Thinking of Buying a Hotel Business in Australia? Here Are 3 Vital Questions to Ask

The Australian hotels and resorts industry generated $14.8 billion in revenue in 2025, with profit margins averaging 10.8%. While revenue contracted slightly over the past decade due to the pandemic and cost-of-living pressures, it is now forecast to grow at an annualised 2.6% through 2030, reaching $16.9 billion.

Industry growth is being fuelled by record levels of international tourism expected by 2026–27, rising demand for luxury accommodation, and improved domestic travel conditions. However, intense competition, labour cost pressures, and substitute offerings from platforms like Airbnb present challenges for buyers to consider.

1. Is the Business Financially Stable and Profitable?

Why It Matters

Profitability in the hotel industry is highly sensitive to occupancy rates and average daily room tariffs. While occupancy rates averaged 71.4% in 2023–24, this remained below pre-pandemic benchmarks. Luxury hotels, however, recorded higher occupancy and room tariffs above $300 per night in major states.

Industry-wide profit margins are 10.8%, with success hinging on balancing accommodation revenue with food, beverage, and value-added services.

What to Check

• Revenue mix & margins – Assess income sources across room rates, food and beverage sales, events, and value-added services such as spas or function rooms.
  
  

• Cost benchmarks – Purchases account for 45–50% of revenue, while wages represent 26.8%, reflecting the labour-intensive nature of the industry. Compare these to the business’s financials.
  
  

• Occupancy & ADR trends – Review historical occupancy rates and room tariffs to ensure resilience against market volatility.
  
  

• Debt & capital exposure – Hotels require high capital investment. Check lease structures, financing terms, and whether the property is owned, leased, or under management.
  
  

2. Does the Market Position & Guest Offering Support Growth?

Why It Matters

A hotel’s success depends on location, target market, and ability to differentiate from competitors. Luxury hotels dominate in New South Wales, Victoria, and Queensland, where average daily rates exceed $270. Meanwhile, regional hotels often rely on niche tourism like wine regions in South Australia or adventure tourism in Western Australia.

International leisure travellers have overtaken domestic tourists as the largest market segment, accounting for 38.1% of demand. These guests are typically less price-sensitive and drive higher margins through premium services.

What to Check

• Target market fit – Confirm whether the hotel caters to the right demographic mix: international leisure, domestic travellers, or business clients.
  
  

• Competitive positioning – Assess how the hotel differentiates from short-term rentals, motels, and serviced apartments.
  
  

• Events & business travel – Check facilities for conferences, corporate bookings, and events, which contribute stable revenue streams.
  
  

• Tourism dependence – Evaluate reliance on seasonal tourism versus steady demand drivers like business travel.
  
  

3. Is the Business Aligned with Industry Trends and Regulatory Demands?

Why It Matters

Hotels that align with key trends in technology, premiumisation, and sustainability are more resilient. Contactless check-ins, smart room controls, and bundled travel packages are now expected by guests. At the same time, regulations around health and safety, liquor licensing, and the Modern Slavery Act place compliance obligations on operators.

Labour shortages and rising wages are also reshaping operating models, with many hotels shifting to part-time or casual staff to control costs.

What to Check

• Technology & innovation – Review adoption of digital booking systems, contactless check-in, and data-driven marketing.
  
  

• Sustainability & compliance – Ensure the business complies with workplace safety standards, liquor laws, and modern slavery regulations.
  
  

• Labour & staffing – Evaluate contracts, wage compliance, and staff retention strategies.
  
  

• Trend adaptability – Determine if the hotel has adjusted to international demand for luxury, while also catering to domestic travellers facing cost-of-living pressures.
  
  

Ready to Invest in a Thriving Hotel Business?

With inbound tourism forecast to reach record levels by 2026–27, strong demand for luxury accommodation, and steady recovery in domestic leisure travel, the Australian hotel industry presents attractive opportunities.

Success will depend on financial sustainability, effective differentiation, and long-term adaptability to global tourism trends.

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