Hotel Futures 2025

Yes, we are back!

The 23rd edition of Hotel Futures has just been released, Australia’s only long term revenue outlook for major hotel markets. Register to receive a copy today: https://dransfield.com.au/index.php/hotel-futures-subscription-notice/

It’s been a variable year for hotel markets as they move from the tail end of the Covid recovery phase, to a new normal. There are still some steps left in this journey, although the range of variable performance is expected to slowly reduce. Demand has built back well, and generally exceeds pre-Covid levels, despite occupancy still trailing with some new supply. Room Rate positioning has been the hero, and underpins the current strong revenue performance, despite some recalibration later in FY2024.

Room rates will likely finalise their reset through FY2025 in most markets. This could restrict revenue growth to slightly below inflation levels over the short term, despite occupancy continuing to make gains. There are some outliers, with market recovery affected by the amount of supply that has been recently added or is imminent.???

Volatility is still presenting on a short term basis. The latest STR data for August 2024 shows four of ten markets with double digit RevPAR swings on the prior corresponding period, and a couple more above +/- 7%. The message to readers is not to put excessive weight on these short term trends, especially while the statistical base line is still moving. The medium term position should better reveal over the next 12 months.?

Our longer term revenue expectations are positive, with 4.1% growth p.a. anticipated to FY2033. Growth above 3.0% p.a is expected for all 10 cities, with periods of volatility more prominent in the smaller markets. This is due to the impact of more minor changes to a single lever having a more pronounced effect on the overall market.

Overarchingly it is a positive supply and demand equation which underpins the national forecast. The majority of the future supply forecast depends on the market responding over the medium and longer term, rather than active current projects. This is a marked difference from our pre-Covid supply outlook, which was informed by actual construction. This change in the cyclic position reduces the likelihood of oversupply in any particular market.

We are pleased that the market recovery has now enabled more meaningful forecasts and the Dransfield team hopes you find this publication useful to your organisation. Please also feel free to share this information with your network.

#dransfieldhotelsandresorts #australiatourism #hotelfutures #hotels #hotelmarketoutlook #hotelsandresorts #hotelindustry #hotelinvestment #development #asiapacific #hotelinvestment #hoteldevelopers Dean Dransfield Raq Pustetto Hayden Longmuir