Overseas interest in nine YHA hostels up for sale is a sign of an expected "big bounce" in international travellers wanting to come to New Zealand, according to an industry expert.
Hamish Doig, an Investment Director of international real estate agency Colliers says several overseas parties are already eyeing the nine hostels that are being sold following their closure late last year as a result of financial woes brought on by the Covid pandemic.
He says there is already keen interest from prospective international buyers as well as Kiwi operators – interest he says which will be heightened by the gradual re-opening of New Zealand's borders.
Doig, who is leading the sale on behalf of YHA, says although it is too soon to say how the properties will be used by new owners, overseas buyers know the calibre of the facilities. "They see it as a great opportunity to enter the New Zealand market while tourism operators here see the possibility of increasing their footprint by partnering with private equity to assist with funding.
The hostels, which can be bought individually or as one package, are in prime locations in Auckland, Rotorua, Wellington, Tekapo, Aoraki Mt Cook, Wanaka, Queenstown, Franz Josef and Te Anau.
"Now that we have more clarity around when restrictions are ending, the consensus is that there will be a big bounce with international travellers wanting to come to New Zealand because it's such a desirable destination," Doig says.
"The YHA properties are garnering such interest because of their fabulous geographic spread. Even though our borders are currently closed, the interest we've had clearly signals that New Zealand is still highly regarded internationally as a tourist destination."
Dean Humphries, Colliers' National Director of Hotels and Tourism, says pent up leisure demand is forecast to see inbound tourism to New Zealand recover to pre-Covid levels by about 2024.
"We think this 'revenge travel' will be led, in part, by the younger generation who will be comfortable travelling more quickly.
"Unfortunately, due to Covid, there has been considerable attrition in inventory in the budget accommodation sector, particularly in the tourism hot spots, and we believe there will be an acute shortage once demand quickens. These assets will, therefore, provide very attractive returns in the medium term."
Ian Lothian, National Chair of YHA, says the board was left with no option but to permanently close the doors.
"YHA New Zealand, traditionally servicing international youth visitors, doubled its domestic guest nights over the past 12 months as it reoriented towards more domestic groups and family stays.
"However, the extended Auckland lockdown, combined with no prospect of an international visitor market this summer, created conditions that were unsustainable for us."
Colliers is seeking expressions of interest in the nine properties, with the offer closing on March 24. In total the hostels have 410 rooms and sleep up to 1320 people. The biggest is in Wellington.
Five of the hostels are owned by YHA while it leased back the remaining four that it sold to an investor last year to try and strengthen its financial position. However, those four are also now being marketed.
All 17 other individually owned and operated associate YHA properties will continue to operate as normal. yha.co.nz
For further details please contact Hamish Doig at Tel: +64 3 365 7887 | Mob: +64 21 320 149. Email: Hamish.doig@colliers.com.