Insights - Backpacker Hostel Market

July, 2021

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Backpacker hostels continue to struggle but Olympics will rejuvenate the market

COVID-19 continues to impact global travel, and this is forecast to continue over the short-term which is impacting on the backpacker hostel market but the announcement of the Olympic Games to be held in 2032 will rejuvenate the sector, m3property research has found.

The announcement is a major win for Brisbane and Queensland and in particular the tourism, hotel and
hostel sectors.

The continuing widespread international and domestic travel bans have seen the hostel market struggle.

International tourism to Brisbane fell by more than 80% during the pandemic with domestic tourism dropping by 42.8% however Queensland itself has benefited from increased travel to regional destinations.

Backpacker visitation has been declining over the past five years due to legislation introduced in 2017 that classifies working holiday visa holders as non-residents which has led to the number of backpackers coming to Australia reducing their time here and choosing to work in nearby countries.

The closure of state and national borders in Australia and social distancing and travel restrictions has had significant negative impact on the hostel industry resulting in significant decreases in occupancy across the sector.

Whilst demand from international tourists is down, domestic demand has remained strong during COVID-19 and whenever restrictions have been eased, there has been immediate demand for accommodation venues and flights.

The accommodation market is catering primarily for a purely domestic tourism market as domestic tourists are taking shorter, yet more regular trips.

There have been delays and postponements in proposed projects and projects under construction. Longer-term there are competing drivers of tourism although the positives are likely to outweigh the negatives. The global economic outlook is likely to strengthen in 2021-22 and pent-up demand for travel is likely to result in increased travel when confidence returns.

According to the 2019-20 Tourism Investment Monitor, there were 30 key tourism projects (defined as projects over $20 million) in planning or construction in Queensland as of June 2020. The total value of these projects was $6.9 billion, decreasing $0.7 billion from the year prior.

Projects such as Queen’s Wharf and the Brisbane Live Entertainment Precinct will be major drawcards for Brisbane going forward.

The Brisbane accommodation market is expected to continue to recover in 2021 as confidence returns to the market, domestic travel increases, and international travel restrictions are loosened.

National Research Specialist
Casey Robinson
casey.robinson@m3property.com.au

Authors

Casey Robinson

National Research Specialist

View Profile > QLD

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