Sydney is in the midst of a boom in new hotel construction that will grow the city’s room supply by 20 percent by the end of the decade.
The last major luxury hotels to open in the city center were a Starwood-operated Westin and Carlson’s Radisson Blu Plaza, both in 2000. Now, more than 2,100 rooms are set to be completed by 2019, according to CBRE and Cordell Information.
Driving it is visitation to Australia, which is growing at the fastest pace in at least nine years, sending occupancies in the country’s largest city to a record high and the highest in Asia after Hong Kong and Tokyo.
The number of overseas visitors to Sydney jumped 6 percent to 2.8 million in 2013, the biggest increase since 2005, according to data compiled by the government’s Tourism Research Australia. Travelers from China represented the biggest group with 394,718 arrivals, a 13 percent increase over the previous year. Growth in overseas arrivals will average 4.5 percent a year over the next decade, the agency forecasts.
The number of Australians visiting Sydney rose 7.2 percent in 2013, the biggest increase since at least 1999, according to the agency.
Sydney’s average hotel occupancy is set to reach 88.8 percent by the end of 2016, the highest since at least 2000, according to economics advisory firm Deloitte Access Economics. With an average daily rate of US$221, the city currently ranks 15th among the world’s most expensive markets for rooms, according to an index compiled by Bloomberg.
“The hotels are all full, so there’s more than enough demand for more rooms,” said Michael Kum, chairman of Singapore-based M&L, which is adding a third tower to its Four Points by Sheraton in Sydney, Australia’s biggest hotel with 683 rooms.
Barangaroo South on Darling Harbour is one of the centers of activity. The former dockyards are undergoing a A$6 billion redevelopment under the direction of Sydney-based Lend Lease with attractions that will include offices, apartments, a waterpark and the city’s first six-star hotel, Crown Resorts’ 350-room Crown Sydney, which will include a high-limit casino.
“The fundamentals have been building behind the scene,” a CBRE spokesman said. “There is a definite sense now that the timing is right for development.”
