Report
Australia Key City Hotel Market Outlook, Sept 2022
Market Recovery and Performance:
Australia's hotel market in Q3 2022 showed signs of recovery as international borders reopened in December 2021. The Australian business outlook forecasts growth in 2022-23 with an unemployment rate of 3.7% and an expected population increase of 321,000. However, the recovery faces challenges from geopolitical tensions, rising inflation, and interest rates.
Regional Economic Outlook
- New South Wales (NSW): Expected to lead in economic growth driven by resilient household demand and business investment.
- Victoria (VIC): Recovering from earlier lockdowns with strong growth prospects.
- Queensland (QLD): Growth driven by international exports amidst domestic economic headwinds.
- Western Australia (WA): Relies on exports for economic growth.
- South Australia (SA): Slower growth expected due to rising living costs and imports.
- Tasmania (TAS): Growth supported by population expansion despite higher prices.
- Australian Capital Territory (ACT): Strong growth driven by increased social security and defence spending.
- Northern Territory (NT): Supported by household demand but needs investment in export capacity for sustained growth.
Tourism Outlook
- International Arrivals: Improved since border reopening, with projections for near pre-pandemic levels by late 2023 or early 2024.
- Domestic Tourism: Expected to surpass pre-pandemic levels by 2023-24, with VIC and NSW experiencing slower recovery due to past lockdowns.
Hotel Market Performance
- RevPAR (Revenue per Available Room): Significant variations across regions, with some exceeding pre-pandemic levels and others lagging.
- Brisbane: 66.8% YoY increase by September 2022.
- Melbourne: 121.8% YoY increase, though still below 2019 levels.
- Sydney: 107.8% YoY increase, also below 2019 levels.
- Gold Coast: 61.1% YoY increase.
Supply Pipeline
- Sydney: CAAGR of 3.0% from 2021 to 2026, with notable additions under construction.
- Melbourne: CAAGR of 4.1%, with a substantial pipeline in upscale and luxury segments.
- Brisbane: CAAGR of 2.0%, focusing on luxury and upper upscale segments.
- Perth: CAAGR of 1.8%, with significant ongoing developments.
- Other Regions: Varying growth rates with a mix of midscale, upscale, and luxury developments.
Key Trends and Insights
- Luxury and Upper Upscale Segments: Significant growth in new hotel supply, reflecting investor confidence in high-end market recovery.
- Domestic Tourism Surge: Increased domestic travel has boosted hotel performance, particularly in leisure-focused regions like the Gold Coast and Sunshine Coast.
- Geopolitical and Economic Challenges: The ongoing war in Ukraine, rising inflation, and interest rates pose risks to the recovery trajectory.
Future Outlook
The outlook for 2023 is optimistic, with expectations for continued recovery in both international and domestic tourism. Key events and government spending are projected to support this growth. However, economic uncertainties and rising operational costs will remain significant challenges.
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