Hotels struggle to buy city land due to builders in 2026

Hotels are losing land bids to builders daily. This is making it very hard to build new hotels, leading to fewer rooms for travelers.
By Newsroom | Business, Real Estate |

Prime urban locations, once eyed for hotel development, are increasingly being secured by residential builders, creating a significant impediment for the hotel sector's expansion. This situation is described as hotels being "outbid every day of the week," contributing to a protracted shortage of accommodation. The Property Council Queensland executive director, Jess Caire, notes this isn't a temporary downturn but a lasting issue.

The opening of the Avani Mooloolaba Beach Hotel, a 180-room facility on the Sunshine Coast, highlights the challenges. KPAT Hotels director, who opened the Avani, stated that acquiring land in city centres is nearly impossible due to competition from residential developers. He stressed the need for "very little red tape" and specifically designated land for hotel projects to facilitate development. The Avani Mooloolaba stands as the first internationally branded, full-service hotel in its region in over four decades.

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A separate report indicates broader educational challenges, with one in ten Queensland students requiring support for emotional and mental health struggles. This figure has doubled over the last decade, prompting some parents to consider alternative schooling.

Meanwhile, a free, popular park Pilates class in Brisbane faced disruption, having to cancel an event after questions were raised by council staff. This incident is mentioned alongside a developer's plight, where a viable business model is hindered by the inability to secure land.

Further complicating the hospitality landscape, a segment of the hotel industry is grappling with the aftermath of reduced housekeeping services implemented during the pandemic. While occupancy rates have rebounded, the frequency of cleaning has lagged in many establishments. This has become a point of contention between hotels, their employees, and guests. Industry observers suggest a return to daily housekeeping is likely only when unavoidable, hinting at potential future pressure points.

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Frequently Asked Questions

Q: Why are hotels finding it hard to buy land in cities?
Residential builders are buying the land first. Hotels are being outbid every day, making it very difficult for them to get the space they need to build new hotels.
Q: What does this mean for hotel rooms?
This situation is causing a shortage of hotel rooms. With fewer new hotels being built, there are not enough places for people to stay, especially in popular areas.
Q: Is this a new problem for hotels?
No, this is not a new problem. Jess Caire from Property Council Queensland says this is a lasting issue, not just a temporary problem. Hotels need easier rules and special land to build.
Q: Are there any new hotels opening despite this?
Yes, the Avani Mooloolaba Beach Hotel on the Sunshine Coast opened with 180 rooms. It is the first big hotel of its kind there in over 40 years, showing how hard it is to build new ones.