Australia’s hotel sector recorded its strongest year on record, with transactions soaring to $2.7 billion in 2025.
CBRE’s latest Hotels Australia Overview and Outlook report shows offshore investors accounted for 78 per cent of total transaction activity, up from 27 per cent in 2024.
The report links the surge in foreign capital to record operating performance across the country’s major markets.
We spoke to CBRE’s Head of Hotels Research, Australia Ally Gibson, to find out what the surge in offshore investment signals for the sector.
Foreign Funds Gain Ground
Offshore investors accounted for 78 per cent of hotel transactions in 2025 - a sharp rise from 27 per cent the previous year.
Asian investors from Singapore, Thailand, China and Taiwan led acquisitions.
Meanwhile, major US portfolio activity accounted for 40 per cent of total transaction volume.
Ms Gibson said Australia’s transparent, stable and low-risk investment environment reinforced its appeal.
“Australia is delivering strong income growth in a market where assets are trading below replacement cost, with elevated construction costs rendering new projects increasingly unviable and materially limiting future supply,” she said.
“This supply constraint is expected to support continued income growth and capital value uplift, which is attracting offshore capital seeking both yield and long-term appreciation.”
Revenue Passes Pre-Pandemic Levels
National hotel performance has moved beyond pre-pandemic levels, according to the report.
Average Daily Rate (ADR) and Revenue Per Available Room (RevPAR) now exceed 2019 benchmarks nationally, with occupancy nearing full recovery.
RevPAR rose 6.7 per cent year-on-year across Australia, with several major markets recording annual growth of 8 per cent or more.
“The uplift is being led by the increasing concentration of new, premium and luxury hotel supply, which is lifting baseline room rates across key markets,” Ms Gibson said.
“This is being supported by significant infrastructure investment, improved transport connectivity and a strong pipeline of major events, which are driving demand.”
Top Performing Markets:
- Sydney: Occupancy averaged 83 per cent, the highest nationally. ADR reached $334, up 5 per cent year-on-year, while RevPAR increased 9 per cent to a record $279.
- Brisbane: ADR increased 9 per cent year-on-year. Rates now sit more than 67 per cent above 2019 levels, the largest uplift of any major market. Occupancy is forecast to reach 78 per cent by 2028 and exceed 80 per cent in the lead-up to the 2032 Olympic Games.
- Perth: Now exceeds pre-pandemic benchmarks across all three metrics, recording gains across occupancy, ADR and RevPAR.
- Cairns and Darwin: Alongside Brisbane and Perth, among the only markets exceeding pre-pandemic levels across occupancy, ADR and RevPAR.
- Melbourne: Recorded 7 per cent RevPAR growth despite additional supply.
Pipeline Falls Behind
New hotel supply is forecast to remain well below historic delivery levels for the remainder of the decade.
CBRE analysis shows forecast supply is expected to be 41 per cent below historic delivery levels and approximately 35 per cent below forecast demand growth.
The report attributes the slowdown to cost escalation, high land values, competition for alternative land uses, tighter financing conditions and increased regulatory burden.
Ms Gibson said growth was expected to be both income and capital-led, supported by strong operating fundamentals and elevated replacement costs.
“Sydney will continue to lead as the blue-chip market, Brisbane is entering a golden growth phase, and Perth is accelerating on the back of resource-driven demand,” she said.
“Melbourne is expected to see a strong recovery as demand deepens and supply is absorbed.”
