Over the past 12 months, alternate investment sectors have shown resilience amid economic pressures. Rising living costs and tighter household budgets have limited discretionary spending, yet operators have generally maintained revenue through smart pricing, operational efficiency, and enhanced customer experiences.
Investor activity has remained active, with notable acquisitions reflecting confidence in well-located, well-managed assets. Larger operators continue to consolidate smaller properties, using scale and brand strength to navigate rising costs and tighter margins. Smaller operators have focused on differentiation, value-added services, and careful cost management.
Looking ahead to 2026, domestic demand for flexible, experience-driven, and nature-based offerings will support steady performance, while strategic acquisitions and operational improvements will continue to shape growth opportunities across these sectors.
Past 12 Months
Over the past 12 months, the caravan park sector has shown strong resilience, outperforming many other accommodation types. Despite slower discretionary travel due to higher living costs, operators have largely maintained revenue through higher tariffs and improved yield management. Industry revenue rose 3.3% to around $5.5 billion in 2024–25, supported by steady domestic touring and the appeal of lower-cost travel options.
Cost pressures continue to shape much of the operating environment. Rent, purchase costs, insurance, marketing spend, and franchise fees have all tracked upward, placing downward pressure on margins even as revenue stabilises. Wages have grown modestly as labour markets ease but remain above pre-pandemic levels. While depreciation and utilities provide some offset, the overall cost structure remains heavier than historic norms, limiting profit recovery for independent parks.
Occupancy growth is limited by household budget pressures, and platforms like Airbnb increase short-stay alternatives. However high-profile sales highlight active investor interest: the $16.7 million sale of Aussie Gardens Caravan Park reflected land and redevelopment value, while the Renmark Riverfront Holiday Park acquisition by G’day Group underscores consolidation of premium regional assets. Smaller parks continue to sell to larger operators, who use capital, brand strength, and reinvestment capacity to weather market volatility.
Outlook for 2026
For 2026, environmentally conscious travellers will continue to favour caravan parks and nature-based stays, supporting steady visitation. Operators anticipate a stable but margin-conscious environment. Rate growth may be constrained by market saturation and household budgets, particularly for smaller parks.
Larger players are positioned to benefit from ongoing consolidation and strategic acquisitions, as seen with Renmark Riverfront. Overall, the sector enters 2026 with solid fundamentals, steady revenue expectations, and continued demand for flexible, outdoor-focused accommodation.
Past 12 Months
2025 saw the sector edge forward, posting 1.3% revenue growth to $20.3 billion. While household budgets remained under pressure, the market showed resilience, driven by operators focused on unique concepts, elevated food programs and high-quality customer experiences. Trading activity was also supported by several state regulatory adjustments, including extended trading hours in some jurisdictions.
A notable feature of the year has been the return of several high-profile venues to the market, signalling renewed confidence in the sector. In Melbourne, Sand Hill Road completed a major redevelopment, reopening the iconic Waterside Hotel as a multi-level hospitality destination, whilst Sydney saw the relaunch of The Woodstock (formerly the Carousel Inn), following a large-scale investment that repositioned the venue with improved dining, entertainment and family-friendly spaces. These renewals highlight continued capital investment and a shift towards diversified, multi-use pub formats.
Costs have stayed elevated, particularly labour, rent, utilities and procurement. Operators that performed well tended to focus on efficiency gains, refine their product mix or pivot toward higher-margin offerings such as specialty drinks and improved food menus. Technology investment and the permanent adoption of contactless ordering continued to expand across the sector, helping offset operating challenges even as depreciation increased.
Outlook for 2026
The outlook for 2026 is cautiously positive. Venues delivering premium, experience-led offerings, including curated beverage lists, entertainment and wellness-aligned options, are expected to lead performance. With recent technology upgrades bedding in, operational efficiency should continue to improve. Coupled with continued consumer preference for experiential hospitality, the sector is positioned for steady, moderate growth through 2026.
Past 12 Months
In 2025, the Bed & Breakfast sector continued its gradual recovery from the pandemic downturn, with industry revenue rising 1.8% to approximately $99.7 million. Demand has been supported by strong domestic leisure travel, helping stabilise occupancy after several inconsistent years. However, the recovery remains uneven: luxury travellers continue to favour hotels, leaving many B&B operators capturing a smaller share of the post-pandemic rebound.
Profitability has improved modestly, driven by higher booking revenue and operators tightening cost controls. But cost-of-living pressures continue to limit price growth, particularly as online travel agencies (OTAs) compress margins through competitive pricing and elevated commission structures. More rooms are entering the market while travellers tighten their budgets, creating extra volatility for small operators. Standing out through personal service, value-added offerings, and curated experiences matters more than ever.
Cost trends have shaped much of the past year. Wages, premium guest offerings, and rising utilities have pushed operating costs higher, restricting bottom-line improvement. Many operators have deferred major renovations or capital upgrades, prioritising service enhancements over structural investment. Despite these pressures, margin recovery has been supported by the return of tourism and operators restructuring services to deliver clearer value.
Outlook for 2026
Looking ahead to the 2026 calendar year, the sector is expected to see steady but modest performance. Profit margins should remain stable, supported by recovering demand and continued refinement of service models, though rising operating costs will cap upside. Heavy reliance on OTAs will continue to constrain pricing power, making direct-booking strategies increasingly important. Domestic leisure travel is forecast to remain the core demand driver, yet household budget pressures may temper short-term growth.
Overall, the sector enters 2026 on firmer footing, with cautious optimism but limited scope for rapid expansion.
Source: IBIS World
Head of Alternate Investments
0457 648 002
ryan.danaher@opteonsolutions.com
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