Hotels Australia - Overview & Outlook 2024

Key performance indicators for the Australian Hotels market continued to improve over 2023, driven by strong international and domestic demand. Substantial growth in ADR and RevPAR has seen investors look to hotels as an inflation hedge, driving investment volumes. In this report we highlight these key factors and provide an outlook on our expectations for hotel market performance in the short-term.

• Despite the surge in outbound international travel, domestic travel remains strong and has surpassed levels seen prior to the pandemic.
• International inbound travel continues to recover but there is still a gap to bridge, with short term overseas arrivals ~24% below pre-pandemic levels, and holiday related travel being at just ~64% of 2019 levels. Visitors from some countries have surpassed 2019 arrival numbers, including those arriving from Nepal, Vietnam, Fiji, Ireland, and South Korea.
• Overall, Australian outbound travel on a short-term basis over 2023 recovered to 88% of 2019 volumes. Closer regional destinations are likely to experience continued growth in Australian visitation levels.
• Performance indicators experienced solid growth in 2023 - Average Daily Rate (ADR), Occupancy and Revenue Per Available Room (RevPAR) – although the pace of growth has moderated compared to 2022.
• New supply forecast for 2024 and 2025 has contracted due to increased borrowing and construction costs. Most new stock will be at the premium end, with limited mid-range and economy projects.
• Transaction volumes in 2023 continued to increase by sale volume although not by number of deals. With the expectation that interest rate cuts will commence in late 2024 and into 2025, investment activity is forecast to remain at elevated levels as sidelined equity capital is deployed.