Victoria and South Australia’s hotel markets continue to perform well, according to JLL Hotels & Hospitality Managing Director & Head of Investment Sales, Peter Harper.
Melbourne and Adelaide experienced some of the largest growth levels of Australia’s key markets throughout the country’s new supply cycle, which occurred in earnest over the past five years. One key benefit was the introduction of upscale and luxury brands, including the likes of the W, Hilton and Ritz Carlton in Melbourne, and Marriott, Sofitel and Crowne Plaza in Adelaide. The new supply cycle in both markets is now nearing its end and will be characterised by some exciting openings such as the 1 Hotel, Hyatt House and Shangri-La in Melbourne, and the Treehouse Market Square, Crystalbrook Sam and Little National in Adelaide.
While both cities’ market wide occupancy remains below pre-pandemic levels, they are strong by global standards, demonstrating an extraordinary ability to absorb this supply, while at the same time taking advantage of the rate growth these new hotels offered. Year on year occupancy improvements are a result of strong leisure demand, increased inbound visitation and improvement in business travel (especially for Adelaide which has seen its economy evolve and diversify considerably in recent years). Both markets lead Australia for their calendar of major events which continue to draw record attendances, such as the Australian Open, Formula 1 and international concerts such as Taylor Swift and Coldplay in Melbourne, and LIV Golf, AFL Gather Round, Adelaide Fringe Festival and the Tour Down Under in Adelaide.
Both markets have recorded full RevPAR recoveries, and we expect the pace of growth to continue over the near term, especially as Melbourne cements its place as a global city and gateway market, and Adelaide thrives on a leisure and business renaissance. Most importantly, this sentiment is shared by domestic and international capital which continues to acquire key assets in both cities.
This real estate outlook was first published in the April edition of HM Magazine.