Australia’s hotel sector in 2025: A year of opportunity for owners?
Latest CBRE report says Australia’s hotel sector is on track for a full recovery by the end of 2025: What owners need to know
According to CBRE’s latest Hotels Australia Overview and Outlook report, Australia’s accommodation industry is positioned for continued recovery and expansion in 2025, with key indicators pointing to growth, investment, and opportunity.
With international travel rebounding, domestic demand stabilising, and major infrastructure projects in motion, owners are well-placed to capitalise on emerging trends. The report highlights key market drivers and opportunities, offering valuable insights for accommodation owners and investors looking to stay ahead in an evolving landscape.
Read the latest AccomNews print edition HERE
The numbers: recovery in full swing
National occupancy rates have climbed to 71 percent, reflecting a 2 percent increase year-on-year. Revenue per available room (RevPAR) is up 3.8 percent to $171, while the average daily rate (ADR) remains stable at $240. Cities like Sydney, Brisbane, Perth, and the Gold Coast have seen significant growth across all key performance indicators, solidifying their positions as top-performing markets.
CBRE’s Australian Head of Hotels Research, Ally Gibson, emphasised that while the sector has stabilised following the record-breaking highs of 2023, long-term prospects remain strong.
“Notably, Brisbane, Perth and the Gold Coast were the only markets to record pre-pandemic rates across all three performance indicators. Melbourne and Hobart face challenges from increased supply and softer domestic leisure demand, though both markets recorded a strong increase in international visitation,” Gibson said.
International travel: A game changer for industry
For owners, the resurgence of international travel presents a lucrative opportunity. Australia’s international arrivals are now just 13 percent below pre-pandemic levels, with strong demand from China, India, and Southeast Asia. Airlines have responded by launching 60 new international routes, significantly improving connectivity.
Troy Craig, CBRE’s Regional Director, Hotel Valuations, noted: “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.”
This expansion in flight routes aligns with pent-up demand, particularly from Asia, and is expected to drive inbound tourism and boost occupancy rates in 2025.
Further supporting the sector’s growth, major infrastructure projects—including the Western Sydney Airport expansion, Melbourne’s third runway, and the $2 billion redevelopment of Perth Airport—will enhance Australia’s global reach.
The rise of MICE and domestic travel
Leisure travel remains dominant, but a key shift in 2024 was the resurgence of meetings, incentives, conferences, and exhibitions (MICE) travel. With domestic travel spend now 34 percent above pre-pandemic levels, business and group travel represent valuable revenue streams for hotels. However, cost-of-living pressures have slowed year-on-year growth to 2 percent, meaning hoteliers must stay competitive by offering compelling value and experiences.
Investment trends: Is now the time to expand?
Despite cautious transaction activity in 2024 due to financing barriers and price gaps, investor confidence is on the rise. More than 72 percent of investors surveyed in CBRE’s Asia Pacific Hotel Investor Intentions Survey plan to increase their hotel asset holdings. Sydney ranks as the second most attractive hotel investment destination in the region, trailing only Tokyo.
For owners, this means the market is heating up—whether it’s time to sell, expand, or renovate, 2025 presents a prime window for strategic decision-making.
New hotel supply: A competitive market
A total of 1800 rooms were added in 2024, with many delayed projects shifting their openings to 2025. Over 5700 rooms are currently under construction, with Melbourne (31 percent) and Sydney (29 percent) leading in new developments. The premium market remains a focus, with 56 percent of new openings catering to high-end travellers.
For existing owners, staying ahead of the competition means prioritising guest experience, upgrading amenities, and leveraging personalised marketing strategies.
2025: A defining year for accommodation owners
With a revitalised tourism market, increasing investment interest, and a competitive supply landscape, 2025 is set to be a transformative year for Australia’s hotel sector. Hoteliers who adapt to shifting trends, embrace new opportunities, and position themselves strategically will thrive in the evolving market.
Whether it’s capitalising on growing international demand, tapping into the MICE segment, or considering investment and expansion, owners have an exciting road ahead. The question is: How will you make the most of it?
