Hundreds of beds are due to be added to the Rotorua accommodation pool but one accommodation specialist says the rise in motels and hotels could create a price war.
According to the most recent Statistics New Zealand figures, hotel occupancy rates in Rotorua reached a high of 87.06 per cent in November 2017, the highest in the past five years.
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The low was 52.03 per cent in June 2015 but hotel occupancy in the 2019 year to August fluctuated between 62.62 per cent in August 2018 and 85.91 per cent in March 2019.
Across all commercial accommodation including hotels, motels, backpackers and holiday parks, occupancy peaked at 64.8 per cent in January 2018, during the typically busy peak summer season.
The low was just under 29 per cent in June and August of 2009.
Holiday parks tend to skew overall occupancy rates according to Statistics NZ.
Multiple motels and hotels are bound for Rotorua in the coming years including the 160-room, five-star Pullman Hotel expected to open early 2020 and create 75 jobs.
Managed by Accor Hotels, it is being constructed at the former Zen Centre on Arawa St.
Meanwhile, last month, Rotomā No.1 Incorporation announced plans for a multimillion-dollar ''wood-first'' Māori commercial centre and a neighbouring 174-room hotel.
It is expected to create up to 120 jobs and be built opposite the Rotorua Citizen's Club on a site better known by locals as "the Palace".
On Fairy Springs Rd, on the corner of Kawaha Point Rd, Marshall Shu is working on a motel expected to open at the end of 2020.
It will contain 78 rooms and create roughly 10 jobs.
The motel will join a string of accommodation providers along the stretch of road which also includes tourism ventures like Skyline and Zorb.
The Regal Palms Rotorua Resort is also expanding from 45 rooms to 70.
Rotorua Motel Association chairwoman Shelley Hobson-Powell said the rise in rooms could create a price war.
She said accommodation providers weren't full "by a long shot".
"There are possibly three weeks a year Rotorua would need that many more beds but in general the majority would be running at 75 per cent occupancy."
Hobson-Powell said the ongoing battle with Airbnbs had already created a price war as there were hundreds of Airbnb properties available at cheaper rates than motels.
She said if higher-end hotels slashed rates, that forced other accommodation providers to. She estimated it would take about a year to sort out a price median and the fluctuation would be good for customers but not businesses.
"It's going to create some unsettlement in prices."
Destination Rotorua chief executive Michelle Templer said hotel occupancy was 76 per cent for the year ending August 2019.
"We are fortunate to have a wide range of accommodation options in Rotorua and occupancy rates do vary considerably between holiday parks, backpackers, motels and hotels.
"Our hotels often operate at full capacity during the summer quarter so continued annual occupancy rate increases are driven by a focus on increasing visitor numbers in the traditional off-peak periods," she said.
"We know from international booking agents' feedback that demand for suitable accommodation at the luxury end of the market currently exceeds supply so we're really excited about the new investments in that space."
Statistics New Zealand reported 146,867 guest nights spent in Rotorua's commercial accommodation for the month of August 2019.
Total commercial guest nights were up 5.3 per cent compared with the same time last year.
Guest nights for the year peaked in January at 260,408 for the month.
At the same time Ministry of Business, Innovation and Employment Monthly Regional Tourism Estimates reported $51m of visitor expenditure in Rotorua for the month, up $1.04m or 2.1 per cent on the same month last year.