Nearly 90% of hotel-industry participants in Australia and New Zealand are looking to maintain or increase their exposure to the sector, despite a consensus that per-room revenue in some major cities could take three-to-five years to recover to pre-pandemic levels.
That’s among the key takeaways from a CBRE Hotels survey of over 70 hotel owners, investors, developers and industry consultants, covering topics including revenue recovery and asset values.
The signs of recovery are clear in responses to the Market Conditions Survey, as tourism in the two countries ramps up following two years of closed borders, even with recent volatility in financial markets.
Asked whether their investment outlook for the sector had changed since early-2020, 50% of respondents indicated they would invest more, with a further 38% answering their investment level would remain the same.
That is despite 62% of participants believing it will take three-to-five years for international arrival numbers in Australia and New Zealand to return to 2019 levels.
Most put the same timeframe on revenue per available room (RevPAR) returning to 2019 figures on an annualised basis in Auckland (69% of respondents), Melbourne (63%), Sydney (54%) and Perth (46%).
There was more optimism, though, around RevPAR bouncing next year in Brisbane (51% of respondents) and Adelaide (49%).
Corporate travel is another cause for encouragement, with more respondents expecting demand to return to 2019 levels next year (44%) than over a three-to-five-year period (39%).
“The hotels sector continues to recover from the impact of closed borders,” said Troy Craig, CBRE Hotels Regional Director, Valuation & Advisory Services.
“While in-bound international traffic is still muted, and survey participants expect it will take three-to-five years to fully return to 2019 levels, recovery in the corporate sector is widely expected to a further boost to the current upward swing in 2023,” Mr Craig added.
“The industry’s optimism is underlined by the fact nearly 90% of surveyed stakeholders are keen to maintain or increase their exposure to the sector, with only 13% looking to reduce their exposure,” said Michael Simpson, Managing Director, CBRE Hotels Capital Markets.
Half of the respondents anticipate higher interest rates to flow into yields, but 58% don’t believe inflation will result in stronger average daily rate (ADR) growth.
Capital city hotel values are expected to rise over the next three years, with 55% anticipating growth of up to 10% and a further 11% tipping larger rises.
Queensland and New South Wales are considered the most-attractive markets for hotel purchases or development, with just over three-quarters of respondents expressing an interest in those two states.
That corresponded with Sydney, the Gold Coast and Brisbane ranking as the cities expected to perform most strongly over the coming year.
“Two-thirds of our survey respondents see growth in asset prices over the medium term, in line with recovering visitation,” Mr Simpson added.
“Queensland and New South Wales are clearly the markets attracting the most interest, with Sydney also expected to be 2023’s strongest-performing city,” Mr Simpson concluded.