Australia’s hotel sector is on track for a full recovery by the end of 2025, with all major cities recording occupancy growth, according to new CBRE data.
Following a surge in international arrivals and steady domestic demand last year, CBRE’s latest Hotels Australia Overview and Outlook report shows that the pace of growth will continue at a moderate rate in 2025.
National occupancy rates sit at 71%, up 2% year-on-year, while average daily rate (ADR) remains stable at AU$240 and revenue per available room (RevPAR) is up 3.8% to AU$171.
Sydney, Brisbane, Perth and the Gold Coast achieved y-o-y gains across the key performance indicators of occupancy, ADR and RevPAR in 2024.
“Notably, Brisbane, Perth and the Gold Coast were the only markets to record pre-pandemic rates across all three performance indicators,” said CBRE’s Australian Head of Hotels Research, Ally Gibson.
“Melbourne and Hobart face challenges from increased supply and softer domestic leisure demand, though both markets recorded a strong increase in international visitation.”
“With major events, premium hotel openings, and infrastructure projects in the pipeline, the outlook for the Australian Hotel sector remains positive.”
Australia’s international arrivals are now at 13% below pre-pandemic levels with strong demand from China, India and Southeast Asia.
The report found tourism recovery has been further boosted by the addition of 60 new international flight routes and expansion of existing services in 2024/2025.
More than two-thirds of the new routes connect to major East and Southeast Asian destination alongside new connections to America, Europe and the Middle East.
“This growth in international flights reflects a strategic response to pent-up demand from key markets, particularly Asia, and is expected to boost inbound tourism demand and enhance connectivity in 2025,” said CBRE Regional Director, Hotel Valuations, Troy Craig.
“Future infrastructure projects, including Sydney’s Western Sydney Airport expansion, Melbourne’s third runway and the $2billion redevelopment of Perth Airport will further enhance Australia’s air connectivity and global reach.”
Nationally, domestic travel spend is up 34% on pre-pandemic levels while, y-o-y spending growth is only up 2% as cost-of-living increased put pressure on discretionary spending. Leisure travel continued to dominate but meetings, incentives, conferences and exhibitions (MICE) related travel showed strong growth.
“Transaction volumes slowed in 2024 with vendor/purchaser price gaps, high interest rates and barriers to finance contributing to investor caution. However, the report notes stronger investment momentum and growth is expected in 2025,” CBRE said.
“This follows the recent release of CBRE’s Asia Pacific Hotel Investor Intentions Survey which found more than 72% of investors plan to buy more hotel assets in Asia Pacific. Sydney was the second most popular city for hotel investment, behind Tokyo who took the top spot.
“On the supply front, a total of 1,800 rooms were added to the market with delays and pipeline shifts pushing some planned hotel openings to 2025. More than half of the new supply (56%) is in the premium market. Looking ahead, there are 5,700 rooms under construction and set to open within the next two years. A total of 31% of these new rooms will be in Melbourne followed by Sydney (29%).”
CBRE expects 2025 will be a pivotal year for growth and investment in Australia’s hotel sector.