Savills Australian Hotel Transaction Review 2025

INVESTOR PREFERENCE • Capital is increasingly being directed toward existing hotel assets, particularly those offering in-place cash flow performance and clear value-add potential through repositioning, refurbishment, or operational flexibility, including vacant possession. • Investors continue to favour well-maintained, institutional-grade assets in strategically located markets that demonstrate a growth profile that can deliver compelling future income yields. • Conversion opportunities , particularly into residential, Build-to-Rent (BTR), co-living, and Purpose-Built Student Accommodation (PBSA) assets, have gained traction, driven by a persistent undersupply of housing and broader affordability pressures across Australia. According to the BTR Database by Franklin St, approximately 10,000 BTR units are operational nationally as of Q1 2025, representing a doubling of stock compared to 2024, highlighting the rapid expansion and growing maturity of this asset class. The transaction market in 2025 has been influenced by a challenging geopolitical environment, resulting in a more cautious approach from both buyers and sellers. As a result, transaction timelines have lengthened considerately compared to prior years. Elevated construction costs continue to constrain new hotel development, prompting investors to focus on existing assets rather than new developments. Under these conditions, and supported by strong trading performance of existing hotels, median passing yields have increased relative to recent years. Source: Savills 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2009 2013 2017 2021 2011 2015 2019 2023 2010 2014 2018 2022 2012 2016 2020 2024 2025 MEDIAN PASSING YIELDS Median Passing Yield Long Term Average I SAVILLS AUSTRALIAN HOTEL TRANSACTION REVIEW 7