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Is new hotel construction in Sydney now moving too fast?

Sydney’s hotel sector appears to have turned a corner, but is it now moving too fast?

For a second month straight, Sydney’s strong hotel construction pipeline has been moving faster than guests and travellers can fill them, with supply increasing at more than double the rate of occupancy, according to preliminary STR results released this morning.

A key factor in the drop is a decline in the number of major events held in Sydney last year compared to July 2017, when English Premier League giants Arsenal played two matches against Sydney FC and the Western Sydney Wanderers as part of a pre-season summer tour.

As a result, lower rates offered by hotels impacted the city’s Average Daily Rate result, which fell 6.9% to $194.05 for the month – the lowest level for any month since September 2014. Average RevPAR took a particularly bad hit, falling 13.4% to $156.12. Demand fell 2.2% and occupancy was also down 7% to a city-wide average of 80.5% -the lowest level seen in July in nearly a decade.

New rooms are popping up all over the city, with supply up 5.1% and indicating Sydney is ready to welcome back travellers who may previously have been squeezed out to suburban regions due to lack of available accommodation.

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