The Australian Hotel Sector has proven to be a high value sector.
As we have all seen by now, the Covid-19 crisis has taken a huge toll on the global hotel industry. With the world now going through economic turmoil, experiencing the worst recession the industry has seen in decades, it may seem like the option of investing in the sector is a thought to toss out the window - or is it? Australia has a track record of being highly valuable when it comes to investment within the hotel sector, so before you shut down your plans for any future investments, here are four reasons why you should consider investing in the Australian hotel sector.
Australia’s Declining Covid-19
Australia has seen a great decline in cases after declaring a strict lockdown and imposing border closures in order to stop the spread of the Coronavirus. So far, doing this has been a resounding success in terms of slowing down the spread. The Australian Health Department has confirmed that every state has achieved a significant fall in numbers. Because of this, Australia has now been able to ease restrictions, and the desire for travel is peaking. Investing money into developing hospitality services in Australia during this time will not only put investors in a position that takes advantage of the recovery in the immediate, but will also allow long term success through their investments.
Just think about it - we're all bored, and once the travel bans start to ease, people will take every chance they can get to start traveling both for work and vacation. With the Covid numbers so comparatively low in Australia, it’s a smarter and safer bet to start investing in Australia as the risk of a second wave is comparatively small.
2. Financial Government Support within the Industry
The Australian Government has helped the hospitality industry (amongst others) with unprecedented support schemes. This has enabled many properties to continue to stay in business during this economic decline. According to The Hotel Conversation, this is all a part of the government's $130 billion Job Seeker wage subsidy scheme.
This means that businesses in the hospitality industry can access funds and receive subsidies that make it easier for them to pay their bills and most importantly, pay employees. Eligible employees will be able to gain access to a fortnightly payment of $1,500 as a means to prevent the industry from plummeting into chaos. This aspect ensures that investors have a backup support system, making investing in Australia sound much more appealing. The hospitality and tourism industry brings significant revenue for Australia. It was explained by Statistica that the income that hotels and resorts earned in June 2017 alone was $ 7.9 billion. Information from IBIS World also shows that industry growth has been running at 3.9% from 2015-2020. Because this aspect plays a significant role within the hotel sector, the government is constantly providing funding to expand the growth of this industry.
3. The Tourist Appeal
Tourism is what drives the hospitality industry; no tourists means no income, and no income means that you're doomed to fail. If you're an investor thinking of investing in Australia, one obvious question is 'Is the place attractive to tourists?'
Sydney is Australia’s most visited destination for tourists. Although Australia has most recently found that their largest tourism source market is China, recent events have mean that Australia is actively looking to expand its tourism sector so that not all eggs are in the China basket - though China will still remain to be an important source market. Just in December of 2019 alone, Australia was able to attract over 1 million travelers, adding to a total of more than 9 million arrivals by the end of 2019 according to Tourism Australia.
The popularity of Australia among tourists will bring many business opportunities to investors, which brings us to the final point.
4. New Opportunities Opening Up and Market Expansion
Despite Australia having experienced good pre-Covid growth within the tourism sector, the development and opportunities within the hospitality sector seem to be lagging behind certain other countries, which is why there are so many business opportunities up for grabs today.
Research conducted by Pro - Invest Group shows that Australia has been lacking in hotel room supply. Corporate clients have been demanding more accommodation facilities even as the supply side of the industry has been experiencing growth in response to the increasing numbers of travelers.
Data provided by Pro - Invest shows that the annual yield achieved in initial investments is about 6.0% of sales. As an investor, this is a major advantage that you should not let slip. In terms of getting your name out into the Australian market, this is a great opportunity to grow and expand your future client base.