Five-Star Quarantine: Struggling Australian Hotels Get Lifeline

(Bloomberg) -- Australia’s hospitality industry has been given a lifeline as the government quarantines all arrivals from overseas in hotels.

More than 1,600 people have been isolated since Saturday in accommodation including the Intercontinental Hotel in Sydney and Crown Resorts Ltd.’s Crown Promenade in Melbourne in an effort to slow the spread of the coronavirus. Thousands more are expected to be isolated at the government’s expense in hotels, serviced apartments and backpacker hostels.

“It’s a lifeline for those that choose to continue trading,” the Australian Hotels Association’s chief executive officer Stephen Ferguson said in an interview. Hotels that remain open have about a 10% occupancy rate as they keep key staff employed for when a recovery occurs, he said.

Australia joins locations including Singapore and Hong Kong in quarantining all new arrivals following concern that some residents returning home were failing to self-isolate. About two-thirds of Australia’s infections have come from people returning to the country after international travel, according to government data.

Some hotels feeling the effects of Australia’s tighter controls on movement were given a reprieve after the Western Australia state government said passengers aboard the Vasco da Gama cruise ship were to be isolated on tourist haven Rottnest Island. Almost 300 passengers who were aboard the Norwegian Jewel were taken to Accor SA’s Swissotel in Sydney after a mercy flight from Honolulu last week.

Returning travelers’ accommodation and food bills are being picked up by government authorities, but that hasn’t stopped complaints. Local media reported some in isolation have complained they’re not allowed out of their room or access to outside food, while a woman in Perth said she was treated worse than prisoners because they were allowed fresh air.

Not all hotels are opening up to returned travelers. Of the hotel association’s members who replied to a scoping message, roughly half indicated they were interested in participating in the scheme, Ferguson said.

And for major hotel chains the business may not take up much capacity. For Accor, while the business is welcome it’s “just a tiny fraction of our available rooms” and is only making a small impact on overall occupancy, said Michael Issenberg, chief executive officer of Accor’s Asia-Pacific unit.

“Unfortunately, the hospitality industry is undergoing the worst crisis we have ever seen,” Issenberg, who oversees 1200 hotels in 21 countries, said. “With most people at home or in virtual lock-down, the industry is still suffering, even with this additional business.”

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