As the Hotel Recovery Picks Up, Investors Turn to Luxury.
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According to Colliers, significant changes in the tourist sector over the last two years have prompted hoteliers and investors to pay closer attention to luxury and sustainability in 2023.
According to Colliers' analysis, the expansionary phase of the Australian hotel business will reach its apex in the coming year with the launch of 5949 rooms as investors turn their attention back to a sector that was severely affected by the epidemic.
In the next three years, 12,517 rooms that are currently under development will be completed and made available.
According to Colliers, this growth is related to a trend toward higher-end hotel accommodations as well as a greater emphasis on sustainability credentials, which is being driven by consumer demand.
The Ritz Carlton and Le Meridien in Melbourne, the Capella and Q in Sydney, as well as the Langham on the Gold Coast as part of the Jewel development, have all recently opened or are now under construction.
Forecasts for the sector have been met with caution from investors and industry analysts, particularly earlier in 2022 when tourism and hospitality were negatively damaged by periodic lockdowns and varied state approaches to reopening.
However, foreign visitors have demonstrated confidence, which Colliers said may present "an opportunity for a luxury green facelift."
Since the pandemic's low point, the number of visitors from abroad has steadily increased every month.
According to the most recent Australian Bureau of Statistics data, there were 1.2 million foreign arrivals in October 2022 alone, a growth of 141,330 per month.
Even though it hasn't yet reached pre-pandemic levels, Karen Wales, who was appointed director of hotels for Colliers Asia Pacific last year, said this upswing shows there is room for more expansion.
“As global travel returns to pre-pandemic levels, allowing for the fact that foreign travelers typically journey Down Under with a six-month booking window and the cost of flights have yet to stabilise, the continued reinvigoration of Australia’s hotel industry will elevate the already renowned national brand,” she says.
Compared to the more than 5000 rooms that opened in 2021, the launch of 3420 rooms in 10 major markets throughout 2022 was slower, but it could also be a sign of good things to come.
According to Wales, this has made it possible for hoteliers to react "dynamically" to shifts in traveler demand, spending, and market conditions.
“By remaining leaner until international tourism rebounds to pre-pandemic levels, hoteliers are better equipped to navigate trading market fluctuations for resiliency post pandemic,” Wales says.
With an additional 1421 rooms in the city and 462 new rooms across the larger metropolitan area by the end of 2022, Melbourne is reportedly leading the way in new hotel openings. According to Colliers, this puts the city in a "well-positioned" position to take advantage of an increase in out-of-state and foreign tourists.
With an additional 1421 rooms in the city and 462 new rooms across the larger metropolitan area by the end of 2022, Melbourne is reportedly leading the way in new hotel openings. According to Colliers, this puts the city in a "well-positioned" position to take advantage of an increase in out-of-state and foreign tourists.
During the year, the Gold Coast built 702 rooms, followed by Sydney (424) and Sydney Metro (315).
While there has been an emphasis on luxury accommodations, which Colliers anticipates will persist, there has also been a shift toward more environmentally friendly hotel alternatives, which has been driven by guests.
“The future is also ‘green’ with demand for sustainable hotels growing amongst corporate clients and those travelling for Meetings, Incentives, Conferences and Exhibitions (MICE), who wish to align with businesses who share their social responsibility goals,” Wales says. “An emphasis on sustainability will also increase due to new government policy driving change in this regard and financial incentives such as Green Financing and Grants, which now exist to encourage developers to pursue ESG certifications for their developments.”
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