Sustained occupancy growth for Auckland hotels in 2011

Embargoed: 12.30pm Wednesday 21 March 2012

Sustained occupancy growth for Auckland hotels in 2011

A major international sporting event, natural disasters and changes in the way people book travel all had an impact on Auckland hotels in 2011.

Speaking at NZ Hotel Council’s 2011 Annual Operating Survey presentation in Auckland today, NZHC Executive Officer Rachael Shadbolt said 2011 was an unusual year. Any one of the events 2011 presented to the sector would have had a marked impact, but to have a Rugby World Cup, a series of earthquakes and a significant shift in the way people booked travel take place in the one year was unprecedented.

In 2011 Auckland’s 36 NZHC members:

• achieved the highest annual occupancy rate of all NZHC members of 77.1%, up 2.3 points from 74.8% in 2010 and well above the national average of 70.7%.

• sustained a second year of occupancy growth up from 69.7% in 2009.

• had the second highest average room rate (ARR) out of the eight regions of $157.60. Up from fifth place last year ($133.10). This increase presented an 18.4% increase in ARR compared to 2010.

• generated over $433m in revenue, up $95m on 2010 from a total of 6860 rooms.

• employed over 4,400 people and contributed almost $263m to the region through wages and salaries, food and beverage purchases, rates and other expenditure, up from $226m in 2010. Wages and salaries and local council rates made up $131m and $6.7m respectively of this total.

NB: this commentary excludes the Christchurch results. As a result of the earthquakes the city’s hotel room inventory dropped from 3717 pre-February 2011 to 853 rooms after the earthquake. Hotels that are currently operating have significantly increased occupancy and average room rates outside the normal range and for this reason have not been included in this summary.

Ms Shadbolt said the year on year occupancy increase for Auckland was a good result particularly as a lot of new hotel room inventory was added in 2011. To have over 500 additional rooms come online and still grow occupancy was quite an accomplishment. Rugby World Cup also had a positive impact on the Auckland results, with strong occupancy and market driven room rates achieved during the key RWC game days. These rates helped increase the average room rate in Auckland in 2011.

The RWC period brought some challenges for hotels, with significant displacement of traditional September and October business being pushed out to either side of the event. This meant that while good rates were achieved during RWC game days hotels were very quiet mid-week as traditional corporate and conference business was practically non-existent during that time. Auckland hotels did however enjoy very strong corporate, conference and event business in August and November. Having the lion’s share of the RWC games also meant a far longer period of RWC business for Auckland hotels than most regions had, she said.

Rob McIntyre, NZHC Auckland Regional Chair and GM Pullman Hotel, said hotels in general were very pleased with the 2011 results. However, he cautioned that difficult trading patterns were emerging for 2012 and beyond. The traditional western markets remained soft, wholesale tour business was also weak and conference business was lagging behind previous years. Hoteliers remained cautiously optimistic but did not see 2012 as another growth year.

Nationwide, the 2011 annual survey highlighted the significant shift in booking patterns, with more visitors choosing to book at the last minute. This was represented by a 9 point shift to 42% of all NZHC hotel room bookings being booked less than 8 days prior to arrival. Auckland sat well above the national average on 49%.

“This data just proves what hoteliers have been saying for the last couple of years. Lead times on corporate and free independent traveller bookings are getting shorter and shorter, particularly as people seek out good deals online. There is also a shift toward far shorter lead times for conference bookings which often involve large numbers of rooms, conference facilities and food and beverage. Some bookings are now coming in 2-3 weeks prior to arrival which is a big shift compared to the traditional 3-6 month lead time,” Ms Shadbolt said.

-ENDS-

Other highlights from the NZHC Annual Hotel Operating Survey 2011:

• NZHC members directly employed almost 11,000 permanent and casual staff.

• Christchurch achieved the highest annual occupancy of 85%, however this was off a reduced inventory base of 853 rooms compared to 3717 rooms before the February 2011 earthquake.

• Excluding Christchurch, Auckland achieved the highest annual occupancy rate of 77.1%, followed by Wellington (73.6%) and Rotorua (64.6%).

• The Central Park region (Taupo, Tongariro, Napier and Gisborne) had the highest average room rate of $160.10, followed by Auckland ($157.60) and Wellington ($150.10).

• The average room rate for 5-star hotels was $217.50, up $39.33 compared to 2010 ($178.70).

• The average room rate for 4.5 star was $148.00, up $15.90 compared to 2010 ($132.10).

• The largest individual source of business was FIT/leisure travellers - 40% of all rooms sold, down 3 points compared to 2010, followed by corporate (23%) and tours & groups (18%).

• The largest consumers of hotel accommodation in 2011 were New Zealanders (54% of all rooms sold), followed by Australians (16%).

• On average, 42% of bookings were short-term (made up to seven days prior to arrival), 33% were medium-term (8-30 days prior to arrival) and 25% were long-term (more than 30 days prior to arrival).

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