Melbourne Hotels Experience Second Revenue Dip in 2023

Melbourne’s hotel industry faced a setback in revenue for the second time this year, marking a notable decline in key metrics. According to preliminary data from CoStar in September 2023, the figures revealed a nuanced shift in the city’s hospitality landscape.

The data for September 2023 showed a year-over-year change in occupancy at 65.4%, reflecting a modest increase of 1.4%. However, the Average Daily Rate (ADR) witnessed a more significant drop, standing at AUD212.47, reflecting a decline of 4.5%. Concurrently, Revenue per available room (RevPAR) also experienced a dip, settling at AUD138.85, marking a 3.2% decrease.

Interestingly, despite the growth in occupancy, Melbourne’s ADR saw a drop exceeding 4.0% for the second time in three months. The only other month in the year with a RevPAR decline was April, attributing it to lower room rates. This decline is indicative of the market dynamics where demand, showing a notable increase of 7.3%, outpaces supply growth at 5.7%, resulting in a contraction in room rates.

Analysing the daily data, the market recorded its highest occupancy levels on Saturday, 30 September (94.8%), coinciding with the AFL Grand Final 2023. Following closely, Friday 29 September reported an occupancy rate of 81.1%. Throughout the month, Melbourne’s daily occupancy consistently remained above the 50% mark, with only two days showing a deviation from this trend.

Looking ahead, the future outlook suggests a cautious optimism with occupancy on the books standing at 53%, indicating that October is on track to match the occupancy levels observed during the same period last year.