Colliers’ Latest Report On The New Zealand Hotel Market Confirms A Recovery Is Underway

Dean Humphries, Colliers National Director of Hotels, notes key performance indicators have improved against the same period last year, when New Zealand first entered a Covid impacted trading environment.

The long-awaited trans-Tasman travel bubble, which commenced in April, was welcomed by the wider industry, particularly those regions most reliant on international inbound visitors.

In other positive news for the sector, Government MIQ contracts for more than 30 major hotels across the country have been extended until the end of 2021, and in some cases longer. This will provide many hotel owners with a secure cashflow during this challenging time.

In addition, the nationwide vaccination rollout will enter its full phase in Q3 and Q4 of this year, which will ensure New Zealand can potentially reopen its borders safely to international visitors from H1 2022.

As a result, investment enquiries for hotels is increasing from a range of parties, who foresee a robust recovery for hotel assets in the short to medium term.

Investment yields appear to be trending downwards on the back of low capital costs and return profiles associated with alternative asset classes.

Key findings YTD 30 June 2021:

• Occupancy rates now sit between 50% and 60% in all major regions with the exception of Queenstown
• Average room rates have remained firm sitting in a tight band between NZ$160 and $185
• Top performing regions by RevPAR are Rotorua (+47%) followed by Christchurch (+41%) and Wellington (+35%)
• The opening of the trans-Tasman bubble, an increase in business demand, and fewer lockdown periods have been the main contributors to recovery patterns
• Some 552 new hotel rooms have opened so far this year with a further 2,080 under construction, primarily in Auckland

Humphries notes: “Despite these encouraging trends, the New Zealand hotel sector remains compromised until our international borders open to key inbound markets.”

About Colliers

Colliers is a leading diversified professional services and investment management company. With operations in 67 countries, our more than 15,000 enterprising professionals work collaboratively to provide expert advice to real estate occupiers, owners and investors. For more than 25 years, our experienced leadership with significant insider ownership has delivered compound annual investment returns of almost 20% for shareholders. With annualized revenues of $3.0 billion ($3.3 billion including affiliates) and $40 billion of assets under management, we maximize the potential of property and accelerate the success of our clients and our people. Learn more at corporate.colliers.com, Twitter @Colliers or LinkedIn.

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