Tourism Export Council (TEC) members, including inbound tour operators (ITO), hoteliers and revenue managers, met recently to discuss the lack of hotel inventory and pricing in the key destinations of Auckland, Rotorua and Queenstown.
The meeting was called by ITOs as they struggle to gain access to rooms with New Zealand estimated to be losing up to 20 percent of new business, despite international holiday arrivals being up 15 percent, according to the international visitor statistics released by Statistics New Zealand in January 2017.
There was general recognition by both parties all sectors of business (wholesale, corporate, crew, groups and FIT) are up, and limited hotel inventory and price increases, were contributing factors regarding the substantial loss of business for this season, and going forward.
Inbound members advised that the word from offshore trade was that New Zealand had reached its ceiling for accommodation pricing, and careful consideration was required prior to further increases. New Zealand is viewed as a very expensive destination compared to Europe and other parts of the world, and we need to check our ‘value proposition’ regarding price, that is; paying 5-star prices for a 3-star hotel, and the ability to complete itineraries.
During Chinese New Year, it was reported that some product suppliers in Rotorua and Queenstown did not receive as many visitors and that spend was down. This relates to high accommodation pricing, as it leaves less disposable spend available to participate in attractions and activities. It’s the law of unintended consequences, and while in the first instance high rates affect group tours and inbound clients, it has also affected product supplier profitability.
Hoteliers advised that they have been releasing more wholesale rooms to trade, but that the demand from ITOs and across other sectors was high, and that there simply were not enough rooms to feed the demand, which leads to premium pricing. Hotels indicated that ITOs should be preparing for dynamic pricing, with static pricing on the decrease and not likely to change in the future.
Feedback from ITOs illustrated that at times multi rooms have been available online and that some offshore agents are finding the rooms at less than the wholesale rate online, which is very frustrating, and damages the ITO’s reputation.
This is a serious issue, as once offshore travel trade stop selling New Zealand, it hurts the relationship with offshore wholesale and retail chains, who spend a lot of money and effort in promoting New Zealand on our behalf.
Additional future concern is the proposed Auckland City Council commercial accommodation targeted rate. ITOs are concerned for themselves and the accommodation sector should this be passed by Auckland Council. Accommodation owners and providers would need to pass on the rates increase, and we at the TEC are not confident that offshore travel trade and consumers would be able to take any more price increases. TEC is preparing a submission stating its support to the accommodation sector and the impacts of higher price increases to Auckland and New Zealand as a destination.