Five new hotels currently underway in Sydney CBD

These will add 1,129 new rooms to the city’s hotel market over the next two years.

JLL says Sydney recorded no new hotel openings in Q1 2026, marking a continued moderation in the supply cycle following the completion of 25hours Sydney and Caption by Hyatt Central Sydney in Q4 2025.

According to JLL, five hotels are currently under construction in Sydney’s CBD, which are expected to add 1,129 rooms, or 4.9% of existing stock, over the next two years. However, the consultancy noted that future supply is expected to remain constrained due to limited development sites and elevated construction costs.

Despite the absence of new supply in the quarter, JLL said Sydney maintained its position as Australia’s highest-performing hotel market through 2025, leading nationally in occupancy, average daily rate (ADR) and revenue per available room (RevPAR). This performance has carried into Q1 2026, with continued growth in both ADR and occupancy.

The consultancy said limited asset availability kept 2025 hotel transaction volumes relatively subdued at AUD382.6 million, well below long-term averages. However, investor appetite remains strong, with several notable deals expected to complete during 2026.

Looking ahead, JLL expects Sydney’s hotel sector to maintain robust demand supported by diversified international and domestic visitor segments, including leisure, corporate travel and a strong calendar of major events that continues to drive forward bookings.

JLL added that investor interest is expected to remain elevated, underpinned by solid trading fundamentals, a tightening supply pipeline and positive market outlook. Transaction activity is also anticipated to rebound in 2026 as both domestic and offshore capital target exposure to the Sydney hotel market.