Australian hotel sales soared past the $2 billion mark in 2022, raking in the second-highest transaction volume to date, as domestic travel continues to drive the local tourism economy and investors wait for interest rates and inflation to stabilise.
Global commercial real estate and investment group CBRE’s latest Hotels Overview & Outlook report found a recovery in hotel occupancy levels and strong growth in Average Daily Rates (ADR) helped insulate the sector from the effects of rising inflation to drive Australian hotel sales.
Last year’s $2.14 billion in hotel sales included 53 transactions valued at more than $10 million – a record number of deals and 39 per cent above the 10-year average.
CBRE’s report also followed the demand drivers and development outlook for the Australian hotel sector.
While ADR growth will plateau over 2023, capital city hotel occupancy levels will increase from an already strong base, particularly in Sydney and Melbourne as international travellers return.
While short-term overseas arrivals remain at 40 per cent below pre-pandemic levels, the reopening of China’s borders is key to Australia’s inbound tourism economy recovery in 2023.
An FCM Consulting report also found that Australian and New Zealand hotels’ room rates recorded the second-highest increase globally in 2022, second only to the US.
In regard to development, the report noted that the hotel market’s expansionary phase will peak in the next 12 months with around 8,400 rooms delivered across major hotel markets in 2023 and 2024.
Following these additions, it’s anticipated that higher debt and construction costs will limit Australia’s hotel development pipeline to key strategic sites with mixed-use appeal.
CBRE Regional Director, Hotel Valuations Troy Craig said: “Even with a recovery in Australians departing for overseas, domestic travel continues to drive the Australian tourism industry.”
“Domestic travel nights are now at or surpassing pre-pandemic levels in Queensland, South Australia, Western Australia and Tasmania and spending in these states is up around 40 per cent on pre-pandemic levels.
“This is benefitting Australia’s gateway cities of Sydney and Melbourne, which recorded the strongest year-on-year growth rates in relation to both ADR and occupancies aided by a recovery in corporate travel and international travel.”
To find out more, visit cbre.com.au
