24 May 2016

Mayor sees higher-end accommodation opportunity in Rotorua

Rotorua mayor Steve Chadwick today welcomed the announcement from Economic Development Minister Steven Joyce and associate Tourism Minister Paula Bennett that Rotorua is one of a few regions identified as needing five-star accommodation as part of a project to attract investment into the sector.

“During the TRENZ 2016 conference here last week, it was clear from feedback that Rotorua needs higher-end accommodation investment with a focus at a five-star hotel level,” said Mayor Chadwick.

“There is an opportunity at that end of our accommodation offering which would assist to lift the market and profile of Rotorua as well as providing an opportunity to get into the higher value visitor segments such as incentive and luxury.

“Our focus in this project announced today by the ministers will be to try and attract a five-star hotel investment development.

“We have a strong and well understood market position in Maori culture, natural hot springs and wellness and outdoor activities, particularly mountain biking.

“Having a five-star property in Rotorua would complement the other accommodation options we already have, which is really important,” she said.

The research also identifies that based on current guest preferences it is estimated that demand for three to four star hotels will continue to grow strongly, whether that is filled by new properties or reinvestment in existing product.

The research identified that annual demand for hotel room nights is expected to increase over the next 10 years by 37 per cent at an average growth rate of 3.2 per cent a year. This growth along with changing market preferences suggest that Rotorua could absorb the current Zen Centre redevelopment by the Chow Brothers and another high-end accommodation project and continue to achieve at least the current occupancy rates.

One of the main drivers for the Rotorua higher-end accommodation investment case is that currently Rotorua has more than $70 million of visitor attraction projects in the pipeline over the coming three to five years.

“Clearly our challenge with any new hotel capacity coming on stream will be to work with the industry to sustain and grow existing demand to meet this increased capacity.”

Upcoming projects include the recently announced $18 million transformation at Te Puia, one of New Zealand’s oldest tourism destinations, which has attracted a $2.5 million injection from the Government for a new bone, stone and pounamu carving school, a taa moko studio and a taonga gallery.

“Being part of this project to attract higher-end accommodation investment with a focus at the five-star level will assist to raise the profile of Rotorua as a visitor industry investment destination and potentially provide opportunity for some Rotorua based partners to take advantage of the projects,” said Mayor Chadwick.

“This growth will be driven by the buoyant international tourism market and in particular the strong growth in Chinese visitors to New Zealand. Chinese visitors love Rotorua so material growth in this market will have a direct and sizeable impact on local hotel demand.”

Anecdotal evidence also suggests that Rotorua is likely to benefit from a spill over effect from the Auckland market, particularly in the short term as increasing numbers of visitors are unable to find suitable accommodation there.

Read the research

ENDS

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