Australian hotel sector sees record growth across performance and investment

Record high performance and transactions across Australia’s hotel sector in 2025 reflect a realignment of the market, a new CBRE report shows.

CBRE’s Hotels Australia Overview and Outlook report found offshore investors accounted for 78 percent of total transaction activity in 2025, up from 27 percent in 2024.

Capital inflows were led by investors from Asia including Singapore, Thailand, China and Taiwan, while major portfolio activity saw US-based capital account for 40 percent of transaction activity over the year.

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CBRE Regional Director, Hotel Valuations, Troy Craig said: “Hotel operating performance has recovered to cycle highs, underpinned by diversified demand growth from international arrivals, domestic leisure, corporate travel and major events.

“Sustained RevPAR growth across major markets has translated into renewed capital deployment, with transaction volumes reaching approximately $2.7 billion in 2025 – the strongest result on record.”

Looking forward, CBRE forecasts transaction volumes will remain elevated and offshore capital is expected to remain active.

CBRE’s Head of Hotels Research Ally Gibson notes Australia’s hotel sector is entering a phase of sustained undersupply which will likely deliver benefits for performance.

“CBRE analysis shows forecast hotel supply is expected to be 41 percent below historic delivery levels for the remainder of the decade, and approximately 35 percent below forecast demand growth,” Ms Gibson said.

“This sustained undersupply reflects structural delivery headwinds, including cost escalation, high land values, competition for alternative land uses, tighter financing conditions and an increased regulatory burden. As demand recovers, the market is doing so with limited capacity to deliver new stock.

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“Hotels are uniquely positioned to benefit from this dynamic. Unlike other property sectors, hotel room rates reprice daily and revenue responds immediately to changes in demand. As supply tightens, hotels convert increased demand into cash flow more quickly than other asset classes, supporting income growth ahead of any meaningful supply response and underpinning feasibility recovery over the medium term,” Ms Gibson added.

The report shows Average Daily Rate (ADR) and Revenue Per Available Room (RevPAR) now exceed pre-pandemic levels nationally, with occupancy nearing full recovery.

Most major markets recorded gains across all three performance indicators, led by Sydney and Perth.

Brisbane delivered particularly strong rate gains, reflecting tightening supply conditions and improving demand depth.

RevPAR growth was a standout, with 6.7 percent year-on-year growth nationally. At least 8 percent annual growth was recorded across Sydney, Brisbane, Perth, Adelaide, Cairns and Hobart. Despite ongoing supply pressures, Melbourne recorded 7 percent RevPAR growth.

Brisbane, Perth, Cairns and Darwin are the only markets to have outperformed pre-pandemic rates across all three performance metrics.

High performing markets

Sydney

As Australia’s premier gateway city, Sydney recorded the highest occupancy, ADR and RevPAR in the country in 2025, with the hotel market benefiting from its gateway status, diverse events calendar and major project investment.

RevPAR increased 9 percent year on year to a record $279, extending Sydney’s lead over other major markets.

Occupancy averaged 83 percent, the highest nationally, while ADR reached a national high of $334, up 5 percent year on year.

Brisbane

The report notes Brisbane remains one of the strongest performing major markets, with leading national rate growth and performance now firmly above pre-pandemic levels across all key indicators.

Alongside Perth, Brisbane recorded the strongest ADR growth nationally in 2025, with rates increasing 9 percent year on year to sit more than 67 percent above 2019 levels, the highest uplift of any major market.

Looking ahead, occupancy is expected to reach 78 percent by 2028, supported by constrained supply and improvements in mid-week demand. Levels are expected to exceed 80 percent in the lead-up to the 2032 Olympic Games.