The outlook for Australia's accommodation sector is strong, reflecting both the increased demand for rooms off the back of growth in the domestic and international visitor markets, and the historically lower levels of new supply.
Robust Accommodation Pipeline
There are a total of 50,878 rooms in the pipeline until 2028, from a total of 299 projects.
The interactive report below features statistics on the number of Australian hotel rooms and projects which are currently in the development pipeline (in planning, construction or final planning). Use the project phase and state/territory drop-down filters to customise the report.
RevPAR on the rise
Capital city accommodation has seen high occupancies for the year ending December 2018. Sydney, Melbourne, Cairns and Hobart reported strong results of over 80 per cent (STR, December 2018). This demand has significantly improved the hotel sector’s Revenue Per Available Room (RevPAR) in recent years and is expected to continue to rise, with Deloitte Access Economics projecting growth of 3.1 per cent in 2019. For more information, visit STR's website.
Hotel Investment Returns
Compared to other property types, hotel investments performed favourably over the last ten years to July 2017. The risk return profile of hotel assets was superior to that of other asset classes, having similar volatility to industrial and office assets, however, considerably outperforming with higher returns.
Future Prospects Remain Positive
Deloitte Access Economics reported that 2018 remains positive for the Australian hotel sector. They expect room nights sold to grow over the next three years at 2.7 per cent per annum, and national occupancy rates to climb to 70.8 per cent by 2019. Revenue per available room is forecast to grow by 3.1 per cent over the next three years, and average room rates are expected to increase at an average of 2.5 per cent over the same period.
Recent Hotel Transactions
Colliers International reported a total of $1.8 billion in hotel transactions for 2018 based on 37 sales, with key highlights including:
- Queensland was the most active hotel investment market ($491 million) as investors made counter cyclical plays, capitalising on improving fundamentals in Brisbane and ongoing strength of trade in the key leisure markets.
- Volumes in New South Wales and Victoria were solid, aided by some big-ticket sales, and the Northern Territory witnessed its largest single investment since 2010 with Delaware North's acquisition of the Darwin casino.
- Offshore capital continued to dominate, accounting for two-thirds of transaction volume, with a notable broadening of the capital base with investors sourced from Singapore, Malaysia, Thailand, Middle East, Hong Kong, India and the United Kingdom.
- Development sales were prominent throughout 2018 with notable transactions including the Quincy Melbourne. More development sales are expected over the coming year with projects currently being marketed in Canberra, Sydney, Adelaide and Melbourne.
- Hotel openings are expected to peak in 2019 with the opening of more than 6,500 new rooms in the ten major accommodation markets. Deal flow is also expected to increase as owners respond to changing market conditions, particularly in markets with new supply.
Source: Colliers International Hotel Sales 2018