- Australia’s hotel sector is projected to recover fully by the end of 2025, backed by a rise in international arrivals and steady domestic demand in 2024.
- The Australian hotel industry has shown resilience and strong performance in key cities, even though the pace of growth is expected to be moderate in 2025.
Australia’s hotel sector is on track for complete recovery by the end of 2025, according to the latest Hotels Australia Overview and Outlook report by CBRE. The sector saw a surge in international arrivals and consistent domestic demand in 2024, leading to growth in occupancy rates in all major cities.
National occupancy rates have risen by 2% year-on-year to 71%. Meanwhile, the average daily rate (ADR) has remained steady at $240, and revenue per available room (RevPAR) has increased by 3.8% to $171. In 2024, key performance indicators such as occupancy, ADR and RevPAR recorded year-on-year gains in Sydney, Brisbane, Perth, and the Gold Coast.
Despite a slowdown in growth from the record highs of 2023, the long-term outlook for Australia’s hotel sector remains robust, according to CBRE’s Australian Head of Hotels Research, Ally Gibson. Markets in Brisbane, Perth, and the Gold Coast were the only ones that reached pre-pandemic rates across all three performance indicators.
Travel is back in vogue, with international arrivals in Australia being a mere 13% below pre-pandemic levels. Strong demand has been from China, India and Southeast Asia, and the recovery of the tourism industry has been further bolstered by the addition of 60 new international flight routes and expansion of existing services in 2024/2025.
Troy Craig, CBRE Regional Director, Hotel Valuations, spoke about the bright future of the Australian Hotel sector, citing major events, premium hotel openings, and infrastructure projects in the pipeline. He mentioned the strategic increase in international flights due to pent-up demand from key markets, particularly Asia. This is expected to boost inbound tourism demand and enhance connectivity in 2025.
Domestic travel spending in Australia has risen by 34% compared to pre-pandemic levels. However, year-on-year spending growth stands at only 2% due to increased cost-of-living pressures on discretionary spending. Despite this, leisure travel continues to dominate, with significant growth in meetings, incentives, conferences, and exhibitions (MICE)- related travel.
Although transaction volumes slowed in 2024 due to factors like vendor/purchaser price gaps, high interest rates, and barriers to finance, stronger investment momentum and growth are expected in 2025. Future infrastructure projects, like the expansion of Western Sydney Airport, Melbourne’s third runway and the $2 billion redevelopment of Perth Airport, are expected further to enhance Australia’s air connectivity and global reach.
In terms of supply, around 1,800 rooms were added to the market, and some planned hotel openings were postponed until 2025 due to delays and pipeline shifts. Over the next two years, 5,700 rooms are under construction and set to open.
Hotels Australia Overview and Outlook report
