Luxury travellers fuelling hotel developments

​Sydney, 7 November 2019 - High-end offerings account for nearly half of the hotels set to be built in major Australian cities over the next five years, as the industry looks to capitalise on luxury travel.

Of the hotels in the development pipeline running through to December 2024, 49% are either rated as the equivalent of five-star (37%) or six-star (12%) product.

That accounts for 23,128 of the 47,664 rooms in the national supply pipeline across Adelaide, Brisbane, Cairns, Canberra, Darwin, the Gold Coast, Hobart, Melbourne, Perth and Sydney.

The data was compiled by CBRE Research for the Q3 2019 Hotel MarketView.

“There is an increasing trend towards developing high-end product,” Benjamin Martin-Henry, CBRE Associate Director, Research, said.

“Owners are positioning themselves to capitalise on the growing luxury travel market, particularly with visitors from China.”

The pipeline is headlined by six new six-star hotels – totalling 1,642 rooms – set to open before the end of 2020; two in Melbourne and one each in Adelaide, the Gold Coast, Perth and Sydney.

A total of 86 hotels classed as five- or six-star, designated as Upper Upscale and Luxury in the research, are in the development pipeline running through to December 2024, accounting for 23,128 rooms.

Melbourne leads the way on those hotels with 22, but its tally of 5,120 rooms is shaded by the Gold Coast’s 5,500 rooms at 11 sites.

“Australia is certainly moving away from the cookie-cutter, standardised approach of hotels of yesteryear, and we are seeing more luxury and lifestyle brands than ever,” CBRE Hotels National Director Wayne Bunz said.

“Guests today are looking for experiential travel, to stay in places where they feel connected to the city they are staying, and are willing to pay a premium for an exclusive product or service.”

Mr Bunz said this had led to the development of bespoke and highly-individual hotels, by engaging local designers. These hotels were influenced by innovation, experiences, design, and focused on the modern-day traveller’s personal requirements.

“This more bespoke approach is being led not only by visionary hoteliers, but also the larger management companies,” Mr Bunz said.

“This can certainly be seen in Brisbane where we currently have the best new hotels in Australia such as the Calile, Art Series, Ovolo and Emporium Hotels, allowing the city to attract a new calibre of travellers.

“The Queens Wharf Development in Brisbane opening in 2024 is further high-end product that will be a strong drawcard for visitors and will lead to higher occupancy and room rates.”

Across the full development pipeline, Melbourne has the most rooms at 13,928, followed by Sydney on 10,294 and the Gold Coast on 8,215.

Measuring in-pipeline rooms against the existing supply, the rate of development is highest in Hobart on 56%, followed by Melbourne on 54% and Adelaide on 43%.

The push towards top-end product comes amid growth in per-traveller spend and international visitor numbers in the 2018/19 financial year ending June 30.

International arrivals reached a new record of 8.6 million guests, an increase of 2.8% on the preceding 12 months, while their combined overnight spend rose by 5.4% to $30.8 billion.

The overnight spend by domestic travellers in the same period grew by 10.4% to $70.3 billion.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com