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‘Road to recovery’ for hotel sector РColliers

Colliers’ latest report on the New Zealand hotel market confirms a recovery is underway.

Dean Humphries, Colliers National director of hotels, notes key performance indicators have improved against the same period last year, when New Zealand first entered a Covid impacted trading environment.

The long-awaited trans-Tasman travel bubble, which commenced in April, was welcomed by the wider industry, particularly those regions most reliant on international inbound visitors.

In other positive news for the sector, Government MIQ contracts for more than 30 major hotels across the country have been extended until the end of 2021, and in some cases longer. This will provide many hotel owners with a secure cashflow during this challenging time.

In addition, the nationwide vaccination rollout will enter its full phase in Q3 and Q4 of this year, which will ensure New Zealand can potentially reopen its borders safely to international visitors from H1 2022, says Dean.

As a result, investment enquiries for hotels is increasing from a range of parties, who foresee a robust recovery for hotel assets in the short to medium term.

Investment yields appear to be trending downwards on the back of low capital costs and return profiles associated with alternative asset classes, says Dean.

Key findings YTD 30 June 2021:

  • Occupancy rates now sit between 50 per cent and 60 per cent in all major regions with the exception of Queenstown
  • Average room rates have remained firm sitting in a tight band between NZ$160 and $185
  • Top performing regions by RevPAR are Rotorua (+47 per cent) followed by Christchurch (+41 per cent) and Wellington (+35 per cent)
  • The opening of the trans-Tasman bubble, an increase in business demand, and fewer lockdown periods have been the main contributors to recovery patterns
  • Some 552 new hotel rooms have opened so far this year with a further 2,080 under construction, primarily in Auckland

“Despite these encouraging trends, the New Zealand hotel sector remains compromised until our international borders open to key inbound markets," says Dean.

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