Hotel revenue per room is now higher than before the pandemic and has soared from last year. And while the hotel owners can look forward to a better summer, in one key centre there’s increased competition for guests among upscale properties.
Revenue per available room (Revpar) for the main New Zealand hotels in November was 14 per cent up on last year but still only 1 per cent up on the same period in 2019, according to data reported by Hotel Data New Zealand (HDNZ), released by Horwath HTL.
But only hotels in Christchurch, Taupō/Hawke’s Bay and the Nelson/Marlborough regions have achieved the Revpar growth that is required to keep up with the 20 per cent inflation since the end of 2019, reported by the Reserve Bank’s calculator, the report says.
“Combined with a 28 per cent growth in minimum wages over the past four years, this continues to challenge hotel profitability, especially in the main tourism centres.”
Traditionally, November stands out as one of the busiest months across various markets.
It sees heightened activity from businesses, government and conferences before the start of the domestic holiday season. Additionally, it marks the onset of the concert season and a surge in international visitor arrivals, creating a series of high-demand days with opportunities to yield.
Horwath HTL says that while hotels reported good business and conference demand, there were few concerts or other special events to drive domestic leisure demand.
International visitor arrivals continue to rise but are still 15 per cent below 2019 levels, according to Stats NZ data.
Combined with 16 per cent more rooms across the country, with increases of more than 25 per cent in main markets such as Auckland, Wellington and Queenstown, this has resulted in limited yielding opportunities and only a modest 3 per cent rise in average daily rates from November 2022.
Average daily rates (ADR) were $236 in November throughout the country, with Queenstown at $296 the highest. RevPAR was $192 across the country with Taupō and Hawke’s Bay highest on $215.
Occupancies in November rose sharply to 80 per cent, in line with market expectations after a disappointing October month. It is the first time in 2023 that average occupancy for New Zealand hotels exceeded the 80 per cent threshold.
Howarth HTL found that Christchurch hotels continued to outperform other markets with Te Pae Convention Centre boosting demand, particularly for hotels in the CBD.
Business confidence for the summer is strong, according to a major operator of hotels outside the CBD, after the commencement of direct flights from San Francisco and Hong Kong, the announcement of the Sail GP event to be held in March 2024 and good levels of forward bookings.
Queenstown hotels’ occupancy rates were boosted by thousands of delegates from the annual Amway distributor seminar, part of a total of close to 10,000 of Amway China’s top achievers who visit Auckland and Queenstown from October to December, with side visits to Rotorua and Aoraki Mt Cook.
The Queenstown Marathon in November provided a second boost, both in occupancy and ADR.
As visitors return to Queenstown and workforce requirements increase, the severe shortage of workers’ accommodation becomes more and more pressing.
Occupancy levels in Rotorua reached a high for the year at 79 per cent, with domestic conference business, visits by Amway China delegates and the continuation of motel rooms being used for social housing increasing demand for hotel accommodation.
Wellington hotels reported strong corporate, conference and tour group business following the election. This saw occupancies rise by 10 percentage points from last month and exceed levels achieved in the same month last year.
ADR however took a dip of 6 per cent compared to last year as the re-opening of the Rydges Hotel increases year-on-year supply by some 260 rooms.
Auckland hotels’ ADR did not show any growth compared to last year and was 4 per cent below the ADR reported for November 2019.
“Considerable supply increases remain unabsorbed, leading to heightened price competition, particularly among 4.5 and 5-star hotels and those vying for conference bookings and aircrew contracts.”
The surge in air capacity from the US is reflected in arrival statistics with a 6 per increase compared to the same month in 2019.
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.