Luxury boom propels top hotels to fastest-growing segment
Australia’s top-end hotel market is surging, with luxury stays — where nightly rates can top $3,000 — now the fastest-growing slice of the sector as affluent travellers splash out on high-end experiences.
Industry tracker STR reports luxury room supply has expanded about 22% in the five years to August, the strongest growth of any hotel tier. Over a decade, the segment is up roughly 35%, underscoring sustained investment at the premium end.
The uplift mirrors a global shift toward experiential spending and coincides with a bulging calendar of marquee events across sport and culture, plus demand for nature-led itineraries. It’s also happening as wealth concentrates at the top: the Australian Financial Review Rich List 2025 puts the combined fortunes of the nation’s 200 richest at $667.8 billion, up from $424 billion in 2020 — a 57.5% jump in five years.
Matthew Burke, STR’s Asia Pacific regional director, said investors have moved to plug a shortage of ultra-premium rooms. “There is an emerging and growing market for international travellers to want that style of accommodation … most of those rooms opened between 2019 and 2024,” Burke told The Australian Financial Review. “There is a cohort of people who, they’ve never been wealthier in the sense that asset prices are higher, their homes are worth a lot more money … [more] time that they have at their disposal.”
Domestically, appetite for luxe getaways has strengthened since COVID-19, buoyed by Australia’s “very healthy” events roster — from the Ashes in Adelaide to WWE in Perth. “People are prepared to pay what it takes to get the experience that they want for something that they really want to experience,” Burke said. “Whether that’s the Formula 1 in Melbourne, Taylor Swift concert … all those things attract either locals or international guests that have got a higher propensity to or willingness to pay.”
Event peaks are translating to extraordinary performance. Accor says 27 of its hotels ran above 98% occupancy on both nights of the 2025 NRL Grand Final weekend in late September.
Most of the new luxury inventory has landed in the back half of the past decade. Marriott debuted Australia’s first Ritz-Carlton in Melbourne in 2023, where the flagship top-floor suite commands about $15,000 a night. At the boutique end, David Horbelt and Malcolm Bean opened Sequoia Lodge in 2021 overlooking Piccadilly Valley in the Adelaide Hills, with suites priced between $2,000 and $3,000.
The pipeline remains active. Sydney’s flagship Waldorf Astoria at One Circular Quay topped out in February and is slated to open next year, while IHG Hotels & Resorts is rolling out fresh InterContinental properties in Melbourne, Canberra and Sydney, and reviving the Regent brand with partner Salter Brothers. In Sydney’s east, Crowne Plaza Coogee is being repositioned to InterContinental (bookings from December), and Crowne Plaza Melbourne will be upscaled to InterContinental by 2030; Melbourne’s current InterContinental will convert to a Regent.
Paul Salter, managing director at Salter Brothers, said the luxury-lifestyle blend is resonating. “Guests are looking for more than just somewhere to sleep, but rather a more immersive offering that encompasses global culinary quality, local experiences and wellness opportunities,” Salter told the Financial Review. “We believe that affluent travellers are prioritising properties that can provide these offerings, and these luxury properties have the potential to deliver long-term growth, delivering value to guests and investors alike.”
Developers are following the money, says Dransfield Hotels and Resorts managing director Dean Dransfield. “[For developers,] the highest that people can pay for any bit of real estate puts the highest amount of land value and profit into any transaction, so you’re always trying to find the highest-paying customer,” he told the Financial Review. “What’s happened over the last decade is there’s more higher-paying customers, so very expensive hotels stack up.
“That’s why we’ve seen such an explosion of luxury hotels around the country.”
Jonathan Jackson, 22nd October 2025
