Experts say rising tourist spending is bringing golden period with an extra 1412 rooms planned for next three years
New Zealand hotels are on the brink of "golden years" thanks to more international visitor spending but room rates have to increase to make top-end hotels more viable, say researchers.
A Horwath HTL report says stronger inbound and domestic visitor demand should revive the sector, which has spent years in the doldrums.
Although the most recent summer was strong, the report said there had been five years or more of hard slog for the hotel industry around the time of the global financial crisis.
Howarth is an international consultant in the hospitality business and a director in its Auckland office, Stephen Hamilton, said the sector was climbing out of a hole.
"It's still not as positive as it should be - we need to get several years of increased room rates in New Zealand because on an international scale our room rates ... [are] cheap," Hamilton said.
During the next three years an additional 1412 hotel rooms have been announced or are planned throughout the country.
In Auckland three new five-star hotels are under construction or planned.
Hamilton said it was hard to make the upper end of the market more profitable.
"There always seems to be a growth of supply in the top end of the market but that's where the feasibility model is at its toughest."
On average hotels in Melbourne or Sydney charged about $100 a night more than Auckland.
While domestic tourists were an important part of the market, the real growth in demand came from international visitors, he said.
Domestic demand by leisure travellers did not increase by the same rate because of slow population growth and in recent years many Kiwis had been taking their holidays overseas because of the high New Zealand dollar.
Read the Horwarth report here:
In 131 hotels, occupancy in the 12 months to March was 73 per cent, up 3 per cent on the same period in 2013. The 2014 figure was up 4 per cent on the period that included the 2011 Rugby World Cup. Average room rates were $141 a night (excluding GST) for the most recent year, up 3 per cent on the previous period.
Hotel group eyes expansion
Hotel group TFE is eyeing development opportunities in New Zealand.
The company - a joint venture between Toga Hotels and Far East Hospitality - has close to 70 hotels in New Zealand, Australia and Europe.
It has Rendezvous hotels in Auckland and Christchurch and the Travelodge in Wellington.
Its group director of marketing Emma Fraser said another hotel would be a natural next step.
The 400-room Rendezvous in Auckland was sitting on 83 per cent occupancy - above the industry average - and expansion in the city was most likely. "It's a competitive landscape out there with the price of land so it's either a takeover or it's building a new property."