Australia’s hotel market is showing ongoing growth with performance metrics benefiting from strong demand fundamentals. Growth in international arrivals, coupled with resilient domestic demand and strategic infrastructure investments, is setting the stage for a positive 2025 outlook.
Key Highlights
- International Tourism Nears Full Recovery:
- International arrivals are now 13% below pre-pandemic levels, driven by strong demand from high-growth markets.
- The introduction of 60 new international flight routes is set to further boost inbound travel.
- Domestic Travel Stabilises:
- Domestic overnight stays remain above pre-pandemic levels, although spending growth has slowed as cost-of-living pressures impact discretionary spending.
- Leisure travel continues to dominate but there has been growth recorded in MICE related travel.
- Hotel Market Performance remains strong although growth rates have moderated:
- National occupancy rates sit at 71%, up 2% y-o-y. ADR remains stable at $240, and RevPAR is up 3.8% over the year to $171.
- Sydney, Brisbane, Perth and the Gold Coast achieved y-o-y gains across all key performance indicators. Notably, Brisbane, Perth and the Gold Coast are the only markets that have outperformed pre-pandemic rates across all three metrics.
- Melbourne and Hobart face challenges from increased supply and softer domestic leisure demand.
- Delayed Supply Pipeline Shifts Some New Additions to 2025, Premium Market Expands:
- New openings across the major markets totalled 1,800 rooms, falling short of expectations. Currently, 5,700 rooms are under construction and set to open within the next two years.
- Investment Market Gears Up:
- Transaction volumes declined in 2024 due to vendor/purchaser price gaps, high interest rates and barriers to finance. With interest rates starting to moderate, the hotel investment market is poised for stronger transaction volumes in 2025.
With major events, new hotel openings, and infrastructure projects on the horizon, the outlook remains positive. Australia’s hotel sector is set to capitalise on these trends, making 2025 a pivotal year for growth and investment.
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