Saturday , August 18 2018

New Zealand hotel market snapshot

There appears to be a strong interest for hotel assets in all key centres; however, opportunities remain scarce with no major NZ hotels having changed hands throughout 2017.

The New Zealand tourism sector continues to enjoy record-breaking inbound travellers with a total of 3.7 million visitors arriving in the country for the year ended August 2017, a 9.3 percent increase year-on-year.

Record numbers of US visitors are coming to New Zealand on the back of increased airline capacity, with a number of other emerging markets such as the Malaysia, Hong Kong and Philippines also achieving strong growth. The historically strong growth in the Chinese inbound market has appeared to have subsided with no growth recorded year to date.

Given the importance of the Chinese market, close attention is warranted over coming months to ascertain whether the recent slowdown is temporary or the start of a new trend moving forward. Strong guest demand together with minimal new hotel inventory over the past six months has resulted in occupancy rates remaining at record level across most regions, culminating in robust room rate growth (particularly in Auckland and Queenstown).

This has resulted in Auckland achieving RevPAR growth 18.4 percent for the year to date September 2017, one of the highest levels in the wider Asia Pacific region.

With existing inventory being tightly-held, there are now a growing number of parties purchasing land or under-performing commercial buildings for development and conversion opportunities. Australian fund ProInvests’ acquisition of part of the former NZME site on the corner of Albert and Wyndham Street in the Auckland CBD to develop a 490-key dual-branded Holiday Inn Express and Even Hotel is a prime example of such development interest.

Investment activity has also spread to many provincial regions throughout New Zealand where investors are seeing improving fundamentals as the tourism boom spreads across the country. To this end, real estate company Colliers has concluded sales of hotels in Rotorua, Hamilton, National Park and Hawkes Bay in recent months.

With Team New Zealand looking to defend the America’s Cup in Auckland in the summer of 2020/21, the event is anticipated to be a major catalyst to stimulate further hotel development in the country’s largest hotel market.

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