How to make the most of the interest rate cut? Get a room

Room bookings by leisure travellers surged nearly 15 per cent at one of the country’s largest hotel chains after last week’s interest rate cut by the Reserve Bank, a sign the cost-of-living crisis may be easing or at least taking a holiday.

The desire for a break after years of mortgage pain and rising living costs was evident in a 14.8 per cent lift in leisure travel bookings, an indicator of domestic demand, across global operator Accor’s Australian network of hotels in the week following the Reserve’s 25 basis point cut.

The Mid Air restaurant and bar atop Accor’s new Hyde Melbourne Place in Melbourne’s CBD.Credit: Supplied

“With the reduction of the cash rate in February and then just now in May, we’ve seen an immediate positive increase in forward bookings for leisure destinations,” Accor’s Pacific chief operating officer, Adrian Williams, said.

The group runs more than 400 hotels in Australia and New Zealand under the Sofitel, Pullman, Swissôtel, Mövenpick, Grand Mercure, Peppers, The Sebel and Mantra brands, among others.

Leisure bookings typically make up about two-thirds of travellers staying in its hotel network.

Last week’s rate cut was followed by this week’s slightly higher-than-expected inflation figure of 2.4 per cent, although CreditorWatch chief economist Ivan Colhoun said the Reserve was still factoring in two more rate cuts, “so further easing is still likely – though back-to-back cuts are now less probable due to inflation and global trade uncertainty.”

Williams said the surge in leisure bookings was a sign of the hotel sector’s recovery as the group recorded its strongest annual performance in Australia since 2019.

That’s despite a 21 per cent increase in new hotel rooms being built and added to Melbourne’s accommodation market, where over a five-year period to January this year, 22 new hotels opened with more than 5000 rooms.

Sydney added 2270 rooms over the same period, a 10.4 per cent increase.

Major events such as the grand prix and the Comedy Festival have bolstered bookings in Melbourne, leading to a record number of hotel rooms selling in March, more than during Taylor Swift’s blockbuster concert series, which filled most of the city’s rooms in February last year.

‘While there’s uncertainty, a bit of concern in some areas around the world, Australia remains a highly attractive place for people to travel to.’

Adrian Williams, Accor’s Pacific chief operating officer

Another major boost to occupancy was April’s Amway China leadership seminar in Melbourne, which drew 16,000 of the multilevel marketing company’s top sellers for five days of seminars, tours, and a gala dinner.

M3 Property’s hotels and leisure director, Antony Schober, said international tourist numbers were returning to pre-pandemic levels, but Melbourne was attracting the lion’s share of domestic tourism in Australia.

“Occupancy rate per room for the Melbourne market in January 2025 was 74.63 per cent, which is a 3 per cent year-on-year increase. Revenue per room has also gone up, with a 9 per cent year-on-year increase,” Schober said.

Another global player, IHG Hotels & Resorts, is also on the move, signing deals last week with property investors Salter Brothers to revive the upmarket Regent brand in Australia.

IHG’s InterContinental in Melbourne will become a Regent hotel in 2030. The group’s Crowne Plaza hotel in Docklands will take over the InterContinental brand, along with Sydney’s Coogee Beach Crowne Plaza and Crowne Plaza Canberra.

Williams said international turmoil linked to US President Donald Trump’s tariffs and the conflicts in Ukraine and Gaza was enhancing Australia’s image as a safe and attractive travel destination.

“While there’s uncertainty, a bit of concern in some areas around the world, Australia remains a highly attractive place for people to travel to. We will see increased growth as a result of that,” he said.

Airbnb Australia and New Zealand country manager Susan Wheeldon said while affordability was top of mind for many people, Australians had not given up travelling.

“When it comes to international travel this winter, Italy is having a resurgence following The White Lotus, while those looking closer to home are heading to Japan, Vietnam and Indonesia – all relatively affordable overseas destinations,” Wheeldon said.

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