The closing of international borders causes pain

A school group of 150 children packed the excavation of the funky Sydney Harbor YHA hostel last week, followed by a group of drama teachers who took a course with the Bell Shakespeare Company.

“The rooms are modest but adequate, and the views are spectacular,” said Geoff de Manser, a Victorian-era professor. “This particular hostel is very affordable and very central.”

But flagship YHA Sydney is one of the lucky ones.

As Australians prepare to use 800,000 half-price plane tickets to travel to 13 tourism-dependent regions thanks to the federal government’s recently announced assistance program for the travel industry, they may find that a Youth hostel is harder to find.

Traditionally reliant on international students and backpackers, the cheap and happy side of the accommodation market faced empty beds for most of 2020 when that source of income ended with the closure of international borders in Australia,

And as domestic travel has opened up again, the industry has been forced to grapple with social distancing rules that challenge its shared, mostly dorm-style accommodation model.

And that has led to closures.

A Melbourne youth hostel operator who did not wish to be named said that although he was not aware of the exact number of hostels that are closing, the figure would be “… significant. This is quite depressing. “, did he declare. He ran two downtown hostels in rented premises, but was forced to close one in the middle of last year and barely clings to the other.

“It’s now up to the landlords. They’ve given us cheaper rent since April-May of last year, but we just don’t know how long it’s going to last. We’re bracing for the worst.”

This is despite the fact that every bed is allowed at the hostel.

“We’re just operating as the Victorian government guidelines suggest, which means we can’t open dorms,” he said.

To this end, the company is operating at a barely sustainable 30 percent capacity.

Twelve months ago, Youth Hostels in Australia had a network of around 70 hostels, 30 directly owned by YHA and 40 franchises. At least 10 of them have closed permanently and many are operating at around 30% occupancy since the middle of last year.

The impact was mostly felt in major cities, particularly Melbourne, which suffered a long second wave lockdown followed by another instant lockdown.

“Although sporting events and shows are starting to come back, there is no reason for people to come to big cities,” said YHA CEO Paul McGrath.

“It really touched us and continues to be difficult for us as these are generally our biggest properties and generate a lot of income.”

In Perth and Melbourne, YHA had “consolidated” from two properties to one and had been forced to cut costs by about 35 percent.

McGrath said areas are showing green shoots and some are performing better than others, such as Byron Bay where YHA has two properties, one marketing around 60 percent occupancy, the other 40 percent. And the glam Sydney hostel was another exception.

Overall, however, he said, Australians remained concerned about the prospect of border closures and blockade. And even if international borders reopen in November or December this year after vaccination programs have largely ended, it is still unlikely that there will be a sudden deluge of visitors.

“In our market, the 18 to 35 age group, we know anecdotally that there is pent-up demand for travelers. They can’t wait to go, but it will depend on factors like the price of plane tickets, what happens. be open when they get here and what restrictions will be placed on them when they arrive, ”he said. “So we see it as a slow ramp-up.”

Meanwhile, McGrath said if the occupancy rate does not improve, his team could face job cuts.

“We have a few hundred employees and they have all been on JobKeeper. It has been tremendous support and has enabled us to keep the properties open and keep people in employment. Once that ends this month – here, if the occupation does not work. improve, we will have to make more difficult decisions. “


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