Beyond Recovery

Why Australia's next hotel investment opportunity is being driven by growth, not recovery 

Australia's tourism recovery is nearing completion. 

International visitor arrivals reached 9.16 million in the year ending May 2026, equivalent to 98% of pre-pandemic levels. While that milestone suggests Australia has largely recovered lost ground, the bigger opportunity lies in what comes next. 

As CBRE's Beyond Recovery report highlights, the next phase is not about recovering lost demand. It is about increasing Australia's share of future global travel. 

The foundations for that growth are already evident. International visitors are spending more, staying longer and generating greater value for the hotel sector than they did before the pandemic. At the same time, elevated construction costs, financing conditions and development feasibility challenges continue to constrain new hotel development across Australia. 

For hotel investors, these trends create a compelling backdrop for future income growth and asset performance. 

Visitors Are Worth More Than Ever 

The strongest tourism story today is not the recovery of visitor numbers. It is the quality of the demand returning. 

Average international visitor spend has increased from $5,195 to $6,795, while average hotel stays have extended from 6.7 nights to 8.6 nights. International arrivals are now providing more value to Australia's hotel sector than they did before the pandemic. 

For investors, those metrics matter as much as arrival volumes. 

"Volume is important, but not at any cost," says Michael Simpson, Managing Director, Capital Markets, Hotels. 

"Higher-spending guests support revenue across rooms, food and beverage, conferencing, wellness and other services. That ultimately drives stronger profitability and asset performance." 

Troy Craig, Regional Director, Hotel Valuations at CBRE, said the quality of demand is becoming increasingly important. 

"From a valuation perspective, how visitors spend is often just as important as how many arrive. Longer stays and higher guest spending support hotel earnings, which are key drivers of value across the sector." 

The result is a stronger demand profile that supports revenue growth across Australia's hotel market. 

The Biggest Opportunity Is Still Ahead 

Australia currently attracts 0.32 international visitors per resident compared with 0.37 in 2019. Returning to that benchmark alone would deliver approximately 1.07 million additional international visitors each year. 

The longer-term opportunity may be even greater. New Zealand currently attracts around twice as many international visitors relative to its population, highlighting the potential for Australia to capture a larger share of global travel demand over time. 

This is why Australia's tourism outlook should be viewed through a growth lens rather than a recovery lens. 

Michael Simpson said, "Australia remains one of the world's most aspirational travel destinations, supported by its climate, natural attractions and diverse experiences. 

Future growth will be driven by expanded aviation connectivity, premium tourism offerings and major global events such as the Rugby World Cup 2027 and the Brisbane 2032 Olympic Games." 

Australia's tourism recovery may be nearing completion, but its growth story is still developing. 

Demand Growth Meets Supply Constraints 

Strong demand fundamentals are only one part of the investment equation. 

CBRE's research points to a constrained hotel supply pipeline, with elevated construction costs, financing pressures and development feasibility challenges continuing to limit new development across the country. 

Importantly, future demand growth is expected to occur against this constrained supply backdrop. 

"Quite simply, this enhances the value of existing hotels," says Michael Simpson. 

"Strong visitor growth and higher spending, combined with limited new supply, should support income growth and resulting asset values." 

Troy Craig, Regional Director, Hotel Valuations at CBRE, said the dynamic is particularly important from a valuation perspective. 

"When demand growth is occurring faster than new supply can be delivered, existing hotel assets are typically best positioned to capture that upside. As operating performance improves through higher occupancy and room rates, the impact is reflected in cashflow and ultimately asset value." 

As additional demand enters the market, existing assets are likely to be among the primary beneficiaries. 

What Stronger Tourism Could Mean for Hotel Performance 

CBRE's modelling demonstrates the potential upside if Australia attracts a larger share of international travel demand. 

Under the benchmark scenario, where visitor intensity returns to its 2019 level, national hotel occupancy could rise to 80%, while average room rates increase to $280. In a stronger growth scenario, national occupancy could reach 84% with average room rates rising to $294. 

Troy Craig said the modelling highlights why investors are increasingly focused on long-term tourism fundamentals rather than near-term recovery metrics. 

"Hotel values are ultimately supported by sustainable earnings growth. The scenarios modelled in this research demonstrate the potential for meaningful improvement in occupancy, average daily rates and revenue performance, particularly within gateway markets with strong international demand." 

For investors, the implication is straightforward: stronger demand has the potential to support higher hotel revenues and stronger operating performance. 

The strongest gains are expected in Australia's gateway markets, where international visitation is highest and future hotel supply remains relatively constrained. 

"There is a clear shift towards premium and experience-led travel," says Michael Simpson. 

"Capital city hotels and high-quality leisure assets that offer compelling accommodation, food and beverage and wellness experiences are particularly well positioned." 

Why Global Capital Remains Convicted 

Investor confidence in the sector is already evident. 

"The 2025 calendar year marked a major turning point for hotel investment in Australia, with record transaction activity driven largely by offshore capital," says Michael Simpson. 

He expects investor interest to remain strong, particularly from experienced capital sources across Asia, the United States and Australia. 

"We will continue to see experienced investors from Asia, the United States and Australia dominate hotel acquisitions, supported by Australia's population growth, improving market fundamentals, constrained supply pipeline, and the safety and transparency of our market." 

Those factors continue to underpin Australia's appeal as a long-term hotel investment destination. 

From Recovery to Growth 

For much of the past five years, the Australian hotel sector has been defined by recovery. 

The next chapter will be defined by growth. 

International visitor numbers are close to pre-pandemic levels, but visitor intensity remains below historical benchmarks. At the same time, visitors are spending more, staying longer and contributing greater value to hotel performance than they did before 2020. 

Australia also retains substantial potential to capture a larger share of global travel demand, supported by its tourism offering, major events pipeline, growing international connectivity and strong global reputation. 

With future demand growth expected to occur against a structurally constrained hotel supply pipeline, the conditions are in place for meaningful performance upside across the sector. 

For investors, the opportunity is not defined by the recovery that has already occurred. 

It is defined by the growth that still lies ahead.