Australia's tourism industry looks poised to continue its strong growth, but a new report suggests vacancy rates in Melbourne and Perth could creep up as new hotels open.
Thirty-two new properties are expected to open in Melbourne alone over the next two years, adding 6,500 new rooms to its existing stock of about 20,000, according to Deloitte Access Economics partner Adele Labine-Romain.
Melbourne has absorbed a number of new properties in recent years, but the sheer number opening will push its occupancy rate below 80 per cent in 2020, Ms Labine-Romain estimates.
Perth is also expecting a number of new properties to open, including a Ritz-Carlton at Elizabeth Quay, pushing its vacancy rate below 70 per cent in 2020 before the market adjusts.
The increased supply is expected to decrease room rates, which are forecast nationally to go in the opposite direction, increasing 2.4 per cent a year over the next three years and exceeding $200 a night by 2021.
"Travellers to Melbourne and Perth will be able to take advantage of some good prices in those markets," Ms Labine-Romain said.
"In the short term there will be some good value. ... there will be a period of adjustment for the market."
The overall outlook for the tourism and hotel sector is strong and it will continue to outperform the Australian economy, Ms Adele Labine-Romain said.
The number of international visitors is estimated to grow by 6.2 per cent on average a year by the next three years, with a record 10 million visitors expected next year.
Tourism from China will continue to grow, although not by the double-digit figures of the past five years.
Visits from India are growing the fastest and are expected to rise 13.5 per cent a year for the next three years, according to Deloitte's Tourism and Hotel Market Outlook, released on Thursday.
Domestic trips are expected to grow by 3.8 per cent, the report said.
Australians went on 100 million domestic overnight trips in the year to September 2018, an average of five trips a person.
Australians spent an average of $5,030 on travel last year, 12 per cent of household consumption, with 46 per cent of that spent on overseas travel.