The past few months have brought a significant amount of positive news for New Zealand’s hotel sector as it continues on the path to recovery following the Covid-19 pandemic.
On 13 April, New Zealand’s borders opened to all Australian visitors and on 2 May travellers from all countries that do not require a visa will be welcomed back, signalling another key milestone for the sector. The remainder of international visitors are expected to return during the third quarter of this year.
Dean Humphries, National Director of Hotels at Colliers, says while the arrival of international visitors is excellent news for the hotel industry, it has not all been smooth sailing this year.
“The Omicron outbreak presented challenges and delays for the relaxing of border restrictions, which has potentially delayed the wider recovery of the sector towards the second half of 2022,” Humphries says.
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“But there is a noted optimism among hotel operators with bookings for the 2022/2023 summer season trending in the right direction.
“Queenstown will also see a boost from international travellers in the coming months given the exceptional winter-friendly tourism offerings available in the region.”
During the next three months a majority of hotels contracted for MIQ purposes will transition back into the wider market with only four hotels remaining under contract to the government beyond 30 June.
Occupancy rates in Rotorua, Wellington, Christchurch, and Queenstown were all up in the year ending March 2022 compared with the preceding 12-month period, with increases in revenue per available room and average daily rates in those respective locations. Auckland saw a 10.6 per cent increase in average daily room rates, although occupancy was impacted by the Delta and Omicron outbreaks.
Humphries says the removal of border restrictions will likely see more hotels being presented to the market for sale given offshore investors can actively review these opportunities.
“New Zealand remains a highly appealing market for people looking to allocate offshore capital due to its transparent legal system, geopolitical status, and strong relationships with leading global economies, which all shape as notable drawcards,” Humphries says.
“Given major hotels across New Zealand are rarely brought to market this will drive a wave of demand among investors who remain keen to secure premier tourism assets.
“Conversely, some vendors are now assessing their options to either recycle capital or rebalance their portfolios following the challenging period that Covid-19 put hoteliers through.”
This week, Colliers has taken to market the 4.5-star 244 room Nesuto Stadium Hotel and Apartments located at 40 Beach Road in downtown Auckland.
This hybrid hotel offers 100 self-contained apartments together with 144 hotel rooms making it one of the largest offerings available for sale in recent years. The hotel has recently undergone a $12 million expansion and refurbishment.
“Hotel assets such as the Nesuto are among some of the most sought-after by prospective purchasers given its downtown CBD location and near new condition,” Humphries says.
“Building a hotel of this magnitude from scratch would cost more than $100 million, making it a highly desirable purchasing opportunity.”
- Article supplied by Colliers
