The Australian and New Zealand luxury hotel sector is expanding as supply struggles to keep pace with growing demand. According to CBRE’s Luxury Hotel Market report, luxury assets are outperforming the wider industry with demand increasing at a 2.9% compound annual growth rate since 2019. This growth rate is more than double the broader hotel market’s 1.3% increase during the same period.
High occupancy and rising prices
Occupancy rates have remained stable at 78% to 79% despite new supply entering the market. Since 2020, 20 hotels comprising 3,517 rooms have opened across Australia and New Zealand. In Australia, luxury properties represented approximately 33% of all rooms delivered during this timeframe. The median transaction price per key increased by 81%, rising from around $396,000 between 2011 and 2014 to $718,000 in 2023 and 2024.
The rising worth is drawing international hotel chains to the area and enabling growth via conversions, repositioning, branded residences and stand-alone operating formats. From 2021 onward, about A$3.2 billion worth of luxury hotel properties have changed hands in Australia and New Zealand. CBRE provided advisory services on A$1.75 billion of that activity, accounting for 55 % of the overall deal value.
Strong foreign demand has bolstered market liquidity and contributed to fresh pricing standards together with vigorous local investment. Investment from China and Hong Kong peaked during 2012-2018, whereas funds from Singapore and Malaysia have remained consistent lately.
Rate premiums widen across markets
Ally Gibson, CBRE’s Director of Hotel Research, noted that the analysis shows luxury hotel performance is supporting pricing outcomes across its transactions. Since 2019, the average daily rate for luxury hotels increased across every market analysed, with premiums over the all-scales sector widening considerably.
Australian luxury hotels saw their average ADR premium over the broader market climb 53 %, moving from $62 in 2019 up to $94 by 2026. In Queenstown, the premium jumped from roughly NZ$78 to NZ$140, the top level among the studied markets, showing its status as a scarce luxury leisure spot. Sydney still provides the most robust performance among major gateways, with fresh offerings setting raised rate standards.
Limited pipeline supports established assets
Looking ahead, the report shows 11 ANZ luxury hotels comprising approximately 1,979 rooms are under construction. Most delivery is expected in 2026 and 2027. Beyond the current development cycle, the confirmed pipeline thins materially as feasibility constraints limit new projects. Strengthening demand and limited new supply should support the performance and value of established luxury assets, particularly in markets with high barriers to entry.
