Several overseas parties are already eyeing the nine YHA hostels that are being sold following their closure late last year because of financial woes as a result of Covid.
The gradual reopening of New Zealand’s borders, announced last week, is set to heighten interest.
All the hostels are in prime locations, in Auckland, Rotorua, Wellington, Tekapo, Aoraki Mt Cook, Wanaka, Queenstown, Franz Josef and Te Anau.
The properties can be bought individually or as one package.
Colliers investment director Hamish Doig, who is leading the sale on behalf of YHA, says there is already keen enquiry from prospective buyers internationally, together with Kiwi operators.
"Overseas buyers know the calibre of these facilities and see it as a great opportunity to enter the New Zealand market while tourism operators here see the possibility of increasing their footprint by partnering with private equity to assist with funding.
"Now that we have more clarity around when restrictions are ending, the consensus is that there will be a big bounce with international travellers wanting to come to New Zealand because it’s such a desirable destination.
"The YHA properties are garnering such interest because of their fabulous geographic spread. Even though our borders are currently closed, the interest we’ve had clearly signals that New Zealand is still highly regarded internationally as a tourist destination."
Dean Humphries, Colliers’ national director of hotels and tourism, says pent up leisure demand is forecast to see inbound tourism to New Zealand recover to pre COVID levels by circa 2024.
"We think this ‘revenge travel’ will be led, in part, by the younger generation who will be more comfortable travelling more quickly.
"Unfortunately, due to COVID, there has been considerable attrition in inventory in the budget accommodation sector, particularly in the tourism hot spots, and we believe there will be an acute shortage once demand quickens. These assets will, therefore, provide very attractive returns in the medium term."
Ian Lothian, national chair of YHA, says the board was left with no option but to permanently close the doors.
"YHA New Zealand, traditionally servicing international youth visitors, doubled its domestic guest nights over the past 12 months as it reoriented towards more domestic groups and family stays.
"However, the extended Auckland lockdown, combined with no prospect of an international visitor market this summer, created market conditions that were unsustainable for us."
Colliers is seeking expressions of interest in the nine properties, with the offer closing on March 25. In total the hostels have 410 rooms and 1320 beds. The biggest is in Wellington.
Five of the hostels are owned by YHA while it leased back the remaining four that it sold to an investor last year to try and strengthen its financial position.
Hamish says private investor RPZ bought the four properties as a long-term passive investment because it specifically wanted to partner with YHA but does not usually invest in hospitality.
All 17 individually owned and operated associate properties will continue to operate as normal. For further details, visit: www.yha.co.nz
