Report

Australia Key City Hotel Market Outlook, Sept 2023

Market Recovery and Performance:

Australia's GDP growth for FY 2023-24 is forecasted to slow down to 1.2%, a significant drop from 3.3% in FY 2022-23. The unemployment rate is expected to rise to 4.1%, with the population projected to expand by 485,000 people and more than 235,000 individuals joining the labour force.

Continued inflationary pressures and a volatile geopolitical environment pose challenges to tourism recovery, impacting travel intentions and cost of living.

Market Recovery and Performance:

Australia’s GDP growth for FY 2023-24 is forecasted to slow down to 1.2%, a significant drop from 3.3% in FY 2022-23. The unemployment rate is expected to rise to 4.1%, with the population projected to expand by 485,000 people and more than 235,000 individuals joining the labour force.

Market Recovery and Performance:
Australia’s GDP growth for FY 2023-24 is forecasted to slow down to 1.2%, a significant drop from 3.3% in FY 2022-23. The unemployment rate is expected to rise to 4.1%, with the population projected to expand by 485,000 people and more than 235,000 individuals joining the labour force.
Continued inflationary pressures and a volatile geopolitical environment pose challenges to tourism recovery, impacting travel intentions and cost of living.

Continued inflationary pressures and a volatile geopolitical environment pose challenges to tourism recovery, impacting travel intentions and cost of living.

Tourism and Visitor Arrivals:
Short-term international visitor arrivals to Australia are returning to a more seasonal trend, with YTD August 2023 figures at 73% of 2019 volumes. The full recovery to pre-COVID levels is not expected until 2025. Domestic tourism is recovering faster, with visitor nights expected to surpass pre-pandemic levels by 2023 and maintain strong performance through 2024.

Hotel Market Trends and Performance:

RevPAR Performance: Major cities showed varied performance in RevPAR (Revenue per Available Room) for YTD September 2023:

Sydney: +38%

Melbourne: +24.3%

Brisbane: +20.6%

Perth: +28.4%

Adelaide: +12.4%

Canberra: -2.3%

Gold Coast: +2.4%

Hobart: +1.3%

Sunshine Coast: -3.9%

Newcastle: +13.7%

Supply Pipeline:
Australia’s hotel market is seeing a substantial supply pipeline with notable city-specific data:

Sydney: Projected to have a Compound Annual Growth Rate (CAGR) of 3.0% in hotel room supply from 2022 to 2027.

Melbourne: Expected CAGR of 3.4% over the same period.

Brisbane: Projected CAGR of 2.9%.

Perth: Expected CAGR of 2.4%.

Adelaide: Anticipated CAGR of 4.5%, the highest among major cities.

Canberra: Forecasted CAGR of 2.0%.

Hobart: Projected CAGR of 2.9%.

Gold Coast: Expected CAGR of 1.8%.

Sunshine Coast: Projected CAGR of 1.5%.

Newcastle: Anticipated CAGR of 2.7%.

City-Specific Insights:

Sydney: The market outlook shows a robust performance with significant supply additions in the upscale and luxury segments.

Melbourne: Continues to show strong growth with a focus on upscale and upper-upscale developments.

Brisbane: Emphasizes luxury with a 41% share of new developments.

Perth: Displays resilience with a focus on midscale to upper-upscale segments.

Adelaide: Exhibits the highest growth rate in supply, primarily in the upscale and luxury categories.

Canberra: Strong performance driven by a high percentage of serviced apartments.

Hobart: Moderate growth with a balanced mix of midscale and upper-upscale hotels.

Gold Coast: Maintains a diverse range of new developments across various segments.

Sunshine Coast: Steady growth with significant additions in the upscale category.

Newcastle: Dominated by upscale and upper-upscale developments.

Risks and Limitations:
The report outlines several potential risks to the hotel market, including economic disruptions, acts of terrorism, natural events, health scares, political unrest, infrastructure failures, and significant additions to accommodation supply. These factors could severely impact hotel performance and market stability.

Australia’s hotel market is poised for a steady recovery with varied performance across major cities. While challenges persist due to economic and geopolitical factors, the overall outlook remains positive, with significant growth anticipated in upscale and luxury segments.