New hotel supply putting the brakes on tourism boom

Expert sounds warning on eve of major annual conference

New hotel supply is the main issue holding back New Zealand’s booming tourism sector, says a Colliers International expert on the eve of this week’s 2018 New Zealand Hotel Industry Conference.

A full house is expected at the annual conference, to be held at Auckland’s Cordis Hotel from July 4-5, where industry experts will try to work out ways to build more hotel rooms across the country.

Dean Humphries, National Director of Hotels and Tourism at Colliers International, says the industry is struggling to add more hotel inventory in key tourism regions, despite New Zealand’s record 3.7 million international visitors in the last year.

“The economic cost to the country from not having these new hotels available over the past five years has been substantial,” he says.

“It is hard to believe that we have seen virtually no net addition to our hotel inventory this decade, despite almost 1.5 million additional tourists visiting New Zealand.

“In Auckland, our gateway city, we have seen a mere 526 rooms added to the hotel stock since 2013. It’s even worse in Queenstown, where we have only seen 158 new rooms.”

Humphries says that despite attempts by both the private and public sector, New Zealand is still struggling to build the new hotels it needs.

“Fortunately, a number of new hotels are now under construction, and the pipeline of mooted projects is growing, particularly in Auckland.

“However, the big question on everyone's minds is when, and if, they will be completed.”

Humphries says there is now significant pressure to deliver these hotels in time for the opening of the New Zealand International Convention Centre (NZICC) in 2019, and the America’s Cup and APEC in 2020/21.

The NZICC is expected to attract about 33,000 delegates a year; the America’s Cup could attract between 150,000 to 175,000 international visitors; and APEC could attract 22,000 attendees, including 10,000 for the summit week alone.

Tourist numbers are expected to continue breaking records after these events, with a recent forecast by the Ministry of Business, Innovation and Employment estimating New Zealand will have 5 million international visitors by 2024.

Humphries notes a recent New Zealand Trade and Enterprise study found Auckland will require up to 4,000 new rooms by 2025 just to keep up with current demand.

“We really need new supply but delivery is very slow, with the majority of new hotel stock not expected until post-2021,” he notes.

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