The hotel, hospitality, and tourism market has successfully navigated a challenging economic landscape over the past few years. Now, with Australia’s commercial property sector poised for a transformative shift in 2025, the timing to divest an asset has never been more opportune.

After nearly three years of market fluctuations, the investment landscape is finally stabilising. The Reserve Bank of Australia (RBA) has cut interest rates for the first time after a prolonged period of tightening, and further rate reductions are anticipated over time. Historically, lower interest rates have correlated with increased property valuations, as reduced borrowing costs encourage more buyers to enter the market. Investors who had been sidelined by higher rates are now eager to re-engage, providing owners a strategic opportunity to divest while demand is high.

Why Now? The Perfect Storm of Market Conditions

A Turning Point in Interest Rates

The RBA’s recent rate cut marks the beginning of a shift in monetary policy, with expectations of further reductions to follow. This change has historically driven property values upward as borrowing costs decrease, stimulating investment activity. Investors who had previously taken a cautious approach are now returning to the market, eager to capitalise on emerging opportunities in the hospitality sector.

Investor Confidence is Rebounding

Following years of economic uncertainty, sentiment among investors is shifting towards cautious optimism with many resetting their expectations and actively seeking quality investment opportunities. The hospitality sector has continually demonstrated resilience, proving its ability to navigate economic downturns and emerge stronger. Historically, the industry has weathered various market cycles and continues to be a preferred choice for investors due to its ability to rebound and generate strong returns, even in challenging times.

Market conditions Favor Sellers - For Now

Buyers are currently outnumbering vendors, creating an environment where demand for high-quality hospitality assets significantly outweighs supply. This marks a sharp turnaround from the early part of 2024 when sellers still outweighed buyers. However, towards the end of 2024, a rapid shift in market dynamics occurred, and the momentum has carried strongly into 2025. This imbalance now presents a rare window where sellers hold the advantage. With buyers competing for a limited pool of available assets, conditions are primed for securing strong sale outcomes.

However, this advantage won’t last forever. As the market gains momentum and more sellers recognise these favourable conditions, competition will inevitably increase. Those who move now will be best positioned to capitalise before a growing number of listings dilute demand and impact pricing power.

The Hospitality Sector’s Continued Strength

Australia’s hotel and tourism market is primed for a resurgence, driven by a combination of strong domestic tourism, international visitor demand, and an improving economic environment. Investors see the long-term potential of hospitality assets, and well-positioned accommodations are particularly attractive due to their unique positioning and stable revenue streams.

Proven Market Activity & Momentum

Our team finished the 2024 year with a flurry of transactional activity. Additionally, we have already settled more than $110 million in transactions this calendar year, with a further $95 million+ under contract or offer. This robust deal flow underscores the strength of the market and the appetite from investors actively seeking premium hospitality assets.

Australia’s Strong Local and Global Investment Appeal

Australia remains one of the most accessible and attractive markets for both international and domestic investors. Overseas interest continues to grow, and as pricing adjustments over the last 12 months have largely taken effect, the market is now in a strong position to recover.

In addition to global interest, local buyer demand is equally robust. Corporate groups, private equity firms, large privately operated hotel groups, and high-net-worth investors are actively seeking opportunities to expand their portfolios. These buyers recognise the long-term value of well-performing hospitality assets and are competing for prime opportunities. The combination of strong local and international capital inflows makes this an ideal time to take advantage of heightened investor activity and secure a premium sale outcome.

A Limited-Time Window to Maximise Value

Over the next six months, we expect a notable surge in property transactions as investors regain confidence and actively pursue new acquisitions. Those who exercised patience during the market’s recalibration phase are now ready to deploy capital, and hospitality assets are high on their priority list. With interest rates beginning to decline and buyer demand outweighing supply, the window for securing a premium valuation is now open. Acting sooner rather than later ensures owners can capitalise on current market momentum before an influx of new listings tempers competition, providing you with the strongest negotiating position and the best possible outcome.

Seize the Opportunity

The hotel, hospitality, and tourism market is at a pivotal moment, presenting sellers with a unique chance to maximise their returns. With interest rates beginning to decline, investor confidence rebounding, and buyer demand exceeding supply, the conditions for divestment are highly favourable. However, this window of opportunity won’t last indefinitely, as more sellers recognise the strength of the market and listings increase.

Our experienced team have the depth of experience, industry insights and buyer connections to guide owners through the process, ensuring they capitalise on these ideal conditions - whether they’re considering selling a single asset or a broader portfolio.

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The postings by any individual on any blog do not necessarily represent the position of Savills, its strategies or opinions.