Government research has found an extra 26 hotels are needed over the next decade to cope with the visitor boom.
As reported in the Herald last month, New Zealand Trade and Enterprise has in place a programme,"Project Palace," to speed up private investment in hotels around the country.
The research focused on Auckland, Rotorua, Wellington, Christchurch and Queenstown and shows that, if demand and supply estimates are borne out, the shortfall in new hotel rooms is expected to be up to 4526 across these centres by 2025, over and above new hotels currently planned.
That is the equivalent of 26 hotels the size of the Sofitel Viaduct in Auckland.
"Communities right across New Zealand are benefiting from the unprecedented growth in tourism, and the Government is focussed on ensuring our towns and cities are well placed to host these visitors," said Associate Tourism Minister Paula Bennett.
The report finds:
• There is a current shortage of hotel rooms during high demand periods in all the centres. This is particularly in summer and autumn (December and March quarters) and when there are major events on.
• In 2015, Auckland and Queenstown had consistently high occupancy rates (>80 per cent) throughout the year and Queenstown is rapidly becoming an all-seasons location.
• In 2015, Wellington had a stable occupancy rate (78 per cent) across the year, with the December and March quarters having higher occupancy than the June and September quarters.
• In 2015, Rotorua and Christchurch had high occupancy rates (>80 per cent) in the December and March quarters, but lower occupancy during winter and spring (June and September quarters).
• Forecasts suggest that the demand for hotels will outstrip supply over the next 10 years in all regions so occupancy rates will continue to grow.
• International visitor arrivals will be a major driver of hotel demand (their numbers are expected to grow 5.4 per cent a year), while domestic demand is expected to grow at 2.5 per cent a year. China and Australia are expected to be largest contributors to the growing international demand.
• Historical preferences suggest that demand for four-star and above quality hotels will be strongest over the next 10 years.
Economic Development Minister Steven Joyce said it was the first time data on the effect that the tourism growth projections will have on hotel occupancy had been quantified.
"This research will be a great help to private investors considering when and where to invest in New Zealand's fast-growing tourism accommodation industry."
NZTE, Tourism NZ and MBIE are working together with local government and the private sector to identify available locations for additional hotels in each of the five locations studied and to pave the way for attracting new investment in hotel development.
The tourism industry is growing right across New Zealand and we don't want individual regions to miss out because investors lack knowledge of investment opportunities.
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NZTE will be using the research as the basis for a prospectus that outlines the business case for investment in New Zealand hotels to domestic and international investors. NZTE's strong international networks will be invaluable in approaching international investors with specific opportunities that highlight why New Zealand is a prime destination for quality hotel development.
NZTE would also list and present hotel opportunities in other New Zealand centres as well.
"The tourism industry is growing right across New Zealand and we don't want individual regions to miss out because investors lack knowledge of investment opportunities,"' said Joyce.
Bennett said tourism was a big part of the economy, directly contributing $11 billion or almost 5 per cent to GDP.
"I hope all our regions use this research to identify opportunities in their area," she said.
Last week The Business revealed the Chinese company behind Wynyard Quarter's luxury Park Hyatt project is set to buy a nearby site on which it will invest more than $300 million into its second Auckland hotel development.
And the firm is also eyeing additional opportunities in Queenstown and Wellington.
In an interview in Beijing, Fu Wah International president Chiu Yung said a three to four-star hotel and apartment complex would be built on the second site, located only a couple of blocks away from the Park Hyatt project.