It’s taking time for New Zealand to claw international tourism volumes back to pre-pandemic levels, but with Stats NZ’s latest overseas visitor figures showing there were 3.3 million arrivals in the year to August 2024, up 535,000 on the year prior, there are encouraging signs that the rebound is happening.
Quoted in the final edition of Bayleys’ Total Property portfolio for the year, the firm’s national director hotels, tourism and leisure (HTL), Wayne Keene, says while industry data shows a mixed bag for the sector, initiatives to attract more visitors should boost interest in tourism-aligned property assets further.
“Boosting off-season international visitor numbers is going to be the focus for Tourism New Zealand, which has lofty goals of growing tourism by $5 billion over the next four years through a targeted overseas marketing campaign.
“New Zealand’s reputation as a safe haven that bats above its weight in terms of natural beauty and amenity should hopefully keep international visitor market wheels turning and it would be great if those off-season troughs could be addressed.
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“Improved inbound flight schedules from some core markets and greater capacity on some routes is certainly going to be beneficial to the sector overall.”
The International Visitor Conservation and Tourism Levy (IVL) for inbound tourists effectively tripled to $100 from October 1st, and could be seen as a barrier to the international visitor market at a time when it is resetting and rebuilding, says Keene.
“The IVL is a fee charged to most international tourists, excluding Australian citizens and permanent residents, and people from many Pacific nations, with funds going towards maintaining public services and tourism sites.
“I think tourism operators here will want to see transparency around where that extra levy is being spent, and how it is tangibly contributing to improved infrastructural assets and conservation efforts.”
Improving New Zealand’s cultural, business and sports events calendar would also go a long way in boosting hotel occupancy, hospitality revenue and local economies in general, with Keene citing the significant economic benefits seen when New Zealand co-hosted the 2023 FIFA Women's World Cup.
“MBIE reporting showed the event delivered a net benefit to New Zealand of $109.5 million so getting these huge events to our shores is a vital component of a flourishing and profitable tourism industry, but we need resilient venue infrastructure with high capacity to allow this.
“We’re watching with interest to see what unfolds for a future-proofed multi-purpose stadium for Auckland and looking forward to the under-construction One New Zealand Stadium in Christchurch.
“There are very few high-profile events scheduled ahead for New Zealand, although the SailGP regatta in Auckland in January will be a shot in the arm for hotel and hospitality operators.”
Latest industry figures confirm that the commercial accommodation market is soft in many regions, with occupancy down for Auckland, Wellington and Dunedin, but up for Christchurch and Queenstown.
Keene says that arguably, Auckland has an over-supply of rooms, and Christchurch an under-supply.
Adding to the Auckland room count recently are Horizon by SkyCity with 300 rooms, the Grand Chancellor with 191 rooms, the 135-room InterContinental Auckland, and 225-room Hotel Indigo.
“Across the city, conversions and new builds are progressing and the city will need to grow into the increased supply. It is interesting to note that hotels in the airport precinct and city fringe area are performing above CBD counterparts on occupancy metrics.
“Elsewhere around New Zealand, various hotel projects are in the pipeline with good progress being made in Hamilton, Taupō, Christchurch and Invercargill. Meanwhile Tauranga City Council has paused looking at developing a convention centre and hotel as part of its broader Te Manawataki o Te Papa civic precinct.”
Keene says the motel sector is in a transitional phase as the government reviews its long-term contracted emergency housing initiatives.
“After contractual reviews, some motel stock will remain in the long-term housing pool, while others will return to the short-term visitor market following refurbishment and relaunches.
“With land prices and cost of construction so high, new-build motel stock is unlikely so visitors will be hoping that refurbished motel inventory will soon be released back to the commercial accommodation market.”
On the deal side of the HTL sector, Keene says the Bayleys’ team is noting an uptick in enquiry and activity on available stock and management-right opportunities for sale.
“There’s a lot of interest out of Singapore and Hong Kong, while European buyers are eying up wilderness lodge offerings, recognising New Zealand’s away-from-it-all eco-credentials.
“Funding challenges remain, with banks somewhat cautious to lend on accommodation assets so creative funding solutions are often needed.”
- Supplied by Bayleys
