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COVID premium emerges in the rush to the regions

Accommodation in regional Australia has been flooded by travellers with demand outstripping supply and a significant boost in costs, according to a report from Flight Centre’s FCM Consulting trend report.

Aug 16, 2021, updated Aug 16, 2021
Air fares were expected to fall later this year (file image)

Air fares were expected to fall later this year (file image)

The report found a pandemic premium had emerged for accommodation in key regional centres of between $US50 ($A68) and $US80 ($A108) a night.

In some of the major centres in the second quarter there were periodic weekends and weekdays where the ability to secure hotel accommodation was not possible, according to FCM.

However, cities like Sydney were hit hard with hotel occupancy at 44.5 per cent in June and Melbourne 29.3 per cent.

Corporate rates for rooms in Brisbane were up 17 per cent and were level pegging with Sydney ($193) and Melbourne ($192).

It said domestic travel continued to dominate in China, New Zealand and Australia with first half hotel occupancy up 53 per cent. All other markets experienced less than 50 per cent.

But the number of seats was still well down on pre-pandemic times, except in China where it was up 3 per cent.

FCM found that air seats offered across Australia during the second quarter grew 46.5 per cent from the previous quarter. 

The Brisbane to Sydney route almost doubled while Brisbane to Melbourne rose 47 per cent. Melbourne to the Gold Coast was up 61 per cent and Sydney to the Gold Coast was up 154 per cent.

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FCM Consulting general manager Australia Felicity Burke said the rebound for travel had been bumpy in the last quarter, but “we have certainly seen both growth and recovery during this period, albeit at a slower rate than we would prefer. 

“The theme is consistent across the board. High levels of vaccinations mean more flights, more hotel occupancy, and stronger confidence within the travel market. We anticipate this will only increase as vaccine supplies in Australia ramp up between now and the end of the year.

“We’ve already seen a stark uptick between quarter two and quarter three when it comes to seats offered where Asia is the destination – up 19 per cent.  

 “The same can be said for seats offered where Australasia is the destination, an increase of 11 per cent – scheduled prior to the prolonged lockdown in New South Wales and more recent lockdowns in Queensland, South Australia, and Victoria. 

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