Saturday, April 20, 2024
HomeSpeaker's CornerNew Zealand hotel rooms are not ‘ludicrously overpriced’.

New Zealand hotel rooms are not ‘ludicrously overpriced’.

Brook Sabin recently told us that it’s too expensive for New Zealanders to see their own country – and shared his experience of a ‘ludicrously overpriced hotel’ – or as he says ‘his overpriced little box’ (Stuff: April 30 2019).

Many New Zealanders may hold a similar view, arguably a view drawn from very limited information – apart from information via people like Brook.

However, what Brook doesn’t share with the public is the hotel he stayed in, its price, location or standard, and while Brook might think the price is ‘ludicrous’, and suggesting other hotels in New Zealand can be the same, some fact-checking tells us that the average price of a New Zealand hotel room is cheaper when compared to most other overseas destinations.

Brook calls for hotels – and other tourism operators – to shrink their prices – supporting the same call from Air New Zealand’s CEO after the airline announced its new cheaper fares.

But there’s a major difference between airlines and hotels – and many other tourist operators for that matter.

An airline can quickly shift (fly) its assets to any global destination where there is demand; hotels and tourist operations can’t do that.

Fixed location and fixed supply creates challenges for hotels who operate in a dynamic and competitive environment.

Hotels can’t quickly add a few more rooms when supply exceeds demand, unlike pulling another aircraft out of a hanger.

The call and comparison Brook makes are totally unrealistic and inappropriate.

Back to the fact-checking. Are New Zealand hotel prices really ‘ludicrously overpriced?

My research, using factual, reliable and comparative data, says no.

New Zealand hotels have been cheaper in comparison to most international destinations since 2000 – only in 2018 did the average hotel room price ($USD135.00) surpass Brisbane and Bali – and then only by $USD20.00 and $USD32.00 per night respectively. We’re still well below other destinations like Sydney, Los Angles, Melbourne, Fiji, Hong Kong, Dublin, Singapore, etc. Note that $USD are used to ensure we are making appropriate comparisons.

What Brook is sharing with readers is his ‘perception’ of the cost of a hotel room. But let’s put that into perspective and talk about ‘value and experience for the price’.

If you and your partner check into a hotel at 2.00pm (usually the earliest check-in time) and check out at 11.00am the following day – that’s 21 hours of ‘experience’ time.

You can have the TV going all the time, watch movies, set the room temperature to what you like, have numerous showers (use all the towels and call for more), spend hours in the gym or pool, use all the tea and coffee provided in the room (and call for more), relax in the bar or restaurant, and have a bedroom close to the activities nearby.

You will probably take home the slippers and toiletries (hotels expect you will), and you don’t have to do any laundry, clean the room, etc.

As the average hotel room in 2018 was $USD135.00, or in NZ currency about $200.00, that’s $NZD9.52 per hour for all that you and your partner can use and ‘experience’.

Yes, you’re paying for some sleep-time, but I think the hourly rate for the experience isn’t too bad – and it’s cheaper than other comparable destinations.

Given that at present there’s not enough hotel rooms for the demand I don’t see hotel room prices descending like Air New Zealand’s fares any time soon, indeed never to Air New Zealand’s grab-a-seat level.

But brace yourself Brook – while there are many new hotels still to open (in Queenstown, Christchurch, Wellington and Auckland), hotel room prices may not decrease; indeed they may increase because many of the new hotels to open are high star-rated international brands who bring with them international levels of service and physical structure – and consequently demand a higher room rate.

Increased standards are being demanded from international tourists and it’s these tourists who fill the majority of New Zealand’s hotel rooms along with business travelers (who usually aren’t personally paying for the room); hotels are not full of domestic tourists.

Brook rightly points out that in the Travel and Tourism Competitiveness Index (2017) we rank 104 (out of 136) for ‘price competitiveness’, but that’s better than the USA (106), Hong Kong (113), Ireland (121), Australia (128) and the UK (135).

What Brook doesn’t mention is that ‘competitiveness’ is made up of ticket taxes and airport charges, Purchasing Power Parity, fuel costs and hotel prices (of only 1st class hotels) – many factors the tourism industry and hotels cannot control.

The great news for New Zealand is that overall (not just on competitiveness) we rank 16th out of 135 countries.

Such a high overall ranking may not solve Brook’s view that New Zealanders find their own country expensive, but if we dropped the price of tourism activity (including hotel prices), New Zealanders would have less economic gain, less employment and less down-stream benefits, etc.

Indeed some tourism operators would not survive financially.

However, there is merit in promoting tourism to New Zealanders via some form of ‘Kiwi Discount’ so that they do experience a fantastic tourist experience.

And finally to the chocolate-challenge Brook has/had – the $7.99 peanut slab.

Simple solution – BYO.

Mini-bars are known to be expensive – for a good reason – people steal from them – guests say they haven’t used the mini-bar when asked at check-out (but they have), and you’re paying for convenience.

Hotels know the old trick of the gin bottle refilled with water, the brandy with tea, etc.

That’s why they have to check the bar after you have gone, but the cost/benefit of then reporting and recharging your credit card after you have left is just not there – so the hotel loses.

Brook doesn’t want people ‘charged the earth the moment they got off the plane’ and that’s a fair call – what people should expect is value for money – and everyone’s perception of that is different.

As for the ‘ludicrously overpriced hotel’ – Assuming that Brook did have a great experience during his stay in his ‘overpriced little box’, then that’s what really matters.

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