COVID-19 Quarantine Contracts and Australian Hotel Economics Report

This report examines the economic impact of the COVID-19 pandemic on the Australian hotel industry. It analyzes the decrease in demand due to border closures and the subsequent conversion of hotels into quarantine facilities, leading to shifts in demand curves. The report discusses cross-price elasticity, focusing on the relationship between hotel room demand and international flight prices, and income elasticity, exploring how changes in consumer income affected hotel demand. It also investigates the impact of increased regional travel within Australia and the resulting changes in supply and demand, ultimately leading to new equilibrium prices. The conclusion summarizes the key findings, highlighting how quarantine programs and shifts in consumer behavior have reshaped the economics of Australian hotels during the pandemic.

AUSTRALIA HOTELS SAY
COVID19 QUARANTINE
CONTRACTS FAR FROM A
LICENCE TO PRINT MONEY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................1

INTRODUCTION
The demand for hotels during covid-19 is highly decreased due to lock down in country.
The hotels are converted as quarantine spots to increase the demand and generate Revenue from
same. In this report. Law of demand and cross elasticity of CBD hotel will be discussed (Steele
and et.al., 2020).. Further it shows the new equilibrium prices are being made after the state
travel had increase in Australia.
MAIN BODY
1.
The decrease in demand curve of CBD hotel is due to other factor which are come under
economical and social factor. Due to closures of border the demand curve of CBD hotels tenet to
decrease without any Exchange in price (Qc, 2020). The major reason for this is Covid-19 which

shows that consumers are avoiding to visit hotels. The above digram shows that before Covid-19
the demand of hotel room is at D with Price P. then after the closures of border, it leads to
decrease in demand and showed up with D to D1.
On the other hand, during the quarantine programs which are staying in CBD hotel leads
to increase in demand Without any change in price. This will increase in demand without any
change in price by hotel. It is due to high Covid-19 cases in country demand of bed for
quarantine are very high at that time. This leads to increase in demand curve and shows shift in
curve from D to D2 without any change in price (Newsome,2020).
Demand curve is a graphical representation which shows the relationship between the
demand of goods in market in different prices of that good for a given period of time. The prices
of a product is appeared on the Y- axis I.e. vertical axis and quantity demanded by consumers
are appeared on X-axis I.e. horizontal axis of demand curve. The demand curve move
downwards from left to right which is known as law of demand which state that, demand tent to
decrease at a time of increase in price and shows the inverse relationship between price and
quantity demanded.
2. Cross price elasticity is a concept which shows the measure of responsiveness in the
quantity demanded of one good I.e. is hotel room so CBD and price for another good
changes I.e. prices of international flights are changes. During the Covid-19 the
passengers which are willing to go home country have to pay high prices to airlines
which increase the prices of travels. However, it results in decrease in demand of hotel
rooms of CBD due to decrease in travel by passengers. It shows the positive relationship
between the demand of hotel changes with the change in price of international flights.
3. The income elasticity of demand tenet to change in quantity demand of hotel room of
CBD at time of change in real income of consumers. During the Covid-19 pandemic real
income of consumers tent to decrease in market and decrease in demand too. This leads
to Low income elasticity of CBD hotel which leads to change in real income of
consumers will leads to small change in quantity demand of Hotel room. This is because
consumers will avoid visiting hotel rooms due to Covid-19 and decrease in demand of
hotel rooms of CBD in market. The change in income will lead to small change in
quantity demand of goods (Kampmark, 2020). On the other hand, when consumers start
associate these luxury hotels as quarantine hotels then it will lead to High income

elasticity of Hotel as the demand will increase of hotel rooms with the increase in real
income of consumers when they start using this luxury hotels for quarantine purpose.
During pandemic demand of travel industry has decrease very rapidly but there are
certain consumers which need to travel for any specific purpose. The quarantine program
which is necessary for every person who travel need top stay at least 7 days. However,
consumers are using these hotels rooms for there quarantine purpose which leads to
increase in demand at a time of increase in real income.
4.
The regional travel in Australia tent to increase in demand which also leads to increase in
supply due to shut down for few months and losses they had faced during lock down. After the
lock down when all hospitality industries are start working, then it leads to increase in demand of
hotel rooms within states travel by passengers. The increase in quantity demand and quantity
supplied in market will leads to change in price of hotel rooms within states. This will found a
new equilibrium point due to change in price, demand and supply of hotel rooms. In the above
diagram, old equilibrium point is at E where P is price of hotel rooms before, demand curve is at
D and supply curve at point S. After the increase in demand, supply and price of hotel rooms, the
new equilibrium point had being showed at point E1. These leads to change in demand from D to
D1 and supply S to S1. The prices from same is also changes from P to P1 and leads to change in
quantity demand from Q to Q1. The rightward shift in demand curve and supply curve leads to

increase in price of hotel room of state market (Pha, 2020). Also, upward movement of price
leads to make a new equilibrium point.
CONCLUSION
The above report conclude, CBD hotel had increase the demand after consumers are
associated with 5-star hotels for quarantine purpose. This will increase the demand of hotel
rooms of CBD with the change in real income of consumers. The however, the demand for it
decrease overall which affect the most. Lastly new equilibrium prices are being created due to
change in price, quantity and supplies.

REFERENCES
Books and journals
Qc, I.F., 2020. COVID-19: Fear, quackery, false representations and the law. International
Journal of Law and Psychiatry, 72, p.101611.
Kampmark, B., 2020. Protesting in Pandemic Times: COVID-19, Public Health, and Black Lives
Matter. Contention, 8(2), pp.1-20.
Pha, A., 2020. COVID-19 PEOPLE VS PROFITS. Guardian (Sydney), (1914), p.1.
Newsome, D., 2020. The collapse of tourism and its impact on wildlife tourism
destinations. Journal of Tourism Futures.
Steele, E.J., Qu, J., Gorczynski, R.M., Lindley, R.A., Tokoro, G., Temple, R. and
Wickramasinghe, N.C., 2020. Origin of new emergent Coronavirus and Candida fungal
diseases—Terrestrial or cosmic?. Advances in Genetics.
Online
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