A rendering of a guest room at 25hours Sydney Paddington.

In HMs 2024-2025 Hotel Development Outlook, JLL Hotels and Hospitality Executive Vice President Strategic Advisory, Ross Beardsell, discusses a changing landscape with a slowdown in new projects and further acquisitions on the cards.

 Australia and New Zealand’s largest-ever hotel expansion is beginning to slow, leaving the region with an enviable stock of world-class hotels and resorts.

There are still some signature hotels in the pipeline, with the Marriott Adelaide, Shangri-La Melbourne, Star Grand Brisbane, and 25hours Sydney scheduled to open over the next year. The launches of Waldorf Astoria Sydney in 2026 and Pullman Launceston in 2027 will largely complete the current luxe hotel development cycle in Australia.

The new hotel development has played a key role in city renewal projects such as Brisbane’s Queen’s Wharf, Perth’s Elizabeth Quay, and Northbank in Melbourne, but even the prospect of hosting the Olympics in Brisbane in 2032 is unlikely to generate a fresh wave of development.

With supply having increased enough to accommodate future demand growth and dramatic rises in construction costs, many other mooted projects will be challenged to stack up.

Past hotel supply booms have traditionally been followed by decade-long droughts as the market rebalances, but in place of major new projects, there is likely to be a move towards substantial asset renovations, such as the AU$60 million upgrading of Sydney hotel icon Sofitel Wentworth.

It is also likely to herald strong acquisition growth, as reflected in the recent sales of 1888 Hotel in Darling Harbour and InterContinental Hotel Double Bay. The acquisition was the second major hotel deal in Sydney in April after the InterContinental Hotel in Double Bay was acquired by a group of developers for AU$215 million.

Effective hotel asset management has never been more crucial. Concerns over the slow recovery in international and corporate travel, geopolitical volatility, the cost-of-living crisis, the potential for further interest rate hikes, and the collapse of Bonza, which will reduce domestic aviation competition, are creating a complex operating environment for hotels at all levels.

Owners and operators will need to adopt a defensive approach to asset management, maintaining a laser focus on their operating structures. This strategic management is not just a necessity, but a key driver of success in the current landscape.

Read HMs full 2024-2025 Hotel Development outlook here.