Hotels across the country are preparing for a busy summer season as the sun starts setting in Europe and tourists turn their attention to warmer climes down under.
In the latest report for the second quarter of calendar 2025 from Colliers, it says hotel demand and supply dynamics remain favourable across the country, while transactions and developments overall are on an upward trajectory.
Colliers’ head of Hotels, Karen Wales says that for occupancy numbers, Sydney is leading the pack, averaging 81.3% over the first six months of 2025 and an upswing of 4.1 points on the prior year.
Other markets recording high occupancies include Hobart at 79.6%, Perth at 78.6% and Melbourne luxury hotels at 78%.
With the increased demand and an 11% rise in international visitor nights from the same time in 2024, has also underpinned a surge in deal flows and a rise in asset sales.
Colliers’ report says year-to-date, ending July, hotel transaction volumes have recorded a notable increase to total $1.36 billion, up 48.6% on the same period in 2024.
“The average trade spiked upwards to $42.5 million with multiple large asset sales concluding during the first half of the year and a continued signal that hotel investment market conditions are improving after a lacklustre 2024,” Wales says in the report.
The biggest sales so far have been the Park Hyatt Melbourne for $200 million; Fraser Suites Perth, including the office tower, for $105 million and Skye Suites Sydney for about $46 million.
Investors are also showing heightened interest in both select-service and luxury/lifestyle hotel asset segments due to each having their own distinct advantages in cash flow stability and investment potential.
“Uniquely positioned assets with distinctive characteristics are particularly attractive to investors, such as historic landmarks, retro-style urban hotels and niche-focused hotels catering to wellness, adventure or cultural experiences,” Wales says in the report.
“A notable trend in the global hotel investment market has been the rising participation of family offices, high-net-worth individuals (HNWIs) and first-time buyers in the hotel market.”
Developers are not wasting time, with many undertaking upgrades and opening new sites across the country.
Mulpha, which owns the InterContinental hotels in Sydney, Hayman Island and Sanctuary Cove is undertaking a $200 million, 17-storey hotel project at 355 – 357 Sussex Street, which backs onto Dixon Street and the northern end of Sydney Chinatown.
Mulpha Chief Executive Greg Shaw, told the inaugural Sydney Hotel Summit by AHICE, held recently at the Crown Sydney, that he had confidence in the Sydney CBD “which has development potential”.
In Sydney’s west, the Cabra-Vale Diggers marked its 100 years with a bold rebrand to Cabravale Club Resort, unveiling Australia’s first integrated Club Resort.
The major redevelopment includes a new Novotel hotel, signature dining precinct, world-class entertainment floor and event spaces,
In Melbourne, the newly refurbished Peppers Docklands, managed by Panache Hotel Group, has undergone a bold transformation across guest rooms, public spaces and its dramatic new lobby.
This will give guests a premium, future-ready experience right on the concourse of Marvel Stadium.
On the Gold Coast, Accor has opened its very swish Mondrian hotel, and the 1834 group’s newly-opened The George Glenelg in South Australia is proving popular with its new guests.
Major events drive optimism amongst investors
Airline carriers, hotel owners and operators have been given a kick-start with the recent British and Irish Lions Tour which saw record occupancy in every state they played.
Australia’s largest hotel operator, Accor, declared The British and Irish Lions Tour a nationwide “tourism triumph”. For the last game in Sydney in early August at Accor Stadium, Accor hotels had a combined occupancy of 97% for the Sydney centre and 95% for Sydney’s west where the sell-out game was held.
“From Perth to Sydney, the influx of international and domestic visitors is driving exceptional results for our hotels and the broader visitor economy,” Accor Pacific Chief Operating Officer, Adrian Williams, said.
“This tour is a powerful reminder of the impact major sporting events have in energising cities, filling hotels, and supporting restaurants, bars, and attractions nationwide.”
The nation’s peak accommodation body recently released its mid-year hotel room report card for 2025 which shows an improved performance overall – with capitals such as Hobart doing particularly well.
The Accommodation Australia figures also show many cities also benefiting from a ‘kick-start’ from the Lions Tour as fans flocked to watch the rugby.
Accommodation Australia chief executive James Goodwin said: “The good news is all of Australia’s capital cities experienced an increase in average occupancy rates over the first six months”.
With more events in the calendar from the Everest racing carnival in Sydney in October to the Melbourne Cup race in November, then the Australian Open tennis in Melbourne in January, investors and developers are increasing their exposure to the sector.