Increasing demand in the global luxury market is driving growth for the Australian luxury hotel sector, with Sydney seeing the strongest returns.

CBRE’s Luxury Hotel Market report found luxury assets are outperforming the wider sector with demand growing at a 2.9 per cent CAGR since 2019, more than twice the broader hotel market’s 1.3 per cent.

Occupancy across luxury hotels has remained stable at 78–79 per cent despite new supply. Since 2020, 20 hotels comprising 3517 rooms have opened across Australia and New Zealand. In Australia, luxury represented approximately 33 per cent of all rooms delivered during the period.

Higher rates are being achieved alongside healthy occupancy. CBRE said Sydney leads the major gateway markets with a luxury average daily rate (ADR) of $450, 85 per cent occupancy and revenue per available room (RevPAR) of $384, sustaining strong performance across a large luxury room base.

CBRE’s Director, Hotel Research Ally Gibson said: “Since 2019, luxury ADR increased across every market analysed and premiums over the all-scales sector are widening considerably.

“Overall, ANZ’s luxury sector is broadening and upgrading. Sydney continues to deliver the strongest major gateway performance at scale and new product is establishing higher rate benchmarks.”

Growing global luxury consumer base

CBRE said the global luxury consumer base was expanding, underpinned by established high-spending markets including China, the US and UK, alongside growing demand from other Asian and emerging markets.

The global luxury market is projected to grow from US$190 billion in 2026 to US$417 billion by 2034. This reflects the continued expansion of luxury travel and the increasing allocation of discretionary spending towards premium accommodation and experiences.

China, the UK and US are Australia’s three highest-spending inbound markets, generating $13.7 billion, $5.5 billion and $4.6 billion respectively in total international expenditure in the year ending March 2026. Together, they account for around 41 per cent of total expenditure.

Younger consumers are helping reshape luxury travel. Gen Z per capita spending is forecast to increase by 28 per cent between 2024 and 2030, with this digitally engaged cohort placing greater emphasis on distinctive design, wellness, local immersion and shareable experiences.

More broadly, CBRE said luxury travellers are seeking personalised service and a stronger sense of place, encouraging hotels to differentiate through design, wellness, food and beverage, cultural programming and tailored guest experiences.