Tourism boom pushes up hotel prices in Auckland and Queenstown

AccorHotels' Pullman hotel is due to open in 2019.

The tourism boom is leading to unprecedented growth in hotel occupancy and room rates, research from Colliers International shows.

The latest New Zealand Hotel Market Snapshot shows that in the year to date to March, Auckland recorded occupancy of 91 per cent and an average daily rate of $225, an increase of 16 per cent.

Queenstown had occupancy of 90 per cent at an average rate of $240 - a 15 per cent increase over the same period in 2016.

Moderate to strong average rates were recorded in other regions, although occupancy rates appear to have generally plateaued in most main centres.

National Director of hotels at Colliers International, Dean Humphries, said the second quarter of 2017 was also likely to be a record breaker.

The just finished World Masters Games - which attracted 25,000 participants to Auckland and British and Lions tour starting next month would attract 20,000 fans - would create a spike in occupancy.

Occupancy in Rotorua, Wellington and Christchurch ran between 75 per cent and 79 per cent.

There were more investors and developers reviewing the possibility of new hotel projects, he said.

However, site availability, planning approval delays, lack of development funding and constraints in the construction sector still made many projects difficult to convert.

The proposed targeted rating increase for Auckland hotel owners was also concerning many developers as this directly impacts their feasibility. Those looking closely at a hotel development were worried by the proposal which also will apply to other commercial accommodation providers, motels and camping grounds.

"It's not the right time for it. I think there's another mechanism that could be used."

Humphries said that despite some of the development challenges faced now, investor sentiment remained strong.

There had been very few hotels built recently but notable announcements over the past six months include:

• Marriott International, will open its first hotel in New Zealand under its "Four Points by Sheraton" brand in late-2017.

•The 255-room hotel will be located at 396 Queen St in Auckland, an 19-level office building currently being converted to a hotel by the Russell Property Group.

• A 227-room Holiday Inn Express will be built in Queenstown by Australian fund Pro-Invest,

• A conversion of the T&G Building in Wellington to a 108-room Doubletree by Hilton.

•Auckland International Airport Ltd and Tainui Group Holdings Ltd partnering to develop a new 250-room Pullman Hotel beside the existing Novotel Auckland Airport.

•A 260-room Peppers hotel to be located on Shotover St in the Queenstown town centre.