Hotel rates jump nearly 11 per cent amid booming tourism and tight supply

Hotel rates jump nearly 11 per cent amid booming tourism and tight supply

Average daily rates in hotels around New Zealand increased nearly 11 per cent last year as occupancy rates rose and supply remained under pressure.

The average daily rate for a hotel was $190 in 2017 and occupancy was up 0.4 percentage points to 81.2 per cent, according to a report by international real estate services company CBRE.

All markets achieved revenue growth per available room of more than 5 per cent except Christchurch, which was only just positive as the market struggled to drive guest demand despite a tourism boom.

The CBRE report shows Queenstown was the fastest growing market last year with revenue per available room growing at 16.1 per cent. This was down from 22.1 per cent the previous year as occupancy levels plateaued.

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International visitors to New Zealand continued to put pressure on tourism infrastructure around the country with 3.7 million visitors coming here last year, up 6.7 per cent on the previous year.

”The need for new hotels to be built in main centres is growing with most markets indicting plateauing occupancy rates as existing supply reaches natural points of saturation,” the report’s authors said.

In Auckland, occupancy rates have displayed a rising trend since mid 2009 due to limited new hotel supply, increasing international visitor arrivals and an improving economy.

”The current plateau in occupancy rates reflects the saturation point achieved by the market with monthly occupancy levels nearing 95 per cent in peak months.”

The report said any further growth in occupancy would require increased demand in the shoulder and low-season months.

One tourist operator last month said rates at premium hotels were up to double the normal amount, prompting a warning that hotels needed to ensure they were delivering value and service to match.

The CBRE report said the growth in room rates in Auckland was a direct result of increases in occupancy rates. Room rates spiked during the Lions rugby tour.

Since 2015 average room rates in Auckland have increased by 12.5 per cent, hitting $210 at the end of last year.

Rotorua has continued a strong recovery. Picture / Alan Gibson
Rotorua has continued a strong recovery. Picture / Alan Gibson

However, a 4.3 per cent increase in international visitor nights in the city was not enough to offset a 5.7 per cent decrease in domestic visitor nights.

”With limited new stock entering the market in 2018 we expect the current plateau in occupancy rates to continue with more moderate ADR (average daily rate) growth expected compared with recent years,” the report said.

In Queenstown saturation point had been reached and increases in occupancy was relying on growth in the low season as a monthly occupancy rate of more than 85 per cent was reached in six months of last year.

”With limited new supply under construction in Queenstown, we expect occupancy levels to increase marginally in 2018 as the market targets guests in quiet months.”

The Amway incentive group from China will comprise 10,00 visitors in waves of 500 a week staying at the Hilton Queenstown.

Average room rates in Queenstown were about $225 a night last year.

Rotorua has continued a strong recovery. During 2017 the share of nights sold to domestic guests increased from 39.7 per cent to 47.4 per cent, reflecting a resurgence in the Rotorua market as a destination for domestic travellers.

Average room rates in Rotorua have picked up since 2015 with an average annual rise of 9.2 per cent, and were about $130 a night last year.

In Wellington, occupancy rates were more than 80 per cent, boosted during winter by the Lions tour, the All Whites World Cup qualifier against Peru and the return of Parliament post election. Average room rates were up nearly 5 per cent to $176.

The accommodation sector has been disrupted in the capital with the Sofitel Wellington closed for part of the year following a fire and the Amora closed for earthquake repairs.

Room rates in Christchurch averaged $160 a night and occupancy slipped slightly to 75.8 per cent.

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