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Horwath HTL has revealed its report for the end of March 2025 with mixed results.
Data shows a 5.5% decline in Revenue per Available Room (RevPAR) compared to the previous year. Particularly hard-hit regions are Auckland and Wellington, where significant decreases of 10% or more have raised eyebrows and concerns with industry investors. However, not all regions are suffering. Queenstown and the Nelson/Marlborough areas continue to show strong growth that sees the hospitality market marching on ahead, despite the overall downturn.
International Arrivals
The figures from Hotel Data New Zealand (HDNZ) show the total room nights sold in March 2025 dropped by 1.6% year-on-year, a decline largely fuelled by a concerning 3.9% dip in international room nights. With only 326,340 non-New Zealand citizens crossing the border—reflecting a 6% drop from the same month in 2024—there is clear pressure on the sector to recover and thrive. The figures show that while arrivals from markets like Australia and the USA are dropping, the influx from China and Hong Kong has numbers increasing by 17% year-on-year.
Auckland’s hospitality sector struggles
The challenges Auckland’s hotel market has faced are concerning with a 11.2% decline in RevPAR for March. This is attributed to a rise in room supply, with five new hotels entering the market over the last year, leading to more competition and therefore drops in Average Daily Rate (ADR). Industry insiders report that consumer preferences are changing, impacting demand across various star categories, particularly in the highly competitive 3 to 4.5-star establishments. Big local events have failed to increase demand, leaving operators concerned about the city’s overall appeal and sustainability.
Wellington’s decline
Wellington’s hotel sector is not doing much better, showing a massive 10% drop in RevPAR—the steepest decline in New Zealand’s major markets. Despite hosting events like the Pride Festival and sports matches, these events have not changed the demand needed to alleviate market challenges. With government-related spending cuts further impacting travel, Wellington’s hospitality sector is in desperate need of recovery.
Queenstown charges ahead.
In contrast to Auckland and Wellington, Queenstown’s hotels have continued to thrive, with an impressive 8.4% increase in ADR confirmed for March. With stable occupancy levels and a growing international appeal, the region is strong in the hospitality market. There is growth in the luxury 4.5 and 5-star establishments showing a shift in consumer choice towards higher-end experiences.
