Colliers’ latest report on the New Zealand hotel market confirms a recovery is under way.
Dean Humphries, Colliers national director of hotels, notes key performance indicators have improved against the same period last year, when New Zealand first entered a Covid-impacted trading environment.
The long-awaited transtasman travel bubble, which commenced in April, was welcomed by the wider industry, particularly those regions most reliant on international inbound visitors.
In other positive news for the sector, Government MIQ contracts for more than 30 major hotels across the country have been extended until the end of 2021, and in some cases longer. This will provide many hotel owners with a secure cashflow during this challenging time.
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In addition, the nationwide vaccination rollout will enter its full phase in the third and fourth quarters of this year, which will ensure New Zealand can potentially reopen its borders safely to international visitors from the first half of 2022.
As a result, investment inquiries for hotels are increasing from a range of parties, who foresee a robust recovery for hotel assets in the short to medium term.
Investment yields appear to be trending downwards on the back of low capital costs and return profiles associated with alternative asset classes.
Key findings in the report on the year to date, as at June 30:
- Occupancy rates now sit between 50% and 60% in all major regions with the exception of Queenstown
- Average room rates have remained firm, sitting in a tight band between NZ$160-185
- Top performing regions are Rotorua (+47%) followed by Christchurch (+41%) and Wellington (+35%)
- The opening of the transtasman bubble, an increase in business demand, and fewer lockdown periods have been the main contributors to recovery patterns
- Some 552 new hotel rooms have opened so far this year with a further 2080 under construction, primarily in Auckland
Humphries notes: “Despite these encouraging trends, the New Zealand hotel sector remains compromised until our international borders open to key inbound markets.”
- Article supplied by Colliers
