New Zealand’s post-Covid tourism recovery appears to be stalled with Stats NZ figures out this week showing that for September international arrival numbers were 87% of those for the same month in 2019. The recovery has been consistently below 90% of pre-pandemic levels for the last year.
Doolan said one way of boosting that was attracting more events.
“Auckland Council and central government have been underinvesting in event attraction. Investment by Auckland Council was slashed from $30 million pre-Covid to $7m today, with even that funding possibly disappearing if current council proposals proceed.“
He said the view that residents don’t benefit from major events in the city was out of touch.
“The vast majority of the 150,000 Coldplay attendees are permanent Auckland residents. Small businesses thrive when the city is buzzing. Auckland Council needs to wake up to the fact that fashions change. Libraries, public swimming pools and sports fields aren’t the only forms of entertainment that ratepayers value.“
Major international performers often require up front cash incentives, called “subvention payments”, before they agree to visit a particular city, said Doolan.
“It’s absolutely normal practice for local and central governments to make subvention payments, because no single business or sector gets all the financial upside when a major event takes place,“ said Doolan.
A key beneficiary of increased spending is always central government, which receives 15% in GST on top of every dollar spent during events, he said.
“For everyone paying $500 for a Coldplay ticket, Uber ride, drinks and meal, the central government receives a $65 slice. We want more of that money going back into supporting the visitor economy.”
Although Auckland hotels have had a good start to November, this followed a grim few months.
According to the latest Hotel Data New Zealand statistics compiled by Horwath, revenue per available room (Revpar) in Auckland tumbled by 19.5% in October
Average daily rates for hotels in the city were down from $216 for October 2023 to $198 per room. That compares with the $198 they were getting five years ago, before the big surge in inflation when prices in other sectors soared.
“This underperformance is attributed to an oversupply of rooms, with a 7.9% year on year increase in inventory, and declining demand from both international and domestic travellers,“ Horwath HTL says.
Statistics NZ reported a 2% decrease in visitor arrivals through Auckland Airport in October.
The airport has experienced a loss of market share to Christchurch and Queenstown, especially for flights from Australia, Horwath said.
Despite October events such as the Diwali Festival, demand remained insufficient to drive growth.
Hotels across much of the country continue to experience the effects of the economic downturn and a sharp decline in government-related travel, compounded by Air New Zealand’s engine issues, which have affected domestic capacity and driven up airfares.
According to Air New Zealand, government travel in some markets has dropped by as much as 30%. National revpar was down 3.5% in October on the same month in 2019 and average rates were down from $216 to $213.
During the past five years, hotel supply has expanded by about 6800 rooms. This increase, along with the lag in room night recovery, has contributed to a 12.5 percentage point decline in occupancy levels compared to the same period in 2019.
Queenstown bucked the trend with revpar growth of 14.8%, and a room rate up from $267 to $286.
Queenstown Airport reported a 9.4% increase in passenger arrivals for the month compared to October 2023. Passenger volumes exceeded pre-Covid levels by 13%.
Christchurch recorded steady growth with occupancy increasing slightly to 76% and room rates rising by 3.3% to $199, translating to a nearly 4% increase in Revpar. Non-resident arrivals at Christchurch Airport grew by 12%, according to Stats NZ, and further seat capacity increases have been announced for upcoming months with United Airlines and Cathay Pacific returning.
These trends point to sustained growth and increased demand heading into the peak season.
Horwath said Wellington experienced moderate gains, with occupancy rising from 70% to 73% and rates slightly increasing to $211. Events such as the World of Wearable Arts and the Wellington Jazz Festival attracted additional visitors.
“There is a feeling that stabilisation in government restructuring announcements may contribute to reducing uncertainty in business and government-related travel.“
Horwath said summer was expected to be crucial for the New Zealand hotel industry, as airlines plan to expand long-haul capacities to accommodate the summer season, potentially boosting demand across key markets during the peak holiday period.
Grant Bradley has worked at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
