Strong demand, limited supply and evolving traveller preferences position Australia as a standout luxury hospitality market in Asia Pacific.
Australia’s luxury hotel sector is experiencing a significant investment upswing, with transaction volumes reaching AUD2.0 billion ($1.4 billion) between 2023 and 2025 as investors increasingly target premium hospitality assets for their resilience, pricing power and long-term growth potential.
According to JLL, luxury hotel assets accounted for 26% of Australia’s total hotel transaction volume in 2025, a sharp increase from just 6% in 2019. The rise reflects growing institutional and private investor appetite for luxury hospitality, supported by strong operational performance and sustained demand from affluent travellers.
The sector expanded at a CAGR of 3.1% between 2017 and 2025, with landmark transactions helping drive momentum, including the sale of One Circular Quay Hotel, future home of Waldorf Astoria Sydney, alongside several high-profile luxury hotel deals across Sydney, Melbourne, Brisbane and Adelaide.
“Luxury hotels in Australia are a highly sought-after investment segment, underpinned by resilient trading performance, constrained supply and often legacy built-form characteristics,” said Peter Harper, Managing Director, Head of Investments Sales Australasia, JLL Hotels and Hospitality Group.
“We are also seeing increasingly diverse capital targeting the sector, with offshore family offices, HNWIs and private companies competing against private equity and some domestic groups for high-quality hospitality assets in gateway and regional luxury destinations.”
Private Equity emerged as the dominant buyer group between 2023 and 2025, accounting for 43% of luxury hotel transaction volume, ahead of HNWIs at 21% and developers at 14%. Cross-border investment activity also strengthened during the period, including KS Hotels & Resorts’ acquisition of the Park Hyatt Melbourne in 2025.
Operational performance has further reinforced investor confidence. Unlike many Asia Pacific markets, luxury hotels in Sydney and Melbourne have outperformed their broader hotel markets on both occupancy and average daily rate (ADR) since 2023. Luxury ADRs in both cities remain approximately 1.5 times higher than overall market averages, highlighting the segment’s sustained pricing power.
“We’re seeing Australia emerge as one of the region’s strongest-performing luxury hotel markets, supported by disciplined supply growth, resilient demand and strong pricing power,” said Wesley Milsom, Executive Vice President, Head of Asset Management & Strategic Advisory ANZ, JLL Hotels & Hospitality Group.
“What is particularly notable is that luxury hotels in Sydney and Melbourne are outperforming the broader market on both occupancy and ADR, reinforcing that demand for premium hospitality experiences remains deep and increasingly year-round.”
At the same time, supply growth remains disciplined. Australia’s luxury hotel inventory expanded at a CAGR of 3.2% between 2015 and 2025, while luxury rooms still account for only around 10% of total national hotel inventory. Future supply growth is forecast to remain modest through 2030, supporting favourable supply-demand dynamics.
Global luxury brands continue to strengthen their presence in Australia, with Waldorf Astoria Sydney set to open in early 2027 alongside the world’s first Ritz Carlton Lodge and incoming St. Regis properties.
The sector is also being reshaped by changing traveller preferences, with affluent consumers increasingly prioritising curated, experience-led stays, wellness offerings and authentic destination experiences over traditional luxury positioning. This shift is expanding demand beyond gateway cities into regional and experiential destinations across the country.
“The Australian luxury hospitality market is entering a new phase of maturity,” added Milsom.
“Demand is increasingly driven by experiential travel, wellness and multigenerational tourism, while investors are attracted by the sector’s ability to deliver strong rates and long-term value creation. Australia is well positioned to benefit from broader premiumisation trends across Asia Pacific.”
The outlook for Australia’s luxury hospitality sector remains positive, supported by constrained supply, growing high-value international visitation and continued brand expansion into markets including Brisbane, the Gold Coast and regional luxury destinations.
Key terms:
ADR (Average Daily Rate): The average revenue earned per occupied hotel room per night.
CAGR (Compound Annual Growth Rate): The annualised rate of growth over a specified period, used to measure how quickly investment volumes, hotel supply or market performance have grown over time.
HNWI (High-Net-Worth Individuals): Individuals with significant personal wealth actively investing in luxury real estate and hospitality assets.
Related Articles
