The global head of Real Assets Research at MSCI, David Green-Morgan, said of the total sales across the Asia Pacific, worth about $3.4 billion, metropolitan markets accounted for 75 per cent of total volume.

He said international travel has been difficult for the past few years and so domestic travel surged, particularly to regional locations as a result investors took advantage of this trend and increased their allocations to regional hotels.

CBRE’s report also tracks the demand drivers and development outlook for the Australian hotel sector.

CBRE regional director, hotel valuations, Troy Craig added that even with a recovery in Australians departing for overseas, domestic travel continues to drive the Australian tourism industry.

Domestic travel nights are now at or surpassing pre-pandemic levels in Queensland, South Australia, Western Australia and Tasmania and spending in these states is up about 40 per cent on pre-pandemic levels.

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“This is benefitting Australia’s gateway cities of Sydney and Melbourne, which recorded the strongest year-on-year growth rates, in relation to both average daily rate (ADR) and occupancies aided by a recovery in corporate travel and international travel,” Craig said.

CBRE is forecasting that ADR growth will moderate over 2023, although Craig said most city markets were still expected to post gains as operators maintain strong rate policies in favour of returning to pre-pandemic occupancy levels.