An increase in international visitors, strong economic growth & lack of supply have fuelled a surge in hotel occupancy & room rates, according to new CBRE research.
CBRE NZ hotels & leisure director Peter Hamilton said yesterday hotels nationwide achieved an occupancy rate of 80.9% in the June year, and average daily rates were up 11.7% to $182.63.
A key indicator of commercial performance – revenue per available room (revpar) – increased by 12.3%.
The rise in returns came as New Zealand experienced a 10.2% increase in international visitor arrivals, with many staying for longer. The research also indicated a recent influx in Chinese visitors was plateauing, while increased air capacity across the Pacific brought a 26% increase in visitors from the US.
Mr Hamilton said: “It’s clear to see when the trend began, but how sustainable it is another matter. If we look to the data in the first half of the decade post the global financial crisis, we see a general theme in term of a decline in average daily rates for Auckland, Rotorua, Wellington, Christchurch & Queenstown. 2011 seems to be a key year for the market, with the Rugby World Cup & the Christchurch earthquake in their own way helping to trigger a surge in occupancy & rates witnessed in recent years.
“It’s clear, though, that we’re coming to the peak of this recent trend, with some regions there already, with future sustained growth reliant on new stock to keep pace with the demand.”
Big events help Auckland
In Auckland, occupancy has neared 95%, up from 76% 5 years ago, and the average daily rate increased from around $140 after the Rugby World Cup to $200 in June this year.
Mr Hamilton said this had flowed through to increasing revpar, supported by the Lions rugby tour and world masters games, combined with the general economic buoyancy encouraging domestic travel.
“In Auckland in recent years it’s been all about hotels being effectively full on regular occasions, and future occupancy growth potential appears to be limited. With new stock expected in coming years, there is a real possibility for occupancy to plateau or decrease and further average daily rate growth will depend on hoteliers’ ability to hold strong on room rates in the face of increasing competition.”
Rotorua – a market usually dependent on summer traffic – enjoyed occupancy close to 80% in the last 2 years: “Like Auckland, with the occupancy rate reaching capacity during the high season due to a lack of supply, there is likely to be a corresponding impact on revenue in the Rotorua market.
“The recent drop in occupancy may result in a subsequent retraction in growth rates. This could be offset by a new 130-room 5-star Pullman hotel recently announced for Rotorua, which would increase hotel supply by 8.4% but also increase the overall quality of hotel stock in the market.”
Mr Hamilton said Queenstown’s average daily rate was below $150 in June 2012 and had risen to $210 in June this year, supported by night flights into the airport, especially from Australia.
More new stock on horizon
Statistics NZ said on Monday the value of consents for hotels, motels & other short-term accommodation shot up to $490 million in the June 2017 year – $42 million more than in the 3 previous years combined. New hotels in Auckland & Canterbury drove the 216% increase from the June 2016 year.
2 of the new Auckland hotels are the Park Hyatt Auckland, under construction on the former Team NZ site in the Wynyard Quarter, and the hotel which will be built beside SkyCity Entertainment Group Ltd’s NZ International Convention Centre.
5 other hotel projects in Auckland, Wellington & Christchurch had consent values over $10 million, including an office building conversion & a refurbishment.
International visitor numbers have continued to break records – up 11% in the June 2016 year, and up 10% in the last 12 months.
Attribution: CBRE & Statistics NZ releases.