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New hotel supply in New Zealand to dry up

New build: Hilton Queenstown

BY JAMES WILKINSON IN AUCKLAND

No new-build hotels are planned for New Zealand beyond 2011 as development in the country stops to a grinding halt.

Queenstown and Auckland will see properties open in time for the 2011 Rugby World Cup, but no new developments are signed for construction following the tournament, according to the latest report from Horwath HTL, released at the New Zealand Hotel Industry Conference (NZHIC) on May 12.

“With no new hotels or serviced apartments under construction in the Auckland CBD and forecasted international visitor growth, existing properties have an opportunity to increase their room rates in the next several years,” the report said.

“This will be sorely needed to recover rises in hotel operating costs expected by many hotel operators.

The report warns, however, of a key factor working against the positive effect of no new hotel supply, that being the decrease in average daily spend by international visitors, which has fallen 14% from NZD$133 in 2008 to NZD$113 in 2010.

“The challenge for hotel operators in the next few years is to achieve strong increases in average room rates in conjunction with rising occupancies, against a backdrop of tightening visitor spend,” the report said.

The only hotel in the development pipeline is the proposed Four Seasons resort at Jack’s Point, near Queenstown. However, the development is yet to be officially signed and no plans have been formalised.

New hotels being built in 2011 include: a Novotel, Sudima and Formule 1 at Auckland International Airport; and the Hilton and Kawarau Hotel managed by Hilton at Kawarau Falls near Queenstown.

On the Auckland hotels, the report said: “These new hotels will provide significant competition to the 4 existing airport precinct hotels and could result in a period of competitive room rates, especially after the Rugby World Cup in September – October 2011”.  

While on Queenstown, the report said “the location of the hotels, 15 minutes out of the town centre will provide a strong challenge for Hilton to fill their rooms at economic room rates commensurate with their star rating”.

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