Sydney hoteliers mark a return to pre-pandemic profits

Hotelier Jerry Schwartz, who owns 14 hotels in Sydney city, NSW regional areas and southeast Queensland. Picture: John Feder

As business executives eschew Zoom meetings and holidaymakers increasingly start travelling, Sydney hoteliers are noticing big improvements in operating profits, which are now closer to returning to 2019 pre-Covid levels.

Fresh data from US research house STR reveals gross operating profits for Sydney hotels reached a pre-Covid 2019 comparable in April after coming in at just 51 per cent the previous month.

Sydney hotels in April posted a gross operating profit per available room of $US52.08, which was 82 per cent of the pre-pandemic comparable.

Hotelier Jerry Schwartz, who owns 14 hotels in Sydney city, NSW regional areas and southeast Queensland, said there had been a big improvement in the performance of his CBD hotels including the Sofitel Darling Harbour because occupancies had increased and rates had been maintained, and gone up particularly in peak times.

“April was a good month. Rates went up with dynamic pricing because of Easter and Anzac Day,” Dr Schwartz said.

But he said that, although rates had gone up, hotel operating expenses had also shot up because of Covid, including higher prices for room cleaning and staff costs.

“Wages have gone up because of competition and that won’t be solved until we get more people overseas such as international students coming to Australia,” he said.

While Dr Schwartz has six CBD hotels in Sydney, he says his regional hotels have been the better performers during Covid.

But of late he has noticed his CBD hotels are doing a lot better attracting smaller business-style conferences, and in April they performed well because of the school holidays, including the Easter break and Anzac Day.

Dr Schwartz said he was not looking at buying more hotels at present, rather he was repaying all loans and expenses he had deferred during Covid.

In this region, STR said Singapore also reported significant month-over-month improvements, posting an April gross operating profit per available room of $US45.56. That was 54 per cent of the pre-pandemic comparable after the market had reached just 37 per cent using the same comparison in March.

Bangkok’s gross operating profit per available room was 27 per cent of the 2019 comparable, up from 13 per cent in March.

But Hong Kong’s gross operating profit per available room remained in negative territory for a fourth straight month.