Australia’s hotel room count surpasses 300,000 milestone, and it is already closing in on the 400,000 figure

New property openings in November have helped pushed Australia’s hotel inventory above 300,000 open rooms, according to data from STR. Australia ranks as the 12th largest country market across the world in total room count and fourth among countries in the Asia Pacific region.

According to the most recent figures in STR’s AM:PM platform, the country features 5,600 hotel properties and 300,229 rooms. STR defines a traditional hotel on three exclusionary criteria: it generates revenue on a nightly per-room basis; it has 10 or more rooms; and it is open to the public (excludes those properties requiring membership, affiliation or club status).

“Australia has been on a progressive development path since 2016 with more than 26,000 rooms added to the marketplace,” says Matthew Burke, STR’s regional manager – Pacific. “That is not counting the more than 5,000 rooms that were closed during that period and converted for alternative commercial usage.”

This uptick in investment clearly reflects the country’s strong performance, especially linked to properties in major markets. As a whole, Australia’s occupancy has been at or near 75% for each of the last five years, and average daily rate has consistently ranged around AUD185, according to STR.

The benchmarking specialist says the ten largest markets in Australia represent 57.1% of all rooms in the country, unsurprisingly led by Sydney with 43,841 rooms. While each hotel class is well-represented in the country’s overall numbers, the largest percentage of rooms sit in the Upscale (24.2%) and Midscale (23.6%) segments, according to its data. The Upscale class has seen the largest influx of new supply with 10,931 rooms opened since 2015.

Among branded inventory only in the country, Accor represents the largest market share with almost a third (32.1%) of all rooms. The Ascott Limited is a very distant second with a 7.6% share.

While the 300,000 room milestone may have only just been achieved, Australia is already on its way to achieving its next milestone with commitments already in place for more than 50,000 additional rooms.

According to STR, there are 94 projects and 18,294 rooms in construction in the country as well as 216 projects and 36,005 rooms in the two planning phases of the pipeline.

“Australia is not likely to hit its construction peak until next year, and we don’t expect a substantial slowing in development anytime over the next several years,” highlights Mr Burke.

Melbourne, Hobart and Adelaide are projected to see the largest increase based on their existing room counts, according to STR, while the two highest-tiered segments (Luxury and Upscale) will combine to welcome more than a third (35%) of the new rooms in the pipeline.

All of this new supply, however, has put some pressure on occupancy levels, and subsequently, hotelier pricing confidence. Moving forward STR anticipates demand growth in almost all markets, but with sustained supply increases, it is still forecasting occupancy declines in the short term.

“Room rates will of course be weighed by the additional competition in the market, but that is not likely to become a long-term trend as many markets trade at high absolute occupancy levels with the ability to absorb new supply,” explains Mr Burke.