Melbourne’s hotel landscape has undergone a transformative expansion, cementing the city’s status as a premier destination for domestic and international tourists. Over the past four years, Melbourne has outpaced all other Australian cities, adding over 5,000 new hotel rooms, a testament to the city’s growing allure. This significant growth has seen a 21% increase in hotel supply since 2019 as developers pour confidence and capital into Melbourne’s vibrant tourism sector.
According to the latest data from JLL, a leading professional services firm specializing in real estate and investment management, Melbourne has welcomed 22 new hotels since 2019. This boom in hotel openings aligns with a 9% rise in hotel bookings, indicating robust demand for Melbourne’s hospitality offerings. In 2023 alone, four significant developments, totalling over $226 million, opened their doors in the Central Business District (CBD), adding 1,100 rooms to the city’s inventory. Notable additions include the Dorsett Hotel, Meriton Suites, the Ritz Carlton, and Le Meridien.
Despite this rapid expansion, Melbourne’s hotel occupancy rates remain impressively high, averaging 74% annually. During major events such as the Formula 1 Grand Prix, occupancy rates surge past 90%, reflecting the city’s magnetic appeal.
The luxury segment of Melbourne’s hotel market is also flourishing. Over the next year, 1,100 upscale and luxury rooms will open in prestigious locations such as Lanson Place and Seafarers 1. These developments highlight Melbourne’s evolving hospitality landscape, catering to discerning travellers seeking premium experiences.
The City of Melbourne actively supports this growth, approving significant developments to enhance the city’s accommodation capacity. Among these are a $250 million complex opposite Carlton Gardens, a $200 million project in Southbank, and a $25 million development on Russell Street. Combined, these projects will contribute nearly 900 additional hotel rooms, further solidifying Melbourne’s capacity to host a growing number of visitors.
Data from the 2023 National International Visitor Survey underscores Melbourne’s dominance in the tourism sector. The city was the top choice for interstate overnight trips, welcoming 3.9 million visitors who spent an impressive $5.1 billion during the year. This influx of tourists boosts the hospitality industry and has a ripple effect on local businesses and the broader economy.
Lord Mayor Nicholas Reece emphasized the significance of this growth, stating, “Everyone wants to visit Melbourne and hoteliers know it. We are setting a new benchmark for development across Australia with more than four major hotel developments each year – a huge vote of confidence in our city. Melbourne will open its doors to more than 1,800 new rooms over the next year, and that means more visitors spending their money at city attractions, restaurants, cafes, and pubs. Not since the gold rush has Melbourne seen so many new hotel openings. Now, this pipeline will deliver a modern-day gold rush for Melbourne businesses and the city economy.”
Councillor Roshena Campbell, City Activation portfolio lead, echoed these sentiments, noting, “Melbourne is a post-COVID tourism success story. More people are choosing Melbourne as their preferred tourism destination, and with more than 5,000 new rooms available, our visitors can experience exciting new hotel offerings. We’ve never been better equipped to welcome the millions of people who visit Melbourne each year.”
Dougal Hollis, General Manager of Accommodation Australia, highlighted Melbourne’s unique appeal: “The compact nature of Melbourne’s CBD and the breadth and diversity of the precinct’s hospitality and tourism offers are very appealing to domestic and international visitors alike. Few cities boast world-class sporting and event stadium infrastructure within walking distance of our city’s vast hotel accommodation network.”
Melbourne’s dynamic hotel expansion reinforces its status as Australia’s leading tourist destination and sets the stage for continued economic growth and development. With a pipeline of exciting new hotels and an ever-increasing number of visitors, Melbourne is genuinely experiencing a modern-day gold rush.
Written by: Charmaine Lu
