From the General Manager

Current State of Tourism in South Australia

IAN HORNE – AHA|SA GENERAL MANAGER

Watch Ian's Video Update: https://youtu.be/D8uIdn7EE3Y

Tourism in South Australia, particularly Adelaide, is largely in lockdown due to closed borders with our two biggest domestic markets of Victoria and NSW. The visitor economy in South Australia pre-COVID-19 generated an impressive $8.1 billion per annum. Sadly, the latest figures report that our visitor economy is now only worth close to half of what it once was, at $4.4 billion.

Accommodation providers in Adelaide’s CBD are an integral part of the Tourism offer but are currently losing between $50,000 and $360,000 per month, with tour operators losing tens of thousands of dollars a month. Business owners are at breaking point, having depleted their cash reserves, and there will be closures. The grim reality is that significant job losses are occurring right now and will only build in the weeks and months ahead, without targeted government support.

While we acknowledge, and appreciate, the support measures provided by the State and Federal Governments over the past 18 months, financial support that is limited to lockdown periods dangerously ignores the catastrophic situation the sector is facing on an ongoing basis.

Cities such as Adelaide are currently not receiving ongoing federal financial support as we are not in lockdown or deemed hotspots. However, our accommodation sector is undeniably heavily affected because locked-down Sydney and Melbourne residents are unable to travel here. In South Australia, at least two-thirds of accommodation revenue is generated by interstate and overseas travellers.

The nation’s most influential hotel chief executive, Simon McGrath, Accor Pacific, has recently warned that, without government support, there will be closures of city and regional hotels across the badly hit tourism sector as the pandemic deepens. Mr McGrath, the operator of 35 hotel brands including Sofitel, Ibis, Novotel, Mantra and Mercure was quoted in the Australian Newspaper on 20 August 2021 as follows:

“Across the industry plans are rapidly accelerating today to hibernate and close hotels due to the lack of government support… Business owners are at breaking point and there will be closures. Many don’t have the means to keep going beyond September.”

Accommodation members are desperate for a lifeline, especially those in the CBD who are struggling to stay open – or even open in the first place.

The majority of accommodation hotels require a 65 per cent occupancy to break even. Unfortunately, but not unexpectedly, occupancy rates within the Adelaide accommodation sector continue to sit significantly below this level.

Most recent occupancy data demonstrates a dip from late June 2021, coinciding with the NSW restrictions and then the Victorian lockdown and that dip is exceeding the depths of vacancies experience after the reopening in August 2020 after effectively three months closure. Except last year Hotels enjoyed JobKeeper support…..not this time.

“Across the industry plans are rapidly accelerating today to hibernate and close hotels due to the lack of government support… Business owners are at breaking point and there will be closures. Many don’t have the means to keep going beyond September.”

STR have provided data which compares 2021 Adelaide CBD occupancy rates with the same time in 2019, pre COVID-19 (see Occupancy Levels below).

Occupancy %

Jan: 2021 = 59.7, 2019 = 75.4. Percentage Change = -20.9

Feb: 2021 = 59.7, 2019 = 83.4. Percentage Change = -28.5

Mar: 2021 = 69.6, 2019 = 85.2. Percentage Change = -18.3

Apr: 2021 = 67.3, 2019 = 81.7. Percentage Change = -17.7

May: 2021 = 64.4, 2019 = 76.7. Percentage Change = -16.0

Jun: 2021 = 57.4, 2019 = 72.1. Percentage Change = -20.3

Jul: 2021 = 40.7, 2019 = 78.9. Percentage Change = -48.4

*Data includes medi-hotel occupancy.

Whilst the 2021 data is positively skewed in relation to the 2019 data, due to the inclusion of medi-hotel occupancy, it shows that the industry was beginning to make a recovery during the period of March – May 2021 due to borders largely being open throughout this period, before an immediate decline in occupancy for June and July once Victoria and NSW were placed in lockdown.

Overall, these figures indicate a significant and unsustainable decline in occupancy compared to a “normal” trading period.

Against this backdrop, we are calling on the South Australian Government to provide targeted, and ongoing financial relief, that will support the accommodation sector out the other side of the pandemic.