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Thinking of Buying a Hotel Accommodation Business in Australia? Here Are 3 Vital Questions to Ask
Australia’s hotel accommodation industry is experiencing steady growth, with total industry revenue projected to reach $14.8 billion in 2024 and grow at an annualised 2.6% through 2029-30.
Occupancy rates have rebounded to 71.4% after the pandemic, while luxury hotels continue to outperform budget and midscale segments.
Despite rising competition from short-term rental platforms, regulatory changes and increasing international visitor numbers are supporting industry resilience.
However, financial sustainability, competitive positioning, and operational efficiency must be carefully assessed before investing.
1. Is the Business Financially Stable and Profitable?
Why It Matters
Hotels operate with multiple revenue streams, including room rates, food and beverage sales, and event hosting.
Industry profit margins average 10.8%, with luxury hotels achieving higher returns. Labour costs, seasonality, and occupancy rates significantly impact profitability.
What to Check
- Revenue trends & profit margins – Review financial statements from the last three to five years to assess profitability and revenue stability.
- Occupancy rates & seasonal fluctuations – Compare with industry benchmarks (71.4% average occupancy) to determine demand trends.
- Cost structure & labour expenses – Analyse wage costs, which account for 26.8% of revenue, and assess automation or outsourcing opportunities.
- Diversification of revenue streams – Evaluate income from dining services, corporate packages, or loyalty programs to ensure revenue stability.
2. How Competitive is the Business’s Market Position?
Why It Matters
The Australian hotel sector is highly competitive, with major chains holding a 13.6% market share while independent operators dominate regional areas.
Hotels in prime locations with strong brand recognition and differentiated service offerings tend to achieve higher occupancy and profitability.
What to Check
- Location & target demographic – Assess proximity to business districts, airports, or tourist attractions, which influence demand.
- Franchise vs. independent model – Determine whether the business benefits from brand affiliation, centralised marketing, and loyalty programs.
- Guest experience & online reputation – Review guest feedback and ratings on booking platforms, as customer satisfaction directly impacts bookings.
- Competitive positioning & niche offerings – Identify whether the business differentiates through boutique experiences, wellness tourism, or eco-friendly initiatives.
3. Is the Business Aligned with Industry Trends and Future Growth?
Why It Matters
The hotel industry is evolving, with increasing demand for smart technology, sustainable tourism, and premium guest experiences.
Businesses that invest in digital transformation, direct booking strategies, and high-value services are better positioned for long-term success.
What to Check
- Technology & digital innovation – Assess the use of smart check-in, AI-driven pricing models, and direct booking platforms.
- Sustainability & compliance – Review environmental practices and adherence to government incentives for eco-friendly tourism.
- Business travel & luxury market expansion – Determine growth potential in corporate travel, conference hosting, and premium accommodation.
- Regulatory considerations & industry policies – Ensure compliance with short-stay rental regulations, occupational health laws, and liquor licensing requirements.
Ready to Invest in a Thriving Hotel Accommodation Business?
With strong demand, evolving guest preferences, and opportunities for premium service expansion, the Australian hotel sector presents a compelling investment opportunity.
However, financial stability, strategic positioning, and operational efficiency are key to long-term success.
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