Australia Key City Hotel Market Outlook, March 2023

31 May 2023

This report by Horwath HTL Australia provides an outlook for 10 key city markets across Australia, assessing performance to date in March 2023 and the outlook for future growth.

The data as published in the report is based on the economic forecast by Deloitte Access Economics March 2023 quarter, historical hotel performance from STR as of March 2023 as well as historical tourism data available 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 March 2023, all key markets but Melbourne have recorded a higher rolling 12-month average RevPAR compared to year-end December 2019, with Sydney just passing that milestone as of March. Melbourne was only about $2 away from the December 2019 RevPAR number.

All markets tracked across Australia have seen continued improvements and a steady return towards pre-COVID operating levels, though as we move towards the second half of 2023, the expectation is that growth rates will slow down or perhaps show some declines. For the month of April 2023, we do note that only Sydney, Adelaide and Perth recorded positive RevPAR growth year-on-year over April 2022.

The continued slow return of corporate travel continues to impact Melbourne and Sydney more than other markets, where the business travel market is a key demand source. We note that air seat capacity on the country’s busiest city pairing between Sydney and Melbourne was at 79% of its 2019 equivalent for the December 2022 quarter, lagging behind overall seat capacity recovery levels.

As was the case in our December 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.

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