Hospitality Industry Australia: 2026 Market Outlook, Key Trends & What Every Property Needs to Know

Australia's hospitality industries cover accommodation, food and beverage, tourism services and events across a wide range of property types. Together these Australian hospitality industries represent one of the fastest-growing sectors in the Asia-Pacific region. This includes hotels of all sizes, boutique properties, motels, resorts, bed and breakfasts, serviced apartments, parks and hotel groups managing multiple sites.

The hotel industry in Australia and the broader hospitality market is valued at AUD 105.93 billion in 2025 and is projected to grow at 3.80% CAGR through 2035. National hotel occupancy sits at 72.6%. Average daily rates have reached $250.65. RevPAR is $182.03.

International visitors generated a record $39.2 billion in spend in 2025. Ten million arrivals are forecast for 2026, surpassing pre-pandemic levels for the first time. For properties across every segment and every state, this is the strongest demand environment in years.

For the hotel industry in Australia, this is the strongest demand environment in years. But capturing it requires the right hospitality management infrastructure, not just more rooms.

The State of Australia’s Hospitality Industry in 2025

The hospitality industry Australia is undergoing significant transformation as it moves toward 2030. With shifting traveller expectations, technological advancements, and as well as increasing competition. Hoteliers must stay ahead of these trends to remain profitable and as well as relevant.

Current Market Landscape

The hotel industry in Australia is valued at $14.8 billion in 2026 within the Hotels and Resorts sector. It has grown at a compound annual rate of 12% over the past five years (IBISWorld). Hotel transaction volumes jumped more than 100% year on year in Q1 2025, reaching $791.8 million. That reflects renewed investor confidence across the entire sector, from boutique acquisitions to large resort developments.

2025/2026 Performance Data:

• National hotel occupancy: 72.6% (up from 71.6% in 2024)
• Average daily rate: $250.65
• RevPAR: $182.03 (up from $179.93 in 2024)
• International visitor arrivals: 8.9 million in 2025
• International visitor spend: record $39.2 billion in 2025
• Hobart occupancy: 79.3% in H1 2025, the strongest major market nationally
• Sydney, Melbourne and Brisbane: all consistently above 70% occupancy
• Hotel transaction volume Q1 2025: $791.8 million, up more than 100% year on year

Growth is being driven by resurgent international tourism, strong domestic travel, rising demand for luxury and boutique accommodation, and major events including the lead-up to the 2032 Brisbane Olympics. Across the Australia hotel industry, properties of all segments, from motels in regional markets to resorts in Queensland, are benefiting from this sustained demand recovery.

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The Brisbane 2032 Supply Gap

Just one new hotel opened across Brisbane, Gold Coast and Sunshine Coast in the past year. This happened during a period of record occupancy and rising room rates.

The region needs up to 30,000 additional hotel rooms before the 2032 Olympics. The current development pipeline is projected to deliver only around 24% of the 14,700 extra rooms needed. Construction costs for three to five star properties have risen close to 40% since 2019, with further increases expected in 2026 and 2027.

This is not only a challenge for large developments. It creates a commercial opportunity for every existing property in Southeast Queensland, across all categories and sizes, that can manage yield and convert demand efficiently.

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Current Issues Facing Australian Hospitality Properties

Strong headline numbers do not tell the full story. Properties of every size and type are navigating a set of structural challenges that are not resolving on their own.

1. Labour shortages

The hospitality workforce has not recovered to pre-pandemic levels. Competition for skilled staff is intense across all departments and all property types. Boutique hotels struggle to replace a front desk manager who leaves. Large hotel groups face the cost of training hundreds of new hires every year. Motels in regional areas find it harder to attract candidates than their city counterparts. Wages are rising and turnover stays high.

2. Rising operational costs

Energy prices, supply chain costs and wages are compressing margins across the board. This affects a 12-room bed and breakfast and a 300-room resort differently in scale, but the pressure is the same. Properties that cannot reduce cost per occupied room through operational efficiency are seeing margins shrink even as revenue grows.

3. OTA commission dependency

OTA commissions in Australia run between 15% and 25% of booking revenue. This affects every property type. A motel relying heavily on Wotif and Booking.com. A boutique hotel sending most bookings through Expedia. A resort group with strong international demand coming almost entirely through OTA channels. Every percentage point shifted to direct bookings improves the bottom line.

4. Outdated hospitality management systems

67% of accommodation properties report struggling with disconnected systems. A front desk system that cannot talk to the channel manager. Revenue decisions made from spreadsheets. Housekeeping managed on paper. Payments reconciled manually. These inefficiencies scale with property size. A 20-room motel loses a few hours each week. A 10-property hotel group loses days.

5. Evolving guest expectations

Guests in 2026 expect contactless check-in, fast communication, personalised service and visible sustainability commitments. This applies whether they are staying at a boutique hotel in Melbourne, a resort in the Whitsundays, a motel on the Pacific Highway or a bed and breakfast in the Hunter Valley. Properties that cannot meet these expectations are losing bookings to competitors who can.

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8 Trends Shaping The Hospitality Industry In Australia by 2030

1. Smart technology is becoming the baseline

Smart hotel features have shifted from premium differentiator to guest expectation. This is true across property types, not only large hotels.

A boutique hotel using mobile check-in and digital room keys can reduce front desk pressure without adding staff. A motel using AI voice technology recovers revenue from calls that would otherwise go unanswered. A resort using guest app communication reduces the cost of every in-stay service request.

What smart technology adoption looks like across Australian properties:

• Contactless check-in and check-out reducing front desk congestion at peak arrival times
• AI personalisation tailoring room settings, dining suggestions and upsell offers based on guest history
• Smart room controls for lighting, temperature and entertainment managed through guest mobile apps
• AI voice tools recovering booking revenue from missed calls, around the clock, in any language
• Predictive maintenance flagging equipment issues before they affect a guest's stay

The foundation for all of this is a modern, cloud based property management system. Without a PMS that connects across departments and devices, smart features create more complexity than they solve.

2. Sustainability has moved from optional to operational

Eco-conscious travellers are no longer a niche. In Australia, they represent a growing share of domestic and international bookings across every property category. They research before they book. A boutique hotel with a Green Star certification attracts a segment that a comparable property without it does not.

With travelers becoming more environmentally conscious, sustainability is no longer optional. Hotels that fail to adopt eco-friendly practices risk losing customers to competitors who prioritize green initiatives. By 2030, sustainability will be a key differentiator in the Australian hotel industry, with properties focusing on:

Sustainability is also an operational cost issue. Energy efficient systems reduce bills. Waste reduction programs lower supply costs. These improvements matter at every scale.

Across the Australian hotel industry, properties of all sizes and segments are acting on:

• Solar installations, smart thermostats and LED retrofits reducing energy costs
• Water conservation through low flow fixtures and rainwater harvesting
• Phase-out of single-use plastics, composting and measurable recycling targets
• Green Star ratings, EarthCheck accreditation and LEED certification
• Locally sourced food, organic amenities and regional supplier partnerships

3. The meaning of luxury has changed for every segment

High-value guests are no longer primarily looking for a premium room. They want an experience that feels specific to a place. This shift creates opportunity across property types, not only five-star hotels.

A boutique property in Byron Bay offering indigenous cultural experiences is competing for a guest willing to pay more than for a branded chain hotel nearby. A resort in Far North Queensland built around reef access and wellness is filling rooms that generic beach resorts are not. A bed and breakfast in the Yarra Valley with farm to table dining is attracting guests from Melbourne and internationally.

Luxury in 2026 is about authenticity, personalisation and access to something that cannot be replicated at scale. That is an advantage for properties of all sizes across Australia.

What properties are doing well in this space:

• Building packages around indigenous cultural tours, private wilderness access and curated culinary experiences
• Investing in wellness programming including spa, fitness and mental wellness offerings
• Positioning sustainability as part of the premium, not a trade-off
• Using guest history and communication tools to personalise every return stay

4. Labour challenges require technology solutions across all property types

Every segment is managing this differently. A large hotel group can build a structured training program and offer career progression. A motel with four staff members cannot absorb the loss of one person without it affecting operations. A resort in a regional location competes for the same talent pool as every other employer in that town.

Technology that reduces the volume of manual work per team member is the most practical response across all property sizes:

• AI voice tools handling after-hours calls and routine enquiries without requiring front desk staff to be available
• Housekeeping scheduling through the PMS that eliminates manual coordination and reduces room turnaround time
• Systems that new staff learn in hours rather than weeks, reducing the operational cost of turnover
• Automated guest communication that handles pre-arrival, in-stay and post-stay messaging without manual effort

This matters whether the property has 8 rooms or 800. The percentage of staff time lost to manual, repeatable tasks is roughly similar across property sizes. The absolute cost differs. The solution is the same.

5. Revenue management is no longer only for large properties

Manual rate-setting was always a rough tool. In 2026, it is a competitive disadvantage for any property that uses it. Other operators, across all segments and sizes, are running AI-driven pricing that adjusts in real time to demand signals, competitor rates and local event data.

This is not only a large hotel or resort capability. A 20-room motel can now use the same revenue management technology as a 200-room hotel group. The scale of the benefit matches the scale of the property.

Key capabilities that properties of all sizes are adopting:

• Dynamic pricing that monitors booking pace, competitor rates and market demand, then adjusts rates automatically
• Predictive demand forecasting that models seasonal patterns, event driven spikes and lead time variations weeks in advance
• Automated rate distribution pushing the right price to every OTA channel simultaneously, without manual updates
• Reporting that shows which rate decisions drove revenue and which did not, so future decisions improve

6. Direct bookings are the most important channel every property controls

OTA commissions running 15 to 25% of revenue affect every property type. A bed and breakfast sending 70% of bookings through OTAs is paying for every one of those stays. A motel on a major highway with strong repeat guests who always book direct is structurally more profitable, at the same occupancy rate.

The strategies shifting direct booking share are not exclusive to large hotel groups:

• Commission free booking engines that convert guests arriving through search or OTA into direct reservations
• Loyalty and repeat guest programs with exclusive rates and benefits that reward guests for booking direct
• Website speed and mobile booking experience improvements that reduce drop-off before confirmation
• Google Hotel Ads and TripAdvisor metasearch visibility that captures demand at the moment of intent
• Guest communication systems that build the relationship between stays and drive repeat direct bookings

A motel investing in a good booking engine and basic email marketing can meaningfully shift its OTA-to-direct mix. The percentage gain in margin is the same regardless of property size.

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7. Cultural tourism is a growing opportunity across all Australian regions

Cultural tourism is one of the fastest-growing booking motivations globally. Sydney consistently ranks among the world's top cultural destinations. But this trend is not limited to capital cities.

Regional Australian markets with strong indigenous heritage, arts and culinary identity are seeing increased inbound interest. International visitors in 2025 stayed longer and spent more per trip than in previous years. This is relevant for a boutique hotel in Broome, a resort near Uluru, a bed and breakfast in the Barossa Valley and a hotel in Sydney's Inner West equally.

Properties capturing this demand are:

• Building partnerships with indigenous cultural programs, regional artists and heritage institutions
• Creating packages that combine accommodation with guided tours, culinary experiences and cultural immersion
• Positioning the property as a gateway to place rather than simply a place to sleep
• Using guest segments and booking data to identify which traveller types respond to which experiences

8. Revenue diversification is becoming essential across all property categories

Accommodation-only revenue leaves every property type exposed to seasonal fluctuation and demand volatility. The most resilient Australian properties in 2026 are running additional revenue streams from the same asset.

What this looks like across different property types:

• Hotels and boutique properties converting underutilised meeting rooms into coworking and event space
• Motels and serviced apartments offering extended stay weekly and monthly pricing for corporate and project-based guests
• Resorts and larger properties offering spa, fitness and wellness programs to non-guests
• Bed and breakfasts and smaller properties developing culinary experiences, tours and packages that generate revenue independent of room bookings

The common requirement across all of these is a property management system that can handle multi-revenue accounting, flexible rate structures and consolidated reporting across all income types. Without that, each new revenue stream adds manual work rather than reducing it.

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What This Means for Every Australian Accommodation Property

The hospitality industries in Australia are in a strong growth cycle, with every segment from accommodation to food service seeing sustained demand recovery. Visitor spending is at record levels. Investor confidence is returning. In markets like Southeast Queensland, demand is outpacing supply ahead of 2032.

The gap between properties that capitalise on this moment and those that do not comes down to how well they are managed. Not the size of the property. Not the category. Not the location. How the daily operations, revenue decisions, guest communication and distribution are handled.

Properties that have invested in modern hospitality management platforms are spending less time on administration, making faster revenue decisions, converting more direct bookings and retaining staff longer. This is true for a 15-room boutique hotel, a 60-room motel, a 5-property hotel group and a 200-room resort.

If your current setup is costing your team hours each week in manual work, or if your direct booking share is below 40%, those are the problems worth solving before the demand from 2032 makes operational inefficiency even more expensive.

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Run Your Entire Property from One Platform

roommaster works with independent hotels, boutique properties, hotel groups, motels, resorts, bed and breakfasts and parks across Australia.

Whether you manage one property or thirty, the platform brings property management, direct booking, channel distribution, AI revenue management, integrated payments and guest communication into one connected system. Built on 30+ years of real hotel management experience. 97% client retention.

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FAQs: Hospitality Industry in Australia 

What is the size of the hospitality industry in Australia?

Australia's hospitality market reached AUD 105.93 billion in 2025, projected to grow at 3.80% CAGR through 2035. The Hotels and Resorts sector alone is valued at $14.8 billion in 2026.

What are the current issues in the hospitality industry in Australia?

Labour shortages, rising operational costs, OTA commission dependency of 15 to 25%, and outdated hospitality management systems are the biggest challenges. These affect every property type and size in 2026.

What is the hotel occupancy rate in Australia in 2026?

National occupancy reached 72.6% in 2025, up from 71.6% in 2024. ADR sits at $250.65 and RevPAR at $182.03. Hobart leads at 79.3%.

How many international visitors does Australia receive?

Australia recorded 8.9 million international arrivals in 2025, generating a record $39.2 billion in spend. Ten million arrivals are projected for 2026, surpassing pre-pandemic levels. 

What hospitality trends are shaping Australia in 2026?

Smart technology, sustainability, experiential luxury, AI revenue management, direct booking growth, cultural tourism and revenue diversification are the defining trends across all property categories. 

What is the Brisbane Olympics hotel supply situation?

Southeast Queensland faces a shortfall of up to 30,000 hotel rooms ahead of 2032. The current pipeline will deliver only 24% of the 14,700 extra rooms needed.

What does hotel management software need to handle in Australia?

It must handle GST at 10%, Privacy Act 1988 compliance, local OTA connections including Wotif, and state-specific short-term rental regulations across Victoria, Western Australia and Queensland. 

How can Australian properties increase direct bookings?

Invest in a commission free booking engine, improve mobile website experience, run Google Hotel Ads and TripAdvisor metasearch, and use automated guest communication to drive repeat bookings.

What is the hotel industry in Australia expected to grow to? 

The hotel industry in Australia is valued at $14.8 billion in 2026 and growing at 12% CAGR over five years. The broader hospitality market is projected to reach AUD 142 billion by 2035.