Singaporean investors remained the most active international buyers, contributing $150 million year-to-date, while Thai interests have emerged as significant players with $376 million deployed over the past two years. With improving operational fundamentals and Australia's tourism sector firmly in recovery mode, offshore appetite is anticipated to strengthen further through 2026 as international investors regain confidence in the market.
Trading performance has strengthened considerably this year and is anticipated to continue in the runway to the Christmas holiday period. For the year to October 2025, national occupancy rates reached 72.8 per cent, up from 70.7 per cent the previous year, while average daily rates held steady at $155.39 and RevPAR (revenue per available room) climbed 2.5 per cent to $113.05 according to the latest STR Global data.
Perth delivered the standout performance with occupancy hitting 80.7 per cent, up from 78.6 per cent, while average daily rates surged 3.5 per cent to $153.29. The market has benefited enormously from major sporting events, concerts and entertainment, with strong demand from interstate and international visitors. Discount airfares from eastern states carriers have made Perth more accessible for domestic tourists, further supporting the market.
Sydney maintained robust fundamentals with 80.5 per cent occupancy, up from 77.4 per cent, and average rates of $175.37 per night. Melbourne's occupancy improved to 73.2 per cent from 70.1 per cent despite high supply additions over the past five years, while Adelaide recorded 75.3 per cent occupancy, up from 71.9 per cent. Brisbane held steady at 76.0 per cent occupancy with daily rates at $161.08, and Canberra showed strong improvement to 72.7 per cent occupancy from 71.0 per cent, benefiting from the return of work and government travel.
Even traditional holiday markets performed well, with Cairns achieving 78.9 per cent occupancy and the Gold Coast maintaining 68.0 per cent occupancy. Regional markets have also benefited from changing travel patterns, with drive holidays and discount airfares opening up previously overlooked destinations. Coastal towns like Ballina, Busselton and Mackay have seen increased demand as airlines add capacity on regional routes and families seek alternatives to expensive capital city breaks. The drive market remains particularly strong, with travellers taking advantage of school holidays to explore destinations within a few hours of major cities.
The positive operational metrics reflect recovering tourism demand. International visitor spending reached $8.5 billion in the June quarter 2025, up 32 per cent on the previous year, with total annual spending hitting $55.4 billion. China remains the highest spending market at 26 per cent of total international expenditure, with Chinese visitor spending jumping 46 per cent as that market continues recovering toward pre-pandemic levels. UK visitor expenditure rose 44 per cent, supported by working holiday makers taking advantage of Australia's summer season. Holiday travel drove much of the spending surge, up 45 per cent to $3.2 billion in the quarter, while education-related travel contributed $2.4 billion as international students returned in force.
Domestic tourism showed resilience despite cost-of-living pressures. Overnight trips remained stable at 112.6 million for the year to June 2025, with Australians continuing to prioritise holiday travel even while moderating their spending. The return of corporate events and conferences has provided crucial midweek demand, particularly in capital cities like Sydney, Melbourne and Canberra.
The timing couldn't be better. Summer marks Australia's peak tourism season, with school holidays driving domestic family travel and international visitors escaping northern hemisphere winter. Discount airline promotions have made destinations like Perth, Cairns and the Gold Coast more accessible to budget conscious travellers, while premium markets continue attracting high spending international guests.
Looking ahead, the combination of strengthening international arrivals, resilient domestic demand and improving operational metrics positions the hotel sector well for the summer trading period. While cap rates have compressed from pandemic highs, yields around 7 to 9 per cent continue attracting both domestic institutions and offshore capital seeking exposure to Australia's tourism recovery. With occupancies climbing and rate growth holding across most markets, well-located assets should continue performing strongly through the peak season ahead.
