Our hotel demand is beating Australia’s
The sale of Auckland’s 165-unit Waldorf Stadium Apartments has attracted domestic and offshore investor interest. Photo / Supplied
New Zealand hotels are outperforming their Australian counterparts as demand for rooms continues to outstrip supply.
Colliers International’s latest New Zealand Hotel Market Snapshot found record-breaking visitor numbers over the summer tourism season contributed to exceptionally strong hotel revenue growth in the year to March 31.
Queenstown was the top-performing hotel market, with growth in revenue per available room (RevPAR) of 19.7 per cent, followed by Auckland with 11.4 per cent and Rotorua with 8.4 per cent.
Dean Humphries, Colliers’ national director of hotels, says many New Zealand hotel markets are now outperforming key regions in Australia.
“Queenstown and Auckland ranked first and second respectively in Australasia in terms of RevPAR growth over the past 12 months,” he says.
“Australia’s top hotel market, Cairns, recorded RevPAR growth of 9.1 per cent over the same period, or more than 10 percentage points lower than New Zealand’s top market.
“This begs the question, why is New Zealand continuing to perform so strongly?
“The answer is relatively simple – demand is outweighing supply. New Zealand continues to have a shortage of hotel inventory in key regions, with minimal new stock entering the market in recent times.”
Six hotel projects have been completed in New Zealand in the last 12 months, leading to a 3.1 per cent increase in total room supply. However, that has done little to address demand.
“There were 3.78 million international visitors to New Zealand in the year to February 28 — a 6.5 per cent increase over the last year.
“With record numbers of tourists flocking to our shores, particularly over the key summer tourism season, we simply don’t have enough rooms to keep up with demand.”
Humphries says an increasing number of proposed projects are on the drawing boards, but very few new projects have commenced construction in the past 12 months.
“This will result in few new hotels being delivered until after 2021, other than those already under construction. Recent shake-ups in the New Zealand construction industry may also have an impact on the timing and delivery of new projects over the short to medium term.”
In the meantime, the New Zealand International Convention Centre is due to open late next year.
Humphries says it has already secured a growing number of large conferences. “This will create even more stress on existing hotel inventory until more stock is built.”
Humphries notes there were no major hotel sales in 2017, as owners have elected to hold onto their assets to make the most of sustained RevPAR growth.
“Fortunately for investors, there are a number of large hotels currently in the market.”
Colliers is marketing the 203-room Holiday Inn Rotorua and the 165-unit Waldorf Stadium Apartments in central Auckland. Both properties have attracted domestic and offshore investor interest, says Humphries.
“This will test the current views on hotel yields and values once sales are concluded on these assets.”
Dean Humphries, Colliers International