Hotel Performance Trends
Australian hotel markets reported revenue per available room (RevPAR) figures that surpassed 2019 benchmarks for the period ending September 2026. According to data provided by CBRE, national occupancy levels reached 74%, while the average daily rate (ADR) climbed to $253. These indicators represent year-over-year growth across major metropolitan regions, signaling a robust recovery in hotel performance metrics. The data indicates that the industry has experienced a sustained upward trend in yield and pricing power throughout the year. Source
Sydney emerged as a leading market, achieving an occupancy rate of 84% and a record RevPAR of $291. This figure marks an 8% increase compared to the previous year and places local performance 33% higher than 2019 levels. Other cities showed varying degrees of growth; Perth and Adelaide led the RevPAR increase nationally with 10% gains, reaching $220 and $166 respectively. Brisbane recorded RevPAR of $199, while Hobart saw a 7% increase to $176, and Melbourne rose 5% to $192. Source
The growth in hotel performance is largely supported by strong domestic demand, which constitutes over 70% of city hotel occupancies. Although corporate business travel remains below pre-pandemic levels in certain hubs like Melbourne, the decline has been offset by consistent growth in leisure travel and event-based tourism. Major sporting events, such as the Ashes cricket series and British & Ireland Lions rugby matches, served as significant demand drivers in 2025, assisting hotels in maintaining elevated rates. Source
A shift in product offerings, moving away from traditional business-focused hotels toward lifestyle-branded properties, has further influenced market dynamics. The introduction of brands like Mondrian, Hyde, 25 Hours, Moxy, and Caption by Hyatt has allowed hotels to cater to leisure travelers seeking wellness features and premium dining. These lifestyle hotels have contributed to increased guest spending, helping properties maintain ADR growth despite softer occupancy rates in cities with significant supply expansion, such as Perth and Brisbane. Source
International tourism has also contributed to the recovery, with annual visitor arrivals now reaching approximately 8.4 million, effectively matching pre-pandemic volumes. While total arrival numbers are comparable to 2019 figures, tourists are reporting longer average stays, leading to total tourism expenditure that exceeds previous records. Inbound travel from Southeast Asia, particularly India, Vietnam, Thailand, and the Philippines, has grown significantly, helping to mitigate the impact of changing airline capacity from other regions. Source
Supply and Investment Outlook
Hotel development has slowed over the last three years, largely due to high construction costs and persistent labor shortages. Approximately 6,000 new rooms have been added across Australia during this period, bringing total national supply to 135,000 rooms. Future development is increasingly focusing on suburban and metropolitan hubs rather than traditional central business districts. Preparations for the 2032 Olympic Games in Queensland are driving new inventory, though analysts note risks regarding potential oversupply following the event. Source
Investment activity in the hotel sector totaled $1.24 billion for the first nine months of 2026, representing a 22% increase year-to-date, despite a deceleration in third-quarter volumes to $142 million. Domestic investors accounted for 60% of these transactions. Meanwhile, hotel management structures are evolving through the adoption of third-party operators (TPOs). Companies such as Trilogy Hotels, 1834 Hotels, and La Vie are assuming daily operational control, a model that allows asset managers to decouple property management from the primary brand. Source
Planned luxury additions include the debut of the Andaz brand on the Gold Coast and the introduction of the St Regis brand, also on the Gold Coast. The hospitality industry is closely watching the 2027 opening of Australia's first Waldorf Astoria in Sydney, which will be situated near the Sydney Opera House. These brand entries reflect a broader strategy of reinvesting in existing assets and upgrading mid-scale properties into luxury or lifestyle venues to combat rising construction costs for new builds. Source
The following table summarizes current RevPAR and performance trends in select Australian cities based on the reported year-to-date data for 2026: Source
| City | RevPAR (AUD) | YoY Growth |
|---|---|---|
| Sydney | $291 | 8% |
| Perth | $220 | 10% |
| Brisbane | $199 | N/A |
| Melbourne | $192 | 5% |
| Hobart | $176 | 7% |
| Adelaide | $166 | 10% |
Operators are finding that upgrading underperforming spaces and improving food and beverage concepts provide the strongest returns in the current high-cost climate. This focus on asset repositioning is replacing large-scale greenfield development projects that were previously common before the post-pandemic spike in building expenses. The sector continues to emphasize the need for professional asset management to unlock value and protect margins as guest expectations continue to evolve in a complex and competitive market environment. Source
Finally, the industry remains focused on capturing the high levels of discretionary spending from domestic baby boomers, who are currently driving demand for premium leisure stays. Hotel owners face the specific challenge of creating local experiences that compete with the appeal of overseas travel, which remains a primary spending competitor. The stability of demand is expected to be maintained through 2027, provided that the current mix of domestic tourism and rebounding international arrivals remains steady, according to market observations. Source
