-
Southern Ocean Lodge – Kangaroo Island – Image Credit Southern Ocean Lodge
Luxury lodges in Australia and New Zealand are experiencing significant growth, driven by increased demand from affluent travelers seeking unique experiences, according to CBRE research.
Luxury lodges have emerged as the leading segment in the hotel industry across Australia and New Zealand. This growth is primarily fueled by a surge in demand from both domestic and international high-net-worth individuals (HNWIs) seeking exclusive and unique travel experiences. Recent research by CBRE highlights the impressive performance of this sector, showcasing a substantial increase in revenue and profit margins since 2018.
Performance Metrics
CBRE’s analysis of seven luxury lodges in the region reveals a 59% increase in total revenue per occupied room since 2018, with profit margins rising by 54%. This growth is attributed to a global increase in the number of HNWIs and a heightened interest in bespoke travel experiences. Luxury lodges are known for offering curated, holistic experiences, exceptional dining, and wellness offerings. Notable examples include Bedarra Island on the Great Barrier Reef, Saffire Freycinet in Tasmania, Longitude 131° in the Uluru-Kata Tjuta National Park, and Huka Lodge in New Zealand.
Demographic Shifts
According to CBRE Research Analyst Katya Ezhova, the strongest demand for luxury travel comes from individuals aged 40 to 50. However, there is a growing demographic of aspirational luxury travelers, including Millennials and Gen Z, who are increasingly willing to invest in premium travel experiences. This shift is contributing to the sector’s profitability, as rising global wealth and disposable incomes create a favorable environment for luxury tourism.
Operational Advantages
CBRE Hotels’ Senior Director Tom Gibson emphasizes that luxury lodges offer world-class hospitality in exclusive, awe-inspiring locations. The sector’s high barriers to entry ensure limited competition, with only a few transactions occurring over the past decade. The lodges analyzed by CBRE have an average room count of 21, striking a balance between exclusivity and operational efficiency. Bookings are typically made three to six months in advance, reducing operational risks and enabling careful cost management, which supports higher profit margins.
Investment Landscape
From an investment perspective, domestic capital currently dominates the luxury lodge market in Australia, accounting for 67% of ownership. Foreign investment, primarily from the USA and Singapore, makes up the remaining 33%. However, Australia’s dynamic tourism sector, stable market conditions, and potential for attractive yields are drawing more foreign capital to luxury lodges. There is also a shift from traditional ownership models dominated by private HNWIs to more diverse investment structures, including impact funds and ESG investors.
The luxury lodge sector in Australia and New Zealand is thriving, driven by robust demand from affluent travelers seeking unique and personalized experiences. With a favorable investment climate and a growing demographic of aspirational luxury travelers, the sector is poised for continued growth. As luxury lodges are increasingly viewed as alternative assets, they are attracting interest from a broader range of investors, signaling a promising future for this high-end lodging segment.
Click here to download the CBRE report.
