Rising inbound visitation reinforces Sydney’s status as an international gateway city

• Latest figures from Sydney Airport show total passenger traffic of 10.8 million in Q1 2026, reflecting a 3.6% increase on the prior year. Growth continues to be driven by a strong recovery in international passenger traffic, which increased 5.8% compared with Q1 2025.
• This growth was also reflected in the latest data from Tourism Research Australia for the year ending March 2026, with Sydney recording 3.9 million international visitors (+8.4% YoY). Visitors stayed for 89.9 million nights and generated expenditure of $13.9 billion (+17.6% YoY).

Supply pipeline continues to moderate, with no new hotels opening in 2026

• No new hotel rooms entered the Sydney market in the first half of 2026, extending a supply pause that has persisted since the most recent openings of 25hours Sydney and Caption by Hyatt Central Sydney in late 2025.
• Six hotels remain under construction in Sydney’s CBD, set to add 1,266 new rooms, or 5.5% of existing stock, over the next two years. Beyond this, the pipeline remains constrained by elevated construction costs, limited site availability and ongoing feasibility challenges.

Sydney holds its position as Australia’s top-performing hotel market in 2026

• Sydney has retained its status as Australia’s strongest-performing key hotel market through the first half of 2026, recording some of the strongest occupancy, ADR and RevPAR nationally. This has been supported by positive year-on-year growth across all trading metrics.
• Transaction momentum has picked up in 2026, after a scarcity of market opportunities held Sydney’s transaction volumes to $382.6 million in 2025. Sydney has recorded six transactions totalling $569.5 million, led by the sale of Novotel and ibis Sydney Darling Harbour.

Outlook: Strong market fundamentals to drive further growth in Sydney’s hotel sector

• Sydney is anticipated to maintain robust room night demand and strong trading growth throughout the back half of 2026, largely driven by strong fundamentals and diversified demand from international arrivals, domestic leisure, corporate travel and a robust major events pipeline.
• Transaction activity is expected to continue, on the back of strong investor interest from both domestic and offshore capital, a positive trading outlook, a moderating supply pipeline and a tightly held market.