Taylor Swift’s 2024 Eras tour boosts Melbourne, Sydney hotel room revenue by $76m – CBRE report
Hot on the heels of a $76 million boost in hotel room revenue in Sydney and Melbourne from Taylor Swift’s Eras tour last year, this will be a “pivotal year” of growth and investment for the Australian hotel industry, according to a new CBRE report.
New hotel openings, infrastructure projects and major events – including the British & Irish Lions tour and The Ashes cricket – are set to drive strong domestic demand.
The CBRE report says more than 620,000 concert-goers secured tickets to Swift’s seven shows last February, and many had booked hotel rooms for the events.
Despite the Swift circus well and truly having left town, a rebound in international arrivals and a resilient domestic market will see us through 2025, with travel across the nation almost back to pre-pandemic levels.
“CBRE expects a full recovery of international arrivals over the course of 2025,” the report reads.
Here’s a breakdown of the main takeaways from CBRE’s newly published 2025 Hotels Australia research report, which summarises the past year and looks at the year ahead.
International travel nears pre-pandemic levels
International arrivals to the land DownUnder are now just 13 per cent below 2019 levels, with demand particularly strong from high-growth markets such as China, India and South-East Asia, the CBRE report found. International tourists embarked on 8.1 million trips to Australia last year, a 15 per cent increase on the previous year.
This is supported by China’s continued recovery, emerging markets driving demand, the acceleration of experiential tourism and a projected surge in spending.
The middle class is expanding, particularly in India, Nepal, South Korea, Ireland and Vietnam, where travel has surpassed pre-pandemic 2019 levels.
Chinese arrivals, Australia’s second-largest source of overseas visitors, are up by almost 70 per cent year-on-year, though this rate is at 62 per cent of its 2019 peak. However, a full recovery is expected by 2027.
Nowhere is more popular than Melbourne, with Chinese arrivals to the city up 250 per cent on the year prior, yet this is still half of pre-pandemic levels.
Traditional markets such as the UK, New Zealand and the US are also on the way up, at 87 per cent compared with 97 per cent pre-pandemic.
The most popular states to visit in Australia are NSW, Victoria and Queensland, while Western Australia has snuck up with a 94 per cent recovery rate.
The introduction of 60 new international flights is expected to further fuel inbound tourism, contributing to the sector’s recovery.
“This growth reflects a strategic response to pent-up demand from key source markets,” the report reads.
“This expanded network is expected to improve accessibility, reduce airfares through greater competition and boost international visitor arrivals.”
Domestic travel stabilises
While domestic overnight stays remain above pre-pandemic levels in almost all states, spending growth has slowed due to cost-of-living pressures that impact discretionary spending, the report states.
“Western Australia and Tasmania have recorded the most significant growth compared to 2019, while NSW, Tasmania and the Northern Territory are the only states to record year-on-year gains,” it reads.
Stronger demand and inflation have led to elevated travel and accommodation costs, leading to a 34 per cent increase in domestic travel expenditure, but year-on-year spending growth has been modest at just 2 per cent.
While leisure travel continues to dominate the market, major events such as the 2025 British & Irish Lions tour and The Ashes cricket series are expected to bring domestic visitors to host cities.
Corporate travel has also shown gains, with trips falling under the category of “meetings, incentives, conferences and exhibitions” (MICE) recording steady growth. The return-to-office mandates have bolstered this “bleisure” (business and leisure) travel.
Hotel performance holds strong amid market moderation
Following a strong performance last year, national hotel occupancy rates have risen to 71 per cent, up 2 per cent year-on-year.
Two further indicators – the average daily rate (ADR), which stabilised at $240, and revenue per available room (RevPAR), which has also increased by 3.8 per cent over the year to $171 – now exceed pre-pandemic levels nationwide.
While the pace has slowed, the sector “remains resilient” with strong performance in key cities.
Brisbane, Perth and the Gold Coast are the only cities to outperform their pre-pandemic levels across all three key performance indicators, while Sydney has also achieved year-on-year gains across all metrics.
Melbourne and Hobart face challenges from increased supply and softer domestic leisure demand.
One of Australia’s leading hotel owners, Jerry Schwartz – director of the Schwartz Family Company, which owns hotels including the Sydney Darling Harbour Sofitel and the Surfers Paradise Hilton – says he is thrilled to see Sydney back “in desire for both Australian investors and overseas investors wanting to invest into our safe jurisdiction”.
“Regional hotels, so much in vogue for holidays immediately post-COVID, have found themselves with competition from nearby overseas destinations,” he says. “This obviously is reflected in their demand.
“Hotels as an asset class are now pretty much at the top of any investor’s list.”
Delayed openings and market expansion
The nation’s hotel supply pipeline bore the burden of delays in 2024, with lower-than-expected new openings and only 1800 rooms added across major markets.
High construction and debt costs, along with skilled labour shortages, sparked the delays.
In figures, 2024 closed with a drop of 54 per cent in new openings compared with 2023, while 2025 is poised for 93 per cent more than last year.
A further 5700 rooms are under construction and set to open within the next two years, with a particular focus on premium offerings. Some 60 per cent of the new stock is considered to be upscale or luxury accommodation.
“The peak of the new supply is expected in the first half of 2025, with more than half of these projects due to be completed by the end of the year,” the report states.
Melbourne is set to welcome in 31 per cent of the new rooms, with Sydney closely behind at 28 per cent. Brisbane’s growth is centred around the Queens Wharf precinct, the city’s newest entertainment and lifestyle precinct.
Investment outlook brightens for 2025
With a landscape of high interest rates and vendor-purchaser price gaps, investor caution led to a drop in hotel transaction volumes in 2024, tracking down 60 per cent compared with 2023.
“Transactions totalled $935 million (excluding transactions under $10 million and hotels sold for change of use or redevelopment) across 27 deals for the year,” the CBRE report states.
However, with interest rates now beginning to moderate, the investment market is expected to gain momentum in 2025.
“With major events, new hotel openings, and infrastructure projects on the horizon, the outlook remains positive,” the report says. “Australia’s hotel sector is set to capitalise on these trends, making 2025 a pivotal year for growth and investment.”
