Australia Key City Hotel Market Outlook December 2022 Edition

This report by Horwath HTL in Australia provides an outlook for 10 key city markets across Australia, assessing performance to date in December 2022 and the outlook for future growth.

The data as published in the report is based on the economic forecast by Deloitte Access Economics December 2022 quarter, historical hotel performance from STR as of December 2022 as well as historical tourism data as at January 2023, including forecasted domestic and international visitation from Tourism Research Australia (TRA) as at December 2022 adjusted by Horwath HTL.

As at December 2022, all key markets tracked across Australia have seen continued improvements and a steady return towards pre-COVID operating levels, with international borders opening and domestic visitors moving freely within the country. The recovery path is now facing new challenges including a volatile geopolitical environment and rising inflation and interest rates.

In 2022, there was a noticeable increase in consumer confidence to travel, especially with the leisure market. The MICE sector continues to grow, particularly driven by the return of major events and business travel is gradually resuming and is anticipated to take longer to fully recover.

Although there is still the need for job flexibility and less demand for in-person meetings, companies have become comfortable with a new work-life balance and recognise the need for in-person business relationships on a priority basis.

The slow return of corporate travel has impacted major capital cities where the business travel market is a key demand source. As of December 2022, the Melbourne hotel market still lags behind all other markets in terms of recovery, as the only market with a RevPAR below the pre-pandemic levels.

As was the case in our September 2022 publication, ADR continues to exceed growth expectations. RevPAR recovery in all eight markets is rate-driven with ADR exceeding the pre-pandemic levels in all markets.