The outlook for Australia’s accommodation industry is bright but complex as hoteliers and short-term rental operators gear up for 2025 with ambitious investment plans, a strong dose of optimism, and a keen focus on overcoming regulatory and economic obstacles. According to the latest Australian Accommodation Barometer, a joint study by Booking.com and Statista, the sector is riding a wave of post-pandemic recovery, with 73% of operators expressing optimistic economic expectations, up 9% from last year.
The research underscores a notable divergence in sentiment across different states and between traditional hotels and short-term rentals (STRs), each facing distinct opportunities and risks. Yet, both segments are united in their push toward more significant investment, fueled by an evolving digital landscape and an anticipated influx of tourists as global travel patterns normalize.
Regional Optimism and Performance Divide
Australian accommodation providers are largely buoyed by a steady rise in occupancy and room rates and favourable projections for 2025. However, optimism varies significantly by state, with New South Wales (NSW) leading the charge. Notably, 77% of accommodation providers in NSW reported strong business performance in 2024, well above the national average. Victoria and Queensland lag slightly, with only 54% of providers in those states rating their performance positively, while respondents from other parts of Australia hover at 67%.
The regional gap may reflect differences in tourism infrastructure, state-led initiatives, and the concentration of high-profile events drawing both domestic and international visitors. With Sydney as a global travel hub, NSW benefits from a steady influx of international tourists, positioning it as a standout performer within the national accommodation landscape.
Hotels vs. Short-Term Rentals: Balancing Optimism with Caution
Both hotels and STRs report an encouraging outlook for 2025, but hotels exhibit slightly more optimism. While 73% of the entire sector remains upbeat about their economic prospects, hotels are less apprehensive about competitive pressures than STRs, with only 60% viewing competition as a primary risk compared to 76% of STR operators.
Short-term rentals, often more vulnerable to regulatory shifts and market volatility, express heightened concern over tax burdens and regulatory uncertainty. “It’s encouraging to see the optimism driving Australian hotel and holiday rental operators as international travel in Australia finally returns to pre-pandemic levels,” stated Yang Li, Head of Public Affairs APAC at Booking.com. “However, short-term rentals still face greater regulatory hurdles and report weaker sentiment than hotels.”
Nonetheless, hotels and STRs identify significant opportunities in digital marketing, with 81% of respondents citing social media and online travel platforms as essential tools to boost visibility. Investments in eco-friendly practices and website optimization also emerged as priority areas for both segments, reflecting a shift towards sustainable, tech-enabled growth.
Investment Surge: Australia Outpaces the U.S. and Europe
Australian accommodation providers are notably bullish about increasing their investment in 2025. More than half (56%) of respondents plan to ramp up their investment efforts, a striking contrast to the U.S. (39%) and Europe (17%), as reported by similar studies in those regions. This surge is driven by increasing occupancy rates and average daily rates (ADR), with 68% of operators seeing a rise in occupancy, up four percentage points from the previous year. Likewise, 66% of respondents report increased ADR, indicating strong demand supporting heightened investment.
The Barometer highlights a favourable financing environment in Australia, with most operators finding access to capital manageable. This financial confidence contrasts with the U.S. and European counterparts, where economic uncertainty and more stringent capital requirements may temper investment growth.
Online Travel Platforms and Digital Strategy: Key to Visibility and Efficiency
Online travel platforms (OTAs) are pivotal in the Australian accommodation sector’s strategy for attracting domestic and international visitors. As many as 86% of accommodation providers list their properties on at least one OTA, with 49% of hotels and 40% of STRs using multiple platforms to broaden their reach. The top reasons cited include higher booking rates, global visibility, and streamlined booking processes.
For hotels and STRs alike, OTAs represent a cost-effective avenue for driving bookings without extensive in-house marketing. While dependence on OTAs raises some concerns about commission costs, the visibility offered by these platforms makes them a staple in the digital toolkit of most operators, especially for reaching international audiences as travel demand rebounds.
Policy Priorities and Industry Advocacy
In the face of evolving challenges, the Australian accommodation industry has outlined several policy priorities it hopes will receive government attention in the coming years. Chief among these is the reduction of tax burdens, a shared concern for hotels and STR operators. This focus reflects the industry’s view that favourable tax policies are critical to sustaining growth and enabling smaller operators to remain competitive.
Access to capital and financing ranks as the second priority, underscoring the sector’s ambitious investment plans. Beyond financial concerns, the Barometer notes moderate support for government initiatives that promote major cultural and sporting events, which can generate additional demand for accommodation services. Interestingly, “reducing overtourism” ranked lowest among industry priorities, signalling that most operators still see room for growth in visitor numbers, particularly in less saturated regions outside major urban centres.
Challenges on the Horizon
Despite the positive outlook, the Australian accommodation sector faces several pressing challenges. Energy costs, staffing expenses, and competition were among the top concerns for operators across the board. Hoteliers and STRs are also preparing for potential fluctuations in consumer travel patterns, with 59% of hotels and 54% of STRs wary of shifts that might impact occupancy rates.
The cost of digital marketing tools and advanced booking technologies is another consideration, with some smaller operators finding it challenging to compete with more prominent brands’ tech-enabled services. As the industry becomes more digitally oriented, hotels and STRs must balance embracing new technologies and managing costs.
Conclusion: A Promising Yet Complex Road Ahead for Australia’s Accommodation Sector
Australia’s accommodation industry enters 2025 with an inspiring optimism tempered by realistic challenges. The Australian Accommodation Barometer offers a glimpse into an industry poised for growth, driven by rising occupancy rates, a commitment to investment, and a shared vision for a digitally empowered future. However, with diverse challenges, from regulatory burdens to economic uncertainty, hoteliers and short-term rental operators must navigate a landscape marked by promise and complexity.
For more insights, the complete Australian Accommodation Barometer report is available on Statista’s website. It comprehensively analyses the trends, opportunities, and challenges facing Australia’s accommodation providers in 2025.
Written by: Soo James
