Horwath HTL reports more international visitors is needed based on the analysis for the latest hotel market performance for September’ 2023’s Revenue Per Available Room (RevPAR)
The country’s primary hotels soared by 15% compared to last year and marked an 11% increase from 2019. However, this growth comes with a drop of a 21% general inflation from Q3 2019 to Q3 2023, making the gains seem modest in real terms.
Queenstown, the adventure capital, showcased strong resilience with a RevPAR recovery of 34% above 2019 levels. This is a huge achievement given the town’s recent water quality issues. Elsewhere, Auckland’s hotel industry faced inhibition. The city’s RevPAR dipped below 2019 figures, attributed to an influx of new hotel supplies. Additionally, the Average Daily Rate (ADR) witnessed a decline from the previous year.
Christchurch showed promise, reaping the benefits of the Te Pae Convention Centre. The establishment has played a role in boosting the city’s hospitality sector. Yet, the narrative across hotels in Auckland, Rotorua, and other regions is clear: the need for more international visitors is evident
The FIFA women’s world cup brought a temporary surge in overseas guests. Still, the overall international arrivals continue to hover below 90% of 2019 levels. Interestingly, China stands out as the only nation showing a significant uptick in visitors.
Diving deeper into the international arrivals, business travellers made up only 9% in 2019, while a whopping 51% visited for leisure. Despite the reduced number of international tourists and a 14% surge in hotel room supply since 2019, hotels reported a 69% occupancy. This figure, although 8% higher than last year, remains 8% below the September 2019 mark.
The silver lining? The strong domestic demand. The period from January to September 2023 saw demand levels reminiscent of 2019. This resurgence is fuelled by domestic travellers, a shift from motels to hotels, and the opening of new hotels and convention centres.
Auckland’s hotel landscape is also evolving. Four-star establishments seem to be the flavour of the season, absorbing the supply increases most effectively. These hotels, especially new entrants in the 4 and 5-star categories, have driven the ADR 18.4% above 2019 levels for the nine months leading to September. Yet, the average RevPAR for Auckland hotels during this period lags, showing only a 3.3% growth over 2019. With no significant events on the horizon and an additional 1800 hotel rooms set to open in the next two years, the city’s hoteliers are banking on a quick influx of international tourists.
