An improvement in economic conditions is on the horizon with leisure and business tourism set to benefit, according to CBRE Director – Hotels and Leisure, Peter Hamilton.
Following an initially strong recovery in demand following international border openings in mid-2022, demand growth slowed in most New Zealand hotel markets from early 2024.
Economic headwinds have impacted business and consumer confidence, and government spending has also been reduced. All of which have resulted in a dampening of demand for hotel rooms.
The opening of the New Zealand International Convention Centre (NZICC) in Auckland is scheduled for late 2025. This will provide a boost to the market, particularly outside the peak periods when it is desperately needed. Hotels that are able to capitalise on the additional demand and spillover effects during large events will benefit most from this.
The Auckland market will need more than just the NZICC to see occupancy rates recover to near previous levels particularly considering the supply currently under construction. A lack of events during the shoulder and low periods and the slow recovery of key international markets such as China have also had a major impact on hotel performance. The industry needs to work with council and government to secure regular large events throughout the year to drive demand to fill up all these new hotel rooms.
Christchurch has benefitted from the opening of Te Pae Convention centre which reportedly generated 90,000 hotel room nights in 2023. Demand is 16% above 2019 levels in the city and the future for Christchurch hotels looks bright, with a new multi-purpose covered stadium on the edge of the CBD due to open in 2026.
Across the country, there have been many new hotels open in the last five years, increasing the quality of our hotel stock and improving the value proposition to visitors. This has placed pressure on owners of older hotels to refurbish or maintain their properties to remain competitive or lose market share.
With interest rates expected to reduce in most international markets, economic conditions are expected to improve and as a result tourism, both business and leisure, should bounce back. New Zealand remains a bucket list destination and will continue to attract strong visitor demand.