The Shout Magazine (New Zealand)

New Zealand Hotel Industry Revs Up: 9% RevPAR Surge

New Zealand Hotel Industry Revs Up: 9% RevPAR Surge

New Zealand’s hotel industry showcased signs of recovery as Revenue Per Available Room (RevPAR) for major hotels witnessed a notable 9% increase during the period from December 2023 to January 2024 compared to the previous year.

This growth was also 4% higher than the same period before the Covid-19 pandemic, according to data released by Hotel Data New Zealand (HDNZ).

Hotels in key tourist destinations such as Queenstown, Christchurch, and Nelson/Marlborough experienced remarkable growth, with RevPAR surpassing 20% compared to the same period in the previous year. However, Wellington faced a 6% decline in RevPAR, attributed to a supply increase of approximately 200 rooms and a $19 (9%) drop in Average Daily Rate (ADR).

Auckland, the only major market where RevPAR has not fully recovered to pre-pandemic levels, saw a 25% increase in room supply, resulting in the differential. Despite this, there was a 5% rise in room nights sold at major hotels compared to the same period in 2019/2020.

RevPAR growth in the Taupo/Hawkes Bay and Nelson/Marlborough regions matched or exceeded the 21% Consumer Price Index (CPI) growth and 25% wage growth reported by the Reserve Bank of New Zealand, indicating a crucial step towards returning to pre-Covid levels. The overall hotel occupancy reached 71%, a notable improvement from the 64% reported for the same period last year, though still short of the pre-pandemic 79%.

International guest room occupancy surged by 37% compared to the previous year, with substantial increases observed among visitors from the USA and China. Domestic demand held up reasonably well despite increased spending by New Zealand citizens on holidays overseas and challenging domestic economic conditions.

Comparing to the prior year, domestic room nights decreased by approximately 2%, while domestic room nights were still 19% higher and international room nights 15% lower than pre-pandemic levels.

New hotel openings, including Te Arikinui Pullman Auckland Airport and La Quinta Hotel in Ellerslie, contributed to Auckland’s hospitality landscape. International room nights for major Auckland hotels increased by 41% compared to the prior year but remained around 14% below pre-pandemic levels.

Christchurch hotels benefitted from increased air capacity, leading to a 25% increase in room nights sold. Queenstown, without major new hotel openings, saw improved hotel occupancies due to increased air capacity.

Rotorua experienced an 11-point increase in occupancy, driven by international visitors from the USA, China, and South Korea. However, international room nights were still around 28% below pre-Covid levels.

Average Daily Rates (ADR) for New Zealand hotels declined by 1% year on year, with Auckland and Wellington facing drops of 7% and 9%, respectively. The slow recovery of visitors from China and a confirmed influx of visitors from the USA contributed to an overall recovery at around 80% of 2019 levels.

Feedback from operators across major markets to Hotel Data New Zealand suggests a positive outlook for February and March, hinting at a potential further increase in international visitors for holiday purposes over these months.

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