Hotel shortage near 'critical'

Margins in hotels have been notoriously tight in New Zealand. Photo / Getty Images

The squeeze on accommodation in tourist hotspots is getting tighter, causing critical constraints in some centres.

An analysis of the hotel sector finds unprecedented demand for rooms in Auckland and warns that chances of finding one will get even tougher next year when major events come to the city.

One sector leader says New Zealand risks losing visitors if hotels are not built urgently.

In Queenstown fewer than a third of the required rooms will be built over the next 10 years.

Throughout the country an extra 26 hotels are needed over the next decade to cope with the visitor boom driven by New Zealand's growing international appeal and the proliferation of air services.

New Zealand Trade and Enterprise has in place a programme,"Project Palace", to try to lure overseas and domestic investment in hotels and commissioned the research to quantify the extent of hotel supply problems.

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.

Margins in hotels have been notoriously tight in New Zealand and low occupancy during off-peak times of the year, the sector's vulnerability to travel slumps and high development costs have deterred investment here over the past decade.

The report finds the ability to deliver new hotels is heavily dependent on managing a number of constraints, including financial feasibility, site availability, resource and building costs, finance and timing delays.

Within the next nine years average daily rates will increase in Auckland from $153 to $220 and in Queenstown from $168 to $278.

With no new supply forecast in Auckland over the next 18 months the sector would reach "critical constraint status" with events such as the World Masters Games in April, the Lions rugby tour in June-July and the Rugby League World Cup in November.

- NZME