Melbourne currently leads Australia’s hotel market with 27,890 rooms across 171 hotels, following an unprecedented push to add more room stock, according to Accommodation Australia.
And there are still more hotels to come.
Accommodation Australia’s general manager for Victoria, Dougal Hollis, has analysed the latest industry figures and says that while the 6,012 rooms added between 2020 and 2025 resulted in a 27.4 per cent rise in new rooms, there are another 1,629 rooms currently under construction. This represents 7.45 per cent of total rooms, bringing the percentage of new rooms available in the city to almost 35 per cent since the pandemic began.
“Room supply into Melbourne is now moderating, with most new room stock having already entered the market,” says Hollis.
By comparison, Hollis reports that Sydney, which had 21,742 rooms in December 2019, added only 2,373 rooms to 2025, and now has 1,071 rooms currently under construction.
In its visitor economy strategy, released last week, which targets a $91 billion visitor spend by 2035, the NSW Government has set a goal of adding 40,400 new rooms across the state by the middle of next decade.
Accommodation Australia not only tracks hotels under construction but also those in final planning. In greater Melbourne there are seven hotels totalling 818 rooms, due between July 2026 and December 2029.
There are also 27 properties across greater Melbourne in an earlier planning stage, offering 4,204 rooms, planned to as far out as December 2035. Half of these hotels are upscale or upper upscale and half are proposed for a 2027 opening.
Hollis noted that the latest report from STR suggested that occupancy levels continue to climb across Australia’s five capital cities, but the average daily rate is moderating.
“Although boosted by hosting two British and Irish Lions rugby tour games in July that saw Melbourne record its busiest hotel night ever, with 25,089 rooms sold at an occupancy rate of 94.7 [per cent], Melbourne hotel performance metrics across July were modest in national terms, placing seventh in occupancy, only ahead of Hobart; fifth in ADR, only ahead of Canberra, Adelaide and Hobart; and sixth in RevPAR, only ahead of Adelaide and Hobart.”
Commenting on the latest trends in hotel development, Hollis nominated the continued exponential growth of lifestyle hotel developments across the Asia Pacific region, “as investors and developers respond to traveller appetites to blend business and leisure travel”.
As a result, there were “four times more lifestyle hotel rooms in 2024 than in 2014, with lifestyle supply anticipated to grow by 34 per cent by 2027”.
