26 extra hotels needed

  • Paula Bennett
  • Steven Joyce
Tourism Economic Development

It is estimated a total of 26 additional hotels, above and beyond what is currently planned, will be needed over the next ten years to meet expected tourism demand in our major tourist centres, according to new independent research released today by New Zealand Trade and Enterprise.

The research is a key part of “Project Palace”, a programme to accelerate new private sector investment in New Zealand’s hotel infrastructure led by NZTE and the Government’s Investment Attraction Taskforce.

“This is the first time we’ve had quantified data on the effect that the tourism growth projections will have on hotel occupancy,” Economic Development Minister Steven Joyce says.

“This research will be a great help to private investors considering when and where to invest in New Zealand’s fast-growing tourism accommodation industry.” 

NZTE, Tourism New Zealand (TNZ), and the Ministry of Business, Innovation and Employment (MBIE) commissioned the research report to gain a more accurate understanding of the demand and supply for hotel accommodation now and in the future across peak and off-peak seasons.

“Communities right across New Zealand are benefiting from the unprecedented growth in tourism, and the Government is focussed on ensuring our towns and cities are well placed to host these visitors,” Associate Tourism Minister Paula Bennett says.

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 4,526 across these centres by 2025, over and above new hotels currently planned. That is the equivalent of 26 hotels the size of the Sofitel Viaduct in Auckland.

“While there is significant hotel investment underway and planned, this report underlines the size of the opportunities there are to grow the sector in New Zealand”, Mr Joyce says. 

“The Project Palace work will help match make investors with opportunities, and reduce the time taken to fill information gaps that can slow down investment.”

NZTE, TNZ and MBIE are working together with local government and the private sector to identify available locations for additional hotels in each of the five locations studied and to pave the way for attracting new investment in hotel development.

NZTE will be using the research as the basis for a prospectus that outlines the business case for investment in New Zealand hotels to domestic and international investors. NZTE’s strong international networks will be invaluable in approaching international investors with specific opportunities that highlight why New Zealand is a prime destination for quality hotel development.

“I’ve also asked NZTE to catalogue and present hotel opportunities in other New Zealand centres as well,” Mr Joyce says. The tourism industry is growing right across New Zealand and we don’t want individual regions to miss out because investors lack knowledge of investment opportunities.”

“Tourism is a big part of our diverse, resilient economy, directly contributing $11 billion or almost 5 per cent to GDP. I hope all our regions use this research to identify opportunities in their area,” Mrs Bennett says.

Attracting high-value foreign investment into New Zealand is part of the Government’s Investment Attraction Strategy, and contributes to Government’s Business Growth Agenda target of attracting an extra $160 billion to $200 billion of capital by 2025.

The Regional Hotel Market Analysis & Forecasting Report is available here.

Note to editors:

The main findings of the research are:

  • There is a current shortage of hotel rooms during high demand periods in all the centres. This is particularly in summer and autumn (December and March quarters) and when there are major events on.
  • In 2015, Auckland and Queenstown had consistently high occupancy rates (>80 per cent) throughout the year and Queenstown is rapidly becoming an all-seasons location.
  • In 2015, Wellington had a stable occupancy rate (78 per cent) across the year, with the December and March quarters having higher occupancy than the June and September quarters.
  • In 2015, Rotorua and Christchurch have high occupancy rates (>80 per cent) in the December and March quarters, but lower occupancy during winter and spring (June and September quarters).
  • Forecasts suggest that the demand for hotels will outstrip supply over the next 10 years in all regions so occupancy rates will continue to grow.
  • International visitor arrivals will be a major driver of hotel demand (their numbers are expected to grow 5.4 per cent per annum), while domestic demand is expected to grow at 2.5 per cent per annum. China and Australia are expected to be largest contributors to the growing international demand.
  • Historical preferences suggest that demand for four-star and above quality hotels will be strongest over the next 10 years.
  • The market research was based on a range of data sources including MBIE’s International Visitor Arrival forecasts and data, Tourism Industry Aotearoa hotel data, and Statistics New Zealand’s Commercial Accommodation Monitor. Colliers International provided proprietary information about planned hotel developments.