Hotels at choking point, 95 per cent occupancy in Auckland

Hotels in Auckland are feeling the heat. Photo / 123rf

Hotels nationwide were at an occupancy rate of 81 per cent in the year to June, which is good news for the business but won't be sustainable without new stock.

Research from real estate firm CBRE showed average daily rates had also increased, up 11 per cent to $182.63. Revenue per available room for hotels increased by 12.3 per cent.

Auckland is the worst-hit centre with occupancy sitting at 95 per cent.

The pressure on hotels comes in the wake of increased international travellers, especially from China and the United States. In recent months, the Lions tour also saw hotels stretched to capacity across the country.

Peter Hamilton, director of hotels and leisure at CBRE said the growth was great for the industry, but sustainability was another matter.

"If we look to the data in the first half of the decade post GFC we see a general theme in term of a decline in the average daily rates for Auckland, Rotorua, Wellington, Christchurch, and Queenstown," Hamilton said.

"2011 seems to be a key year for the market with the Rugby World Cup and the Christchurch earthquake in their own way helping to trigger a surge in occupancy and rates witnessed in recent years.

"It's clear though that we're coming to the peak of this recent trend, with some regions there already, with future sustained growth reliant on new stock to keep pace with demand," he said.

Auckland's hotel market has felt the most pressure with average daily rates increasing from $140 after the Rugby World Cup to $200 in June this year.

"In Auckland in recent years it's been all about hotels being effectively full on regular occasions and future occupancy growth potential appears to be limited," Hamilton said.

"With new stock expected in coming years, there is a real possibility for occupancy to plateau or decrease and further average daily rate growth will depend on hoteliers' ability to hold strong on room rates in the face of increasing competition."

In New Zealand's tourist mecca Queenstown, average daily rates went from below $150 in June 2012 to $210 in June this year.

"Queenstown attracts the highest proportion of international demand, which tends to experience greater price elasticity than domestic demand sources. Not surprising then that the growth in ADR comes at the same time Queenstown airport has had an upgrade allowing for night flights and substantial increases in arrivals, especially from Australia," Hamilton said.