Bumper year for hotels

The sale of New Zealand’s largest provincial hotels caps off a bumper year for the hotel sector – one with an almost ten-fold increase in sales volume by value.

The Kingsgate Hotel Hamilton and Kingsgate Hotel Whangarei have been sold to New Zealand based hotel operator Distinction Hotels New Zealand by Dean Humphries, National Director of Hotels for Colliers International.

“The sale is now unconditional, with both hotels to be rebranded under the Distinction brand following settlement in early 2016,” he says.

“This marks a bumper year for the New Zealand hotel sector, on the back of strong market fundamentals including record numbers of international visitors, a falling New Zealand dollar and New Zealand’s growing reputation as a safe destination to visit.”

Kingsgate Hotel Hamilton comprises 147 rooms, two restaurants, seven conference rooms and extensive car parking, while Kingsgate Hotel Whangarei has 115 rooms together with restaurant, two conference rooms and pool amenities. 

Both hotels attracted significant interest from domestic and offshore investors, looking to be part of New Zealand’s booming tourism sector, Humphries says.

“Kingsgate Hotel Hamilton, which attracted a substantial number of bids, was identified as having a significant upside due its proximity to Auckland.

“The Auckland hotel market is running at capacity, and there are virtually no rooms available over summer. Therefore, there is huge opportunity for the spill over to be absorbed by satellite cities including Hamilton, Rotorua, and Whangarei, for tourists who simply can’t find accommodation in Auckland.”

A total of 11 hotels – for an aggregate price of over $290 million – were sold in New Zealand in 2015, compared to just five hotels totalling $32 million in 2014, according to Colliers’ Hotels division research.

“This represents an astonishing 800% plus increase in sales volume by value compared to last year, and is indicative of the existing buoyant performance in the tourism and hotel sector,” says Humphries.

Major hotel transactions completed by the Colliers’ team in 2015 include the 193-room Hotel Grand Chancellor Auckland Airport, to be rebranded to a 4 star plus Naumi hotel in 2016, the 108-room Kingsgate Hotel Wellington, now rebranded as The Thorndon Hotel by Rydges, the 247-room Novotel ibis Auckland Ellerslie, and the 273-room Novotel Queenstown Lakeside. 

Humphries, who was responsible for the majority of New Zealand’s 2015 hotel sales, notes there are currently a wide range of domestic and offshore investors who are looking to get a foothold in New Zealand’s hotel sector to take advantage of booming tourism conditions.

“Hotel values have increased significantly in 2015, with many hotels increasing in value by 20-30%,” he says.

“With virtually no new supply coming into the New Zealand market over the next three years, the hotel sector is set to continue its robust performance, with further growth anticipated.

Queenstown, like Auckland, is also running at capacity and desperate for new hotel rooms, he says.

“Other key tourism centres, including Wellington, Rotorua and Christchurch are also heading towards capacity over the next 18 months, with new inventory required in these regions.

“With such strong market activity, the second and third tier markets in key provincial areas are also benefitting from increasing tourism numbers, and are likely to see significant increases in value over the short to medium term.”

For further information please contact Dean Humphries 

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