Savills Australian Hotel Transaction Review 2025

The Reserve Bank of Australia (RBA) cash rate has been trending downward throughout 2025 to 3.6%, however, that is still above 2022 levels. After a slow 1st half of the year as a result of federal elections and global factors, positive momentum and improving sentiment have been building in the second half of 2025 and are expected to support increased transaction activity into 2026 on the back of this investor confidence. OUTLOOK Amid rising inflation in the second half of 2025, which remains above the RBA’s target range, the RBA has tightened the cash rate by 25 basis points in February 2026 to bring inflation into their target band. Operational real estate, such as hotels, which continues to exhibit a strong income growth profile, should remain resilient to this tightening in monetary policy. Hotels are able to reprice daily through dynamic pricing with high flow‑through to net operating profit. THE YEAR 2025 IN REVIEW AUSTRALIAN HOTEL INVESTMENT MARKET (CONT.) Source: RBA CASH RATE (%) 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 1.5% 0.5% 2.0% 1.0% 0.0% 1-Feb-22 1-May-22 1-Aug-22 1-Nov-22 1-Feb-23 1-May-23 1-Aug-23 1-Nov-23 1-Feb-24 1-May-24 1-Aug-24 1-Nov-24 1-Feb-25 1-May-25 1-Aug-25 1-Nov-25 1-Feb-26 I SAVILLS AUSTRALIAN HOTEL TRANSACTION REVIEW 8