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The inaugural Australian Accommodation Barometer published by Booking.com in partnership with Statista, has shone a light on growing positivity across the travel accommodations sector, revealing over half (64%) of respondents have found the development of their business over the past six months to be very good.

Business sentiment among Australian hoteliers and holiday rental operators remains strong as occupancy levels and prices have continued their increase over the past 12 months, with over half (61%) anticipating that 2024 will be their year of highest revenue yet.

Despite the macroeconomic volatility of the past years, over half (64%) of respondents from hotels found their economic situation to be favourable; with both average daily rates and occupancy levels reported to have increased in 2023. However, this is in contrast with holiday homes and other short-stay accommodations, of which less than half (46%) of owners in this segment report their situation to be favourable.

Opportunities and challenges heading into 2024 

In terms of business opportunities, the focus for Australian hoteliers is very much on attracting additional visitors, international (80%) or domestic (80%). This sentiment is more pronounced in Australia than in our European counterparts, where on average 54% and 50% of respondents see opportunities in attracting international and domestic travellers respectively. This may be due to the fact that the region has relatively extended travel restrictions due to the pandemic.

Over three-quarters of hoteliers surveyed (77%) see attracting families as a top opportunity. Expanding service diversification also ranks highly as a business opportunity for many Australian accommodations, with around 7 in 10 looking at offering local experiences or upselling additional services to generate more business

The Australian accommodation industry faces a multitude of challenges, however concerns about operating costs are currently most front-of-mind. For respondents, the top two challenges, affecting a sizable 7 in 10 respondents, were the cost of energy and taxation. These are followed by staffing costs, economic uncertainty, the cost of inputs and services, and competition from other accommodation providers.

Shorter stays and longer booking windows amidst ongoing economic uncertainty 

Australian travellers and international visitors alike are feeling the pinch of inflation and the rising cost of living. The standout trend is that consumers are now booking shorter stays, as stated by 7 in 10 of the hoteliers surveyed. Around two-thirds of the respondents also said consumers were booking further in advance (65%) and were opting for cheaper rooms (64%). Nevertheless, the top cost-saving decisions appear to take place primarily at the time of booking the accommodation. When it comes to spending on extras, only 44% indicated that consumers were spending less.

Investment in sustainability a higher priority than digital transformation and AI

Australian hoteliers’ plans to invest in sustainability and decarbonisation – half (50%) of the respondents intend to invest the same amount in sustainability initiatives in the next six months as in the previous period, while a further 27% have further investment in mind going forward. In terms of where Australian accommodations intend to invest in sustainability, energy efficiency perhaps unsurprisingly tops the list as the world continues to grapple with high energy prices. Over half (51%) of the respondents said this was their top investment priority, followed by waste reduction at 41% and water preservation at just 25%.

And while machine learning and artificial intelligence are dominating the headlines, only a very small minority (6%) of accommodations currently make use of AI-powered business tools such as chatbots and dynamic pricing algorithms. This, despite 48% of respondents planning to invest more in digital transformation overall in 2023. Although AI adoption is expected to grow, with 23% of respondents looking to introduce such tools in the coming six months, more than 68% of respondents still do not yet have any plans to use AI in how they run their businesses – creating the possibility of technological disparity and a corresponding competitive disadvantage.

“It’s encouraging to see the optimism driving Australian hotel and holiday rental operators ahead of what will likely be our busiest summer travel season since pandemic restrictions ended, reaffirming perceptions that recovery of our local travel industry continues on a positive trajectory,” said Todd Lacey, Regional Manager Oceania at Booking.com.

“At the same time, there remains an array of challenges that our accommodation partners continue to face. Our hope is that by giving them and our industry a collective voice through this research, we can support the hospitality ecosystem further by surfacing issues that will matter to our partners the most over the next six months and beyond.”