United Airlines' new San Francisco-Christchurch route has helped boost hotel occupancy. Video / George Heard
Hotel room rates have fallen by 1 per cent throughout the country, with two big markets reporting an even sharper drop.
Total hotel occupancy reached 71 per cent during December and January, short of the 79 per cent figure pre-pandemic, but a big improvement on the 64 per cent figurereported for the same period last year.
Figures from Horwath HTL show average daily rates (ADR) for New Zealand hotels declined by 1 per cent year on year to just under $200, with hotels in Auckland and Wellington experiencing a drop of 7 per cent and 9 per cent respectively.
Both cities experienced notable supply increases and sub-70 per cent occupancy levels, prompting many hotels to adjust prices, says the Horwath HTL study, based on Hotel Data NZ figures.
In Auckland, hundreds of new hotel rooms were opened during the past few months, including 311 rooms at Te Arikinui Pullman Auckland Airport hotel, after the 103-room La Quinta Hotel in Ellerslie, which opened in October, and the 139-room Intercontinental Hotel on January 30.
This week, Templeton Group’s 11-storey, 290-bed Abstract Auckland opened on the intersection of Upper Queen St and Karangahape Rd.
The study shows while international room nights sold for major Auckland hotels increased by 41 per cent compared to the previous year, they are still around 14 per cent below pre-pandemic levels.
In the meantime, domestic room nights during the December-January period in Auckland hotels fell by 5 per cent compared to the previous year.
Auckland is the only major market where revenue per available room (RevPAR) has not recovered to pre-pandemic levels, caused by a supply increase of around 3000 rooms - 25 per cent up on 2019.
RevPAR at Wellington hotels fell by 6 per cent after a supply increase of around 200 rooms and a drop in ADR of $19 - 9 per cent down on a year ago.
Cathay Pacific has returned to Christchurch. The airline will operate a summer service.
Across the country, RevPAR was 9 per cent up on the prior year and 4 per cent up on the same period pre-Covid.
Hotels in Queenstown, Christchurch and Nelson/Marlborough reported growth in excess of 20 per cent compared to the same period last year.
Christchurch hotels hugely benefited from increased air capacity into the city, being the key driver of a roughly 25 per cent increase in room nights sold.
In addition to accommodating passengers, some central-city hotels gained lucrative new air crew contracts.
The increase in air capacity into Christchurch also benefited hotel occupancies in Queenstown, where there were no new major hotel openings during the past year.
Arrivals from Australia into Queenstown airport also increased by around 10 per cent, according to provisional data from Stats NZ. The shortage of worker accommodation remains the main challenge for Queenstown hotel operators.
The increase in air capacity into Christchurch also had benefits for Queenstown. Photo / Destination Queenstown
But many hotels are struggling to cover increased costs.
Hotels in the Taupō/Hawke’s Bay and Nelson/Marlborough regions are the only ones with RevPAR growth that matches or exceeds the 21 per cent CPI growth and 25 per cent wage growth reported by the Reserve Bank (RBNZ) since before the pandemic, the Howath HTL analysis shows.
As international tourist numbers recover, room occupancy by overseas guests surged by 37 per cent compared to the previous year, with significant rises among visitors from the US and China.
“Overall domestic demand appears to have held up reasonably well, despite an increase of New Zealand citizens spending their holidays overseas and tougher domestic economic conditions.”
Based on the HDNZ data, it is estimated that compared to the previous year, domestic room nights fell by around 2 per cent.
Compared to pre-pandemic levels, domestic room nights are 19 per cent higher and international room nights 15 per cent lower.
The return of international visitors was good for Rotorua, where occupancy increased by 11 points to 74 per cent. A decline in domestic room nights of around 10 per cent was more than offset by strong increases in visitors from the US, China and South Korea.
Nevertheless, international room nights were still about 28 per cent below pre-Covid levels in the absence of more visitors from China.
The data indicates a slower-than-expected recovery of visitors from China and a confirmed influx of visitors from the US after increases in air capacity with big American carriers ramping up flights over summer.
The overall recovery of international visitors has remained around 80 per cent of 2019 levels.
The latest available data also indicates people visiting friends and relatives are driving the recovery of international visitors, while the number of visitors specifically arriving for holidays or business remains 30 per cent below 2019 levels.
Late summer looks good for tourism.
"Feedback from various operators across most major markets show a positive outlook for February and March, which indicates that we may see a further upwards trend in international visitors for holiday purposes over these months," the Horwath HTL study shows.
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
