Capital Edge
Business Insights | Luxury Hotels Are Setting the Pace for ANZ Hospitality Investment
Strong demand growth, rising room-rate premiums and a tightening development pipeline are reinforcing the investment case for ANZ luxury hotels, with established assets benefiting from increasing scarcity and evolving traveller preferences.
September 29, 2026
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Click HereDemand Growth Continues to Outpace the Market
Australia and New Zealand's luxury hotel sector is entering a new phase of growth, underpinned by strong demand, resilient operating performance and a development pipeline that is expected to thin significantly beyond the current cycle. According to CBRE's Behind the Deals CBRE and the ANZ Luxury Hotel Market report, luxury hotel demand across major ANZ markets has grown at a compound annual rate of 2.9% since 2019, more than double the 1.3% recorded across the broader hotel market.This growth has translated into stronger pricing power. Luxury room-rate premiums have widened across most markets as domestic and international travellers increasingly seek premium, experience-led accommodation. Sydney continues to lead the major gateway markets, while destinations such as Queenstown are establishing themselves as luxury tourism hotspots.
Rising Values Reflect Investor Confidence
The sector's strong operating performance is flowing directly into asset values.Median transaction pricing for luxury hotels has increased 81% over the past decade, rising from approximately A$396,000 per key between 2011 and 2014 to more than A$718,000 per key in transactions completed between 2023 and 2026 year-to-date.
Investors continue to be attracted by the combination of growing earnings, limited availability of institutional-grade assets, rising replacement costs and high barriers to entry. The result has been a significant repricing of luxury hotel assets across Australia and New Zealand.
New Supply Has Been Successfully Absorbed
A key feature of the current cycle has been the sector's ability to absorb a substantial volume of new supply without undermining performance.Since 2020, 20 luxury hotels comprising more than 3,500 rooms have opened across Australia and New Zealand, including landmark projects such as W Sydney, Ritz-Carlton Melbourne, The Langham Gold Coast and InterContinental Auckland.
Despite this wave of development, luxury hotel occupancy has remained broadly stable at around 78% to 79%, demonstrating the depth of demand supporting the sector. Rather than diluting performance, new luxury supply has helped elevate room-rate benchmarks and strengthen the overall quality of the region's hotel offering.
A Supply-Constrained Future
While development activity remains active in the short term, the longer-term pipeline appears increasingly limited.Approximately 1,979 luxury rooms are currently under construction across ANZ, with most scheduled for delivery in 2026 and 2027. Beyond that period, the confirmed pipeline falls away materially as rising construction costs, site constraints and development feasibility challenges make new projects more difficult to deliver.
This increasingly constrained supply outlook is expected to support future rate growth and reinforce values for existing assets, particularly in markets where opportunities for new development remain limited.
Global Trends Support Long-Term Growth
Structural demand drivers continue to strengthen the outlook for the luxury hotel sector.The global luxury travel market is projected to expand significantly over the coming decade, supported by growth in the ultra-wealthy population and increasing demand for personalised, experience-led travel. These trends are driving the expansion of international hotel brands, branded residences and independent luxury concepts across Australia and New Zealand.
For investors, the combination of strengthening demand, rising room rates and limited future supply is reinforcing luxury hotels as one of the most compelling opportunities within the broader hospitality sector.
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