Hotel sales strong in the regions

The 82-room Park Hotel Ruapehu, in the North Island's National Park, was purchased by an Auckland investor. Photo / Supplied

Demand for regional hotels is on the rise following a record number of hotel sales in New Zealand's main tourism markets.

Dean Humphries, national director of hotels for Colliers International, says the recent sale of two large regional hotels comes after more than $500 million of hotels changed hands in 2015/16, the strongest period on record in a decade.

An Australian investor purchased the 51-room Ambassador Hotel Hamilton, while an Auckland investor bought The Park Hotel Ruapehu, an 82-room hotel in the central North Island's National Park.

Humphries says the Ambassador - one of Hamilton's best-known accommodation providers - is the second hotel the Australian investor has purchased in the last 12 months.

The investor also bought the 142-room Heartland Hotel Auckland Airport, 14 Airpark Drive, Mangere, Auckland - a leasehold asset.

"They see Hamilton as a key growth region both due to its status as a satellite city to Auckland and as an emerging tourist destination."

The Park Hotel Ruapehu is one of the region's largest commercial accommodation providers, close to the popular Tongariro Crossing and Whakapapa ski fields. "The new owner from Auckland plans to immediately complete the remaining room renovations to the property in time for the winter ski season."

Humphries says investors are seeking higher returning investments in emerging tourism markets, which is driving up inquiry levels.

The 51-room Ambassador Hotel Hamilton. Photo / Supplied

"These hotels can still be purchased well below current replacement cost and at attractive yields returning up to 10 per cent on current net cash flows," he says.

Humphries says other emerging hotspots include Hawke's Bay, Taupo, Tauranga, Nelson and Dunedin.

"Investors have high levels of confidence in New Zealand's hotel sector, thanks to favourable trading conditions and the huge economic benefits of the country's ongoing tourism boom," he says.

Dean Humphries, Colliers International.