Australia is in the midst of its biggest hotel building boom since the 2000 Sydney Olympics but industry groups are confident the extra supply is sustainable and will be comfortably absorbed.

Tourism Accommodation Australia (TAA) estimates there are 120 hotel projects in the pipeline, which will grow the number of rooms by 30% over the next five years to the end of 2021.

Over the next two years alone TAA forecasts 9000 rooms will be added, a surge that hasn’t been seen since the years leading up to the Sydney Olympics, when 7500 rooms came on line between 1998 and 2000.

But that room boom was  followed by a bust, with a series of global events – 911, SARS and a stock market meltdown – decimating global tourism.

However on this occasion TAA believes no such obstacles are on the horizon and that a buoyant tourism market, under-pinned by strong inbound growth, will enable the market to successfully integrate the new supply, although rates and occupancy may be impacted short-term.

Chair of TAA, Martin Ferguson said: “With almost double digit growth in visitor arrivals – particularly from China – we are well on the way to achieving our visitor targets, and this growth will be sustainable in the long term.

“There may be excess hotel capacity in some cities in the short-term, but this will be to the benefit of travellers through greater availability, and the increased capacity will enable cities to compete for large conferences, exhibitions and events.”

He added: “What is so encouraging about this record-breaking phase is that the projects range from luxury international brand names to intimate boutique hotels traversing a vast range of styles and price points.

“It counters any arguments for additional stock by unregulated commercial short-term accommodation operators, who have exploited grey legislative areas to establish quasi hotels in CBDs and other tourist hot-spots.”

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