Market Report

New Zealand Hotels Performance Focus

In August 2023, Revenue Per Available Room (RevPAR) for New Zealand hotels increased by 14% compared to August 2019 and 24% compared to August 2022, according to Hotel Data New Zealand (HDNZ).

This rise was significantly influenced by the FIFA Women’s World Cup, especially in Auckland and Wellington, which hosted seven matches during the first two weeks of the month. Additionally, good snowfall in August bolstered accommodation demand in major ski areas like the Queenstown Lakes District.

Visitor Arrivals and Air Capacity
Non-New Zealand citizen arrivals recovered to 86% of August 2019 levels. Border movements are closely linked to air capacity, which was approximately 11% below August 2019 levels. Recovery is stronger from visitors coming to see friends and family, while holiday and business visits were still about 20% below 2019 levels. The increase in visitor arrivals from the USA compensated for 15% of the shortfall from China. Limited air capacity and higher air fares have particularly impacted Auckland and Rotorua hotels, which typically see higher numbers of Chinese visitors during winter.

Domestic Travel Trends
Domestic leisure travel appears to be tapering off with minimal events and continued pressure on household budgets, marking the end of a period of „revenge spending“ on travel for many New Zealanders. However, business-related travel remains strong, particularly in Wellington and Christchurch, both of which have new convention centres, as well as in Auckland and the Taupo/Hawkes Bay areas.

Hotel Performance Metrics

Hotel RevPAR Comparison: A significant increase in RevPAR across various regions, with Queenstown, Wellington, and Auckland showing notable growth compared to 2019 and 2022.

Hotel Occupancy Comparison: Occupancy rates have improved, reflecting recovery trends.

Hotel ADR (Average Daily Rate) Comparison: ADR has grown by 7% compared to the same period last year and by 28% compared to 2019, with the largest growth seen in tours and FIT segments, followed by corporate and meeting segments.

Challenges and Future Outlook
To restore and grow the share of international visitors, air connectivity is crucial. Forward bookings for the summer season look promising, particularly from the North American market, where air capacity is projected to be more than 30% above 2019 levels. However, total inbound air capacity is expected to be about 9% below 2019 levels during the upcoming summer months due to reduced flights from regions other than North America.

The New Zealand hotel sector has shown strong recovery signs, driven by major events and favourable seasonal conditions. However, the overall recovery is uneven, with certain markets still lagging pre-pandemic levels. Continued focus on enhancing air connectivity and adapting to changing travel patterns will be key to sustaining growth in the hotel industry.