In HM‘s 2024-2045 Hotel Development Outlook, Marriott International Vice President of Hotel Development ANZP, Richard Crawford, points to signs that activity is set to reignite over the next 18 months.
As a NASDAQ-listed company, Marriott International’s shareholders demand growth, and we are certainly upholding our end of the bargain in Australia. Six new hotel openings since March 2023 (in Sydney, Melbourne, Perth, and Port Moresby) have been our region’s contribution to Marriott’s strategic aim “to be in more places”.
When Marriott acquired Starwood in 2016, Marriott operated just six hotels in the Australia Pacific region. Today, we have 47 hotels, and another 20 agreements signed, meaning we will move from six hotels to more than 60 by 2027.
Importantly though, it’s not the number of hotels that is defining our growth, but the quality. Right now, Marriott can state without challenge that we operate the newest, best, and highest performing hotels in our region. To preserve that market position, we often say no; only putting energy into competing for new hotel projects with the right location, the right brand fit, the right commercial terms, and the right owners. In short, we don’t open hotels for the sake of planting another flag in the ground. Instead, our growth needs to make sense for us, our guests, and our hotel owners.
It is well known that escalating construction costs, increasing interest rates, inflation, and debt challenges weakened the business case for hotel development in recent years. In that environment, many signed new hotel projects are yet to break ground and our response has been to extend contracted milestone dates, to give projects every chance of materialising – and succeeding.
Our hotel developer partners have welcomed this commercial flexibility, and it is our expectation that with the return of a more certain and stable macro environment, hotel development activity will be reignited over the coming 18 months. Therefore, whilst near-term hotel room supply increases will be limited, increased construction activity in our sector throughout 2024 and 2025 will see a spike in exciting new hotel openings across Australia in 2027.
This article was originally published in the June edition of HM Magazine.