built channel manager software (it can also be connected to other popular channel managers) 
  • A delightfully easy Book Now button