Defensive Characteristics of Motels

Motels have demonstrated more defensive characteristics than hotels and resorts, due to a number of factors including affordability, larger mix of user, and lower exposure to overseas travellers.

During the global financial crisis of 2008-2009 motels were less affected by the crisis than traditional hotels, as motels were more affordable. While during Covid, motels proved to be resilient in terms of both occupancy and day rate.

Motels typically attract a diverse mix of guests, including tourists, business travellers, and those visiting friends or family, compared to hotels and resorts. This broader user base results in less pronounced seasonal fluctuations in nightly rates and higher weekday occupancy. This trend is even more evident in regional motels, where midweek occupancy is often driven by local visitors traveling into town for appointments, such as medical consultations, or similar activities. This dynamic is reflected in the significantly lower variability in motel occupancy rates in regional areas of NSW and Victoria compared to Sydney and Melbourne.

Another factor influencing regional motel demand is the lower competition from AirBNB/Serviced Apartments, which are more prevalent in Metro areas.

International tourists are also less likely to stay in motels, with only 20% choosing to stay in a motel when they travel in Australia. International tourism tends to be more volatile than domestic tourism, with factors such as the currency impacting demand.