Australia’s hotel market saw an increase of 4,924 rooms across the ten major markets in 2021, with Melbourne leading the way. 

According to Colliers research, the expansion of Australia’s accommodation market has continued over the past two years with the addition of more than 8,500 rooms in the ten major markets. 

Melbourne saw the most significant increase, as 2,339 rooms opened in the city and 588 across the broader metropolitan area this year. 

“As the events capital of Australia, Melbourne had one of the fastest growing tourism markets pre-COVID, which coupled with an availability of land, had led more investors to consider developing new hotels in the Melbourne CBD and across the broader metropolitan area,” said Colliers National Director Hotels Karen Wales. 

“Sydney and Melbourne have both seen a regeneration of hotel room stock with new hotels opening across different chain scales, product styles and brands.  

“As Australians start travelling domestically again and international visitors return to our shores, they will be able to enjoy these fantastic new hotels. 

“The Gold Coast will also see some significant new openings including Meriton Surfers Paradise, Dorsett Gold Coast, The Langham Gold Coast and in the future, Mondrian.  

“These assets are well timed to take advantage of growth in domestic leisure tourism through 2022.”  

Colliers found that an increase in new rooms over the next 12 months should mark the national development cycle peak. 

Close to 6,850 rooms are scheduled to open nationally during 2022, with new openings set to peak in the second half of the year, particularly in Sydney and Melbourne. 

Looking forward, the accommodation pipeline is set to dry up in 2023 (3,022 rooms) and 2024 (1,234 rooms), with proposed projects predominately those where the operator has been announced and Hotel Management Agreement already signed.  

As investors wait for demand to catch up with supply, the expansionary phase of the hotel market cycle is expected to slow down. 

“The slowdown in openings will allow demand to catch up with supply and older room stock is likely to be sold for conversion to an alternate use,” Wales said.  

“New additions to accommodation supply are set to peak in Melbourne in 2021, while openings in Sydney will peak in 2022 given that all proposed projects may not proceed.”