The Aotearoa Hotel Industry Conference and Exhibition brings together New Zealand’s leading hotel owners, operators, consultants and suppliers.
None of New Zealand’s major cities have higher hotel occupancy rates than they did pre-Covid, but the differences between the North and South Islands is beginning to grow.
That’s according to new data presented at the Aotearoa Hotel Industry Conference and Exhibition in Christchurch this week.
The event brings together New Zealand’s leading hotel owners, operators, consultants and suppliers for two days of everything to do with hospitality and hotels.
Presenting on how the hotel market has changed, STR regional director for APAC (ex China) Matthew Burke said both supply influence and demand hadn’t been able to match pre-Covid times.
“When you look at New Zealand over the last 15 months or so, you can see that the comparison coming out of 2023 into 2024 made for a really tough winter period,” Burke said.
“Demand has started to turn positive again, which is a good sign, but it is not matching the supply growth, and therefore, why you’ve seen the occupancy declines we have seen across the country.”
Compared to other countries in the Asia-Pacific region, New Zealand’s performance remained relatively flat, while countries like Australia, Japan, Sri Lanka and Vietnam had recovered strongly.
New Zealand is performing better than countries like Thailand, Singapore and China, although there are several domestic factors influencing those locations.
Burke said that summer 2025 was quite good in terms of rebounding but New Zealand’s monthly occupancy levels and average daily rates for hotel rooms had become more seasonal than ever before.
“When you look at occupancy over the longer term, the impact of that supply and the sluggish nature of the demand recovery overall has meant that occupancy is nudging closer to the long-term average in the summer months, but certainly is still lagging and becoming more seasonal across New Zealand at large through winter and spring.”
During the winter months, tourist numbers typically drop despite the diverse range of tourism operators and opportunities that continue to operate year-round.
Over the next three years, Tourism New Zealand will be focused on growing off-peak visitation, according to its 2024-2028 strategy overview.
Across five of New Zealand’s major tourism locations, Rotorua has had the strongest recovery over the current year to date because of an influx of international visitors and strong domestic tourism coming from Aucklanders.
Christchurch had seen a small amount of growth. Burke said that demand had been growing at a healthy rate for a long period of time.
The Garden City is also set to benefit from the opening of One New Zealand Stadium in April 2026, which has coincided with a spiking of forward occupancy rates in the same month.
Queenstown, meanwhile, has also seen year-to-date growth, but demand has turned negative in the first half of 2025 on a year-on-year basis for each month.
Burke said one thing that boded well for Christchurch and Queenstown in the medium term was the lack of rooms currently under construction, which won’t drive a higher level of supply compared to the demand.
Auckland and Wellington, however, are where there is cause for concern, as both occupancy levels and average daily rates are in the negative.
Wellington has had its demand level decline for a considerable amount of time, although it did briefly grow during December 2024 and January 2025.
“Essentially, Wellington has had no new rooms recently, but because demand has just been negative, it’s meant that occupancies decline and the average rate has come under pressure.”
Burke said Wellington’s woes could mostly be attributed to weekday business and the city’s local economy, which had come under pressure following the Government’s cuts to the public service and use of consultants.
Auckland had had a consistent level of new supply coming to the market, but falling demand in the city was a “recipe for occupancy decline,” Burke said.
Around 50 of the 71 properties in Auckland were recording negative occupancy growth and negative average rate growth.
There had also been a change in the mix of new supply, with strong growth in the luxury class of hotels.
“Upscale hotels in Auckland have actually had the least amount of new supply in the five and a half years since 2019.”
Burke said it’s a collective demand problem influencing both occupancy level and average daily rates, where fewer events and more discretionary business were influencing the decline.
Next year the new New Zealand International Convention Centre (NZICC) is due to open, providing a draw card for visitors.
The NZICC is set to host 15,500 people at nine major conferences in Auckland over the next few years, with an estimated economic impact of roughly $34 million.
In the shorter term, over the next 90 days, forward occupancy looks set to decline except for two spikes during which the All Blacks will be hosting test matches at Eden Park.
Burke said the largest influence on Auckland’s performance was the CBD area.
Separating Auckland into the harbour front precinct, airport zone and CBD, Auckland’s CBD has had the most new rooms open, but average rates and occupancy levels are lower today than they were in 2019.
Burke stressed the need for a diversified mix of demand in terms of upscale accommodation versus mid-to-low level options to drive demand.
“It’s even more critical when you get to the softer months, everyone is impacted in terms of year-over-year drops this year, but it is especially felt in the rest of the CBD area.”
Looking ahead to the upcoming summer season, Queenstown is set to have the highest occupancy of the five cities, followed closely by Rotorua.
However, Queenstown’s occupancy rates are 7% lower than the same time last year.
Burke said there were very different trends between the North and South Islands.
He said occupancy levels in New Zealand were becoming more seasonal, and the data broadly points to stagnant growth without intervention.
“The data is predicting a very similar pattern moving forward, but the one piece of good news is that there is more demand drivers and more infrastructure to come.
“If it’s supported by marketing programmes to get people travelling through, then we should start to see more demand, more occupancy, and the chance to start to lift average rates.”
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.