Offshore Capital Returns as Hotel Deal Structures Shift

Australian hotels are drawing offshore capital again, but owners and investors are using a wider range of funding and operating structures to get deals done. At The Urban Developer’s Hotel Summit in Sydney , Colliers head of hotels Australia Karen Wales said hotel transactions reached about $2.7 billion in 2025, with offshore capital accounting for about 49 per cent of market activity. She said “one of the key things that we saw last year was the re-emergence of offshore capital” and added offshore buyers were “playing predominantly at the top end of the market”. Wales said offshore money had long played a major role in Australian hotel investment, averaging about 65 per cent of activity over the past 20 years, but moving in waves. Travel restrictions, higher travel costs and competing opportunities elsewhere kept some groups on the sidelines through Covid and the period after. “Last year that really did shift,” she said. “We saw a significant investment from offshore capital with around sort of half of the transaction volumes across the market being invested from offshore capital.” Her figures show 67 hotel transactions last year, 6252 rooms sold and an average price per key of $427,000, with 13 deals above $50 million. ▲ Colliers head of hotels Australia Karen Wales outlines the capital flows reshaping Australia’s hotel market at The Urban Developer’s Sydney summit. TFE Hotels chief executive officer Antony Ritch said the rebound had widened the buyer pool. “Australia has evolved a lot and we’ve gone from a nice to have to now very clearly a must have for global capital,” he said. “To be honest, it’s the strongest we’ve seen.” “Pretty much every country and every category is represented and that’s only going to continue.” Wales said momentum had carried into 2026 as investors were “reorientating their focus back to Australia”, a market she described as a “highly transparent safe haven”. Australia’s investment-grade hotel universe now sits at about $82 billion, up from roughly $60 billion a decade ago. ▲ Antony Ritch (from right), Sam McVay and Paul Fischmann join Adam Di Marco for the build, buy, sell or hold panel. The change is not only about capital coming back, it’s also about the way hotel deals are being put together. ResortBrokers managing director Trudy Crooks said major banks still backed most transactions, but “there’s definitely been a shift to more private equity and funding coming through” during the past five years. She said family offices and joint ventures were becoming more visible, particularly around new developments where buyers were bringing in direct capital. Crooks said the same shift was flowing into operating structures. “We started to see bigger properties, people who own bigger properties, they’ve had them under management agreements and they’d like to put a lease in place,” she said. ResortBrokers had done this “very successfully” on “100 key, 200 key properties in capital cities”, with guaranteed return still appealing to many owners. ▲ Trudy Crooks speaks on the hotel investment lifecycle panel with Adam Di Marco, Ivy Cheng and Ashish Bhattacharya. CapitalLand investment and business developer Ivy Cheng said institutions were widening the capital stack as well. “We can do preferred equity structure and then we’re also looking at the private credit space,” she said. “There are multiple ways that we invest in the sector and then we just need to be flexible and agile in our approach.” Cheng said operators were also becoming more flexible, “not just on management agreement terms, but also on the way they manage an asset to support our long-term value creation for the properties”. Lockton head of real estate and construction Ashish Bhattacharya said many hotel deals now involved “private equity funding”, government funds and institutional investors. From an insurance and diligence perspective, he said the key issue was whether policy settings met financier requirements. “We would look at those requirements and see, does your policy cover those requirements?” he said.

Offshore Capital Returns as Hotel Deal Structures Shift

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