The luxury hotel market in Australia and New Zealand is outpacing broader accommodation growth, with demand increasing at a 2.9% compound annual rate since 2019—more than twice the 1.3% growth seen across all hotels. This trend reflects sustained interest in high-end stays, particularly in major urban centers and resort areas.
Luxury properties have maintained occupancy rates between 78% and 79%, even as new developments entered the market. The stability suggests strong and consistent demand across key destinations. Since 2020, 20 new hotels, comprising 3,517 rooms, have opened across Australia and New Zealand. In Australia, luxury represented approximately 33% of all rooms delivered during the period.
Prices for hotel units have surged over the past decade. The median cost per room rose 81% from the 2011–2014 period, when it averaged around $396,000, to $718,000 in the 2023–2026 reporting window. This sharp increase highlights the sector’s premium positioning and investor confidence.
Investors are closely tracking pricing benchmarks, as luxury hotels now command significantly higher valuations than standard properties. The sector’s growth is being driven by both domestic and international travelers seeking premium experiences.
Despite economic fluctuations, luxury hotels in Australia and New Zealand continue to attract capital. The sector’s ability to sustain high occupancy and strong pricing signals its resilience. Developers are prioritizing locations with proven demand, ensuring that new projects align with market needs rather than speculative trends.
International and Domestic Capital Drives Luxury Hotel Transactions
Investment in luxury hotel assets across Australia and New Zealand has accelerated, with over A$3.2 billion in transactions recorded since 2021. CBRE facilitated approximately A$1.75 billion of this, accounting for more than half the total value. The firm’s role highlights its influence in shaping market activity, particularly as international capital has become a key factor in driving these deals.
Transaction activity has set new standards for pricing and yields, attracting both local and foreign buyers. These outcomes occurred under varying conditions, including sales during pandemic restrictions and later recoveries. China and Hong Kong led investment between 2012 and 2018, while Singaporean and Malaysian capital has remained consistent, broadening the investor base in recent years.
