Sydney to add 1,173 hotel rooms to existing stock

There are currently six hotels under construction, which will yield over 1,100 new rooms.

Since 2020, Sydney has welcomed 2,270 new rooms to the market, representing a 10.4% increase in total room stock, according to a JLL report. The supply cycle continues to slow down, with no new hotels opening in 2024, after 2023 saw 816 new rooms, representing a 3.5% increase in room stock.

“Currently, there are six hotels under construction in Sydney’s CBD and fringe suburbs, which are set to add 1,173 new rooms, or 5.1%, to existing stock. Sydney’s next hotel opening is anticipated to be The Eve Surry Hills Village (102 rooms), set to open in Q1 2025,” the report said.

Here’s more from JLL:

Latest data from Sydney Airport announced that total traffic reached 30.4 million passengers (YTD September), a 7.9% increase y-o-y, and recovered to 92.7% of 2019 levels. Major events, such as Vivid Sydney and SXSW, also continue to drive strong hotel performance.

Recent visitation statistics from Tourism Research Australia also highlight the improvement in demand. Sydney recorded 33.7 million visitors, with visitor nights (1.3%) and visitor expenditure (8.6%) both improving y-o-y.

Growth in trading performance continues

As of YTD December 2024, Sydney hotels continued to record growth in trading metrics, with y-o-y increases across occupancy, ADR and RevPAR. The recovery continues to be driven by steady growth in rates and occupancy, with ADR and RevPAR exceeding pre-pandemic levels.

Sydney transaction volumes totalled AUD 452.5 million (across eight transactions) for full year 2024, including a number of notable sales such as Courtyard by Marriott North Ryde, Novotel Parramatta, Woolstore 1888 by Ovolo and Holiday Inn Bondi Junction.

Outlook: Sydney poised for further growth in 2025

Sydney hotels are anticipated to continue seeing improvement in occupancies and moderated ADR growth. The outlook is positive with a significant events calendar, international and Chinese visitation and corporate/MICE demand returning.

Transaction activity is forecast to be strong, driven by robust investor interest, strong trading performance and an anticipated fall in interest rates. Despite the challenging conditions, Sydney will benefit from favourable underlying market fundamentals, limited new supply and a positive long-term outlook.