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The importance of New Zealand’s hospitality sector has been reinforced by a new report commissioned by Hospitality New Zealand, which highlights the industry’s scale, resilience, and growing productivity.
Hospitality State of the Nation 2025 shows the hospitality sector – which includes food services and accommodation – generated $21.4 billion in revenues in the year to March 2025, supported more than 220,000 jobs nationwide, and is now contributing to New Zealand’s overall productivity growth.
Authored by respected economist Shamubeel Eaqub, the report aims to help better understand and articulate the hospitality sector’s economic contribution, opportunities and risks.
A major economic and employment driver:
Hospitality State of the Nation 2025 finds the hospitality sector contributes 5 per cent of GDP through sales and more than 2 per cent of GDP directly, making it one of the country’s largest and most dynamic industries.
The sector is also one of New Zealand’s biggest job creators, directly employing 193,000 people in the year ended March 2025, accounting for 6.7 per cent of all jobs. An additional 28,000 jobs were supported through suppliers, bringing the total to 221,440 – or 7.7 per cent of all jobs nationwide.
The report charts five years of dramatic swings, noting that “the last five years have been extremely unusual from an economic perspective”, spanning COVID-19 Pandemic restrictions and border closures, cost of living pressures reducing discretionary spending, rising interest rates and recessionary spending slowing household demand.
“2025 has been the year of waiting, despite earlier predictions that reductions in interest rates from late 2024 would start to flow through,” the report finds. “However, that recovery has failed to fire.”
Growth and productivity:
While headlines about hospitality closures are common, Hospitality State of the Nation 2025 finds the number of hospitality businesses has actually continued to grow.
“Despite the recession… the total number of hospitality businesses has been increasing. This means the sector is intensely competitive, with more businesses competing for a largely stagnant pool of hospitality spending.”
Short-term rentals have also surged, creating fresh challenges and intensifying competition in the accommodation market.
One of the most striking findings is that hospitality is no longer a drag on productivity, with the report noting that “It used to be true that the hospitality sector was low productivity. But in the last three years it has been just above or below the national average”.
Over the decade to 2024, productivity in hospitality rose 1.6 per cent per annum, compared with just 0.5 per cent nationally.
“It means that when the sector grows, it improves the overall productivity of New Zealand. This is good news and should be celebrated.”
Looking ahead:
Hospitality State of the Nation 2025 notes that the sector is expected to rebound as inflation eases and interest rates fall.
Forecasts from the Reserve Bank, Treasury and independent economists suggest strong growth in 2026 and 2027, with the report stating that “an economic recovery is nearing, but 2026 looks more likely”.
Hospitality NZ’s acting chief executive Nick Keene says the findings underscore the importance of the hospitality sector.
“The Hospitality State of the Nation 2025 report shows hospitality is a major employer, a driver of regional economies, and now a proven contributor to productivity growth.
“Despite the challenges of recent years, our sector continues to grow, adapt. We should be proud of hospitality’s resilience, and confident in its future.”
