Why Regional Motels Benefit from Both Business and Leisure Travel

Regional motels occupy a unique position within the Australian accommodation sector because they typically serve a wide range of guest segments rather than relying on a single source of demand. Unlike CBD hotels that may depend heavily on corporate travel or coastal resorts that rely primarily on discretionary tourism, regional motels often benefit from a diversified mix of business travellers, contractors, government workers, healthcare professionals, insurance accommodation, and domestic leisure guests.

This diversity of demand can create more stable occupancy patterns and reduce earnings volatility across economic cycles. It also helps explain why many regional motels demonstrated relative resilience during periods of disruption such as COVID-19, when some other accommodation sectors experienced far sharper declines in occupancy and revenue.

Australia’s domestic travel market has remained significant in recent years. According to Tourism Research Australia, Australians took more than 94 million domestic overnight trips in 2024, with regional destinations continuing to attract a substantial share of travel activity. Regional travel has been supported by lifestyle migration, infrastructure investment, workforce mobility, and the continued popularity of domestic tourism.

Figure: Domestic Overnight Trips to Regional Australia

Sources: Tourism Research Australia

At the same time, regional Australia continues to see major investment across infrastructure, renewable energy, healthcare, mining, logistics, and transport projects. These projects often require large mobile workforces that rely on regional accommodation providers for extended stays.

Rather than relying on one type of traveller, many regional motels effectively operate as flexible accommodation hubs servicing multiple segments simultaneously — tourists on weekends, contractors during the week, healthcare workers year-round, and government or insurance-related stays when required.

Regional Australia Continues to Benefit from Domestic Travel Growth

Domestic tourism remains one of the key drivers of regional motel demand. While international tourism can fluctuate significantly due to currency movements, geopolitical issues, airline capacity, or global events, domestic travel has historically provided a more stable source of demand for many regional destinations.

According to Tourism Research Australia, regional Australia accounted for a substantial share of domestic overnight visitor expenditure in recent years, with travellers increasingly seeking road-trip destinations, regional experiences, nature-based tourism, food and wine regions, and short-stay leisure escapes.

Many regional motels are well positioned to capture this demand because they provide affordable, accessible accommodation close to highways, tourism precincts, sporting events, hospitals, and regional business centres. Their lower price point compared with full-service hotels can also make them attractive during periods of cost-of-living pressure, when travellers remain price conscious.

International tourists are also less likely to stay in motels compared with domestic travellers, with only around 20% of international visitors using motels during travel within Australia. This can reduce exposure to volatility in international tourism markets and airline capacity disruptions.

Another factor supporting regional motels is the relatively lower level of competition from Airbnb and serviced apartments in many regional locations compared with major metropolitan markets. Short-stay apartment supply tends to be concentrated in capital cities and major tourist hubs, whereas regional accommodation markets often remain more dependent on traditional motel-style lodging.

Regional Travel Is Supported by Workforce Mobility

A major but sometimes overlooked driver of regional accommodation demand is workforce mobility.

Regional Australia relies heavily on mobile workers across industries such as construction, mining, energy, healthcare, transport, agriculture, forestry, telecommunications, and government services. Many of these workers travel between regional centres for projects, maintenance work, shutdowns, inspections, training, or temporary assignments.

According to the Australian Bureau of Statistics, regional population growth and labour mobility have remained important themes across many states, particularly in areas benefiting from infrastructure investment and decentralisation trends.

For regional motels, this creates a recurring stream of midweek demand that can complement leisure travel. Contractors and workers may stay for days, weeks, or even months depending on project requirements. These guests often value convenience, parking access, laundry facilities, reliable Wi-Fi, and proximity to worksites more than luxury amenities.

This type of accommodation demand can provide a stabilising effect because it is often linked to essential economic activity rather than discretionary travel spending.

Infrastructure Spending Supports Regional Travel Demand

Australia continues to invest heavily in regional infrastructure, including roads, renewable energy, healthcare facilities, utilities, rail, logistics, telecommunications, and public infrastructure projects.

The Australian Government has committed tens of billions of dollars toward infrastructure investment nationally over coming years, with a significant proportion directed toward regional projects. Large infrastructure programs typically create sustained accommodation demand for engineers, contractors, consultants, project managers, inspectors, and support workers.

Table: Examples of Infrastructure-Related Regional Accommodation Drivers

Demand Driver	Typical Guests	Potential Length of Stay
Renewable energy projects	Contractors, engineers, technicians	Weeks to months
Highway upgrades	Civil construction workers	Days to months
Mining and resources	FIFO/DIDO workers, consultants	Recurring stays
Regional hospital projects	Healthcare specialists, builders	Days to weeks
Telecommunications upgrades	Technical crews	Short recurring stays

Sources: Infrastructure Australia, Australian Bureau of Statistics, state infrastructure pipelines.

These projects can materially benefit regional accommodation providers, particularly in towns with limited hotel supply. In some regional markets, major infrastructure activity has contributed to elevated occupancy and stronger room rates for extended periods.

Importantly, infrastructure-driven accommodation demand is often less seasonal than tourism demand. A motel that serves both contractors during the week and leisure travellers on weekends may achieve a more balanced occupancy profile across the year.

Contractor and Workforce Accommodation

Contractor accommodation has become an increasingly important component of revenue for many regional motels.

A motel located near industrial zones, mines, logistics hubs, renewable energy projects, forestry operations, or transport corridors may regularly host electricians, plumbers, civil contractors, telecommunications workers, engineers, mechanics, and maintenance crews.

These guests frequently book multiple rooms at once, stay midweek, and return regularly over long periods. Repeat business relationships with companies can also reduce customer acquisition costs and improve booking predictability.

For motel operators, workforce accommodation can provide several operational advantages:

• More consistent occupancy outside holiday periods

• Longer average lengths of stay

• Reduced reliance on online travel agencies

• Greater visibility over forward bookings

• Higher repeat customer potential

In many regional markets, business and contractor travel can represent a substantial share of total occupancy even when tourism conditions soften.

Insurance Accommodation Demand

Insurance-related accommodation is another underappreciated source of motel demand.

When homes become temporarily uninhabitable due to floods, storms, fires, water damage, or other insured events, insurers often require short- to medium-term accommodation solutions for displaced residents.

Regional motels can benefit from this demand because they offer practical, flexible accommodation that is usually more cost-effective than full-service hotels.

Australia has experienced increasing weather-related insurance events over recent years, particularly across regional communities exposed to flooding, bushfires, and severe storms. This has contributed to periods of elevated temporary accommodation demand in affected areas.

Insurance accommodation can also produce relatively stable occupancy during periods when discretionary tourism weakens.

Government and Healthcare Travel

Government and healthcare travel remains another important contributor to regional motel demand.

Regional Australia requires ongoing travel by:

• Healthcare specialists

• Agency nurses

• Government inspectors

• Teachers and trainers

• Police and emergency services

• Court and legal personnel

• Utility workers

• Social and community service providers

Many regional towns depend on visiting professionals who require overnight accommodation while servicing local communities.

Healthcare travel in particular has become increasingly important. Regional hospitals and healthcare networks often rely on travelling specialists, locum doctors, agency nurses, and allied health professionals who may require regular accommodation throughout the year.

This demand can provide consistent occupancy independent of tourism cycles.

Diversified Revenue Can Reduce Earnings Volatility

One of the key strengths of many regional motels is their exposure to multiple demand drivers simultaneously.

A motel may host:

• Tourists during weekends and school holidays

• Contractors during infrastructure projects

• Insurance guests after weather events

• Government travellers during the week

• Healthcare professionals year-round

• Sporting groups during regional events

• Corporate travellers servicing local industries

This diversification can reduce reliance on any single customer segment.

Table: Example of Diversified Regional Motel Demand Mix

Guest Segment	Typical Demand Pattern
Leisure travellers	Weekends, holidays
Corporate travellers	Midweek
Contractors	Extended stays
Government travel	Consistent year-round
Healthcare workers	Recurring travel
Insurance accommodation	Event-driven
Sporting/events travel	Peak weekends

Diversified demand can help smooth occupancy fluctuations and improve revenue resilience across changing economic conditions.

For investors and operators, this diversification may create more defensive earnings characteristics compared with accommodation assets that rely heavily on one segment such as international tourism, conference travel, or luxury discretionary spending.

Why Regional Motels Demonstrated Relative Resilience During COVID

The COVID period highlighted the relative resilience of many regional motels compared with parts of the broader accommodation sector.

While CBD hotels and international tourism-focused assets were heavily impacted by border closures and the collapse in international travel, many regional motels continued servicing essential workers, contractors, freight operators, healthcare staff, and government travellers.

Domestic road travel also recovered faster than international tourism once restrictions eased. Many Australians chose regional destinations accessible by car, benefiting accommodation providers in regional towns and tourism corridors.

In several regional markets, motels were able to maintain comparatively stable occupancy levels relative to major city hotels because they serviced a broader mix of essential and non-discretionary travel demand.

Importantly, regional motels also generally operate at lower price points than luxury accommodation assets. This can support demand during periods of economic uncertainty because travellers and businesses often remain more willing to spend on practical, affordable accommodation.

A Broad-Based Demand Profile Supports Regional Motel Performance

The Australian motel sector continues to benefit from several long-term structural trends, including domestic tourism, regional workforce mobility, infrastructure investment, decentralisation, and essential service travel.

Rather than depending on a single category of traveller, many regional motels serve a broad ecosystem of guests ranging from tourists and families through to contractors, healthcare workers, insurers, and government agencies.

This diversified demand profile can create more resilient occupancy patterns and potentially reduce earnings volatility across economic cycles.

For motel owners and investors, understanding these multiple demand drivers is important when assessing the long-term performance characteristics of regional accommodation assets.