Hotel investment activity in Australia remains remarkably resilient

Hotels have an inflation hedging appeal.

Despite a broader slowdown in commercial property markets due to rising interest rates, a Savills report said hotel investment activity in Australia has shown remarkable resilience. 

“Hotel investment volume rose by more than 80% in 2022 to AU$3.5 billion, its highest level since 2015. Activity was boosted by sale of the Hilton Sydney for AU$530 million, the largest single hotel asset acquisition in Australia,” the report added.

Here’s more from Savills:

In 2023, hotel investment volume declined by a modest 6% off relatively high 2022 levels, compared to much larger declines of between 41% and 64% for the industrial, retail, and office sectors. 

Investment markets have continued to be active recently, with deal volume of over AU$400 million in Q1/2024, including major transactions such as the Four Points by Sheraton Melbourne Docklands hotel for AU$96 million. This sustained activity underscores the sector's strong fundamentals and the inflation hedging appeal of hotels through dynamic nightly pricing.