A surge in international arrivals and steady domestic demand in 2024
has put Sydney's hotel sector on track for a full recovery by mid-2025.

CBRE’s latest Hotels Australia Overview and Outlook report notes that while the pace of growth will continue at a moderate rate in 2025, the sector remains resilient with strong performance in key cities such as Sydney.

National occupancy rates sit at 71 per cent, up two per cent year-on-year, while average daily rate (ADR) remains stable at $240 and revenue per available room (RevPAR) is up 3.8 per cent to $171.

Sydney achieved year-on-year gains across the key performance indicators
of occupancy, ADR and RevPAR in 2024. RevPAR grew five per cent year on year to a record $215, extending Sydney's lead over other top performing major markets.

Sydney occupancy sits at 78 per cent, while ADR sits at a national high of $275, up three per cent year on year.

CBRE Regional Director, Hotel Valuations Troy Craig said: “With major events, premium hotel openings and infrastructure projects in the pipeline, the outlook for the Australian hotel sector remains positive.”

The report found visitor economy recovery had been further boosted by the addition of 60 new international flight routes and expansion of existing services in 2024/2025. More than two-thirds of the new routes connect to major East and Southeast Asian destination alongside new connections to North America, Europe and the Middle East.

“This growth in international flights reflects a strategic response to pent-up demand from key markets, particularly Asia, and is expected to boost inbound tourism demand and enhance connectivity in 2025," Mr Craig said.

"Future infrastructure projects, including Sydney’s Western Sydney Airport will further enhance Australia’s air connectivity and global reach.”

Sydney leading Asia Pacific city for hotel investment

The report noted stronger investment momentum and growth is expected in the hotel sector in 2025. This follows the recent release of CBRE’s Asia Pacific Hotel Investor Intentions Survey, which found more than 72 per cent of investors plan to buy more hotel assets in Asia Pacific.

Sydney was the second most popular city in the region for hotel investment, behind Tokyo which took the top spot.

CBRE Managing Director, Capital Markets Michael Simpson said: "Sydney is Australia's premier gateway market with the highest ADR and RevPAR in the country.

"The market's fundamentals remain strong, supported by the recovery in both domestic, MICE and international visitation, alongside expanded flight routes and the upcoming Western Sydney International Airport.

"While operational and construction costs remain key challenges, strategic premium supply expansion and a dynamic events calendar are expected to further boost investor confidence and drive transaction volumes in 2025."

On the supply front, a total of 1800 rooms were added to the market with delays and pipeline shifts pushing some planned hotel openings to 2025.

More than half of the new supply (56 per cent) is in the premium market. Looking ahead, there are 5700 rooms under construction and set to open within the next two years. A total of 29 per cent of these new rooms will be in Sydney.