Australian Hotels Winning Against Uncertainty↗
Photo credit: IHG Hotels and Resorts
Australia’s hotel sector is entering 2026 with renewed confidence, buoyed by strong occupancy results in 2025 even as global economic headwinds and geopolitical uncertainty continue to cloud international travel outlooks.
According to the Australian Financial Review, industry leaders say demand across major cities has rebounded to near pre-pandemic strength, supported by domestic travel, major events and a gradual recovery in corporate and business-related stays.
Matt Tripolone, managing director of IHG Australasia and the Pacific, said the market is “as strong as it has ever been,” though operators must remain agile. He cautioned that domestic pressures and broader macroeconomic forces beyond the industry’s control could quickly reshape travel behaviour, requiring hotels to adapt rapidly.
Occupancy recovery gains momentum
Accommodation Australia’s 2025 end-of-year report card graded the national hotel sector an A-minus, reflecting solid performance across most capital cities. Perth led the gains, followed by Sydney, Hobart and Adelaide, while Melbourne also benefited from major events, including the Australian Open, which helped lift hotel occupancy by 6 per cent compared with the same period last year.
Chief executive James Goodwin attributed the strong results to a mix of international sporting and cultural events, renewed confidence in business travel and increased demand for longer stays linked to construction projects and remote work patterns.
Not all regions shared equally in the recovery. Brisbane and the Gold Coast recorded modest declines after extreme weather events and cyclones disrupted travel in south-east Queensland, highlighting the sector’s exposure to climate-related risks.
Domestic travel and new work trends reshape demand
Hotels adviser Dean Dransfield said geopolitical tensions and fluctuating exchange rates could alter global travel flows, but may ultimately favour Australia. As international uncertainty grows and post-pandemic “revenge travel” fades, domestic travellers may opt to explore closer to home, while overseas visitors who do travel could see Australia as a safe and stable destination.
He added that Australia’s hotel market remains heavily driven by domestic corporate travel, meaning shifts in business confidence tend to flow directly into occupancy levels.
While traditional business travel has not fully returned to pre-COVID norms, a new category of demand has emerged. Hybrid and remote work arrangements are prompting teams to gather periodically for strategy sessions and team-building events, driving short stays and increased use of hotel conference facilities.
Cautious optimism for 2026
Industry leaders broadly agree the outlook for 2026 is positive, provided operators stay flexible. Collaboration with governments, tourism bodies and event organisers will be critical to sustaining momentum as economic and geopolitical conditions remain volatile.
As Tripolone noted, strong fundamentals are in place, but success will depend on how well hotels respond to a rapidly changing global environment.
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