Recovery in both domestic and international arrivals supports demand growth

• Sydney Airport announced that total traffic reached 41.4 million passengers (YTD Dec 24), a 7.1% increase on the prior year, and recovered to 93.2% of 2019 levels. International passengers continue to return, increasing 12.1% on 2023 and recovered 96.5% from 2019.
• This improvement in demand is also reinforced in the latest visitation statistics from Tourism Research Australia (YE Dec 24), with Sydney recording 36.7 million visitors, with visitor nights (+10.6%) and visitor expenditure (+7.4%) both improving on the prior year.

One opening in Q1 as supply cycle continues to moderate

• The Eve Surry Hills Village opened in February, adding 102 rooms to the market, the first opening in Sydney city in over a year. There are currently five hotels under construction in Sydney’s CBD and fringe suburbs, set to add 1,071 new rooms, or 4.9%, to existing stock.
• Since 2020, Sydney has seen 2,373 rooms added to the market, which represents a 10.9% increase in total room stock. However, the supply cycle continues to moderate, and once the final projects complete, the market will have a 15.8% total supply increase over 2019.

Strong trading performance continues through the first quarter

• Sydney hotels continued to record positive trading metrics, evidenced by a y-o-y growth in occupancy and RevPAR (yet with softer ADR). Major events such as the NYE Fireworks and Vivid Sydney continue to drive strong hotel performance, with RevPAR exceeding 2019 levels.
• Transaction volumes totalled AUD 452.5 million in 2024, below long-term averages and a result of limited institutional-grade assets coming to market. Sales volumes in Q1 totalled $273.5 million; notably the Sir Stamford Circular Quay sold for residential conversion.

Outlook: Further growth for Sydney hotels anticipated in 2025

• It is anticipated that Sydney’s hotel market will continue to experience robust demand growth over 2025. This is supported by a significant events calendar, improving visitation and corporate/MICE returning, resulting in improved occupancies and moderated ADR growth.
• As a result of this strong trading growth and positive market outlook, investor appetite and interest for Sydney hotels remains high, with annual transaction volumes heavily reliant on the opportunities that come to market this year.