New Zealand is firmly back on traveller radars – so how will the wider tourism sector respond?

News that international tourism has rebounded and is now the country’s second-largest export earner is a real morale boost to the hotels, tourism & leisure (HTL) sector.

As New Zealand looks to grow its visitor economy – and to welcome guests across all market segments and at all price points – there’s opportunity for more investment in our tourism assets.

Recently, new Tourism and Hospitality Minister Matt Doocey said: “there is nothing off the table at the moment about understanding how we better resource tourism, because I want tourism to grow”. It will be interesting to watch how this unfolds.

We’ve seen strong recovery of the international airline network connecting into Auckland, Wellington, Christchurch and Queenstown, with new flight routes providing greater connectivity.

With arrivals from Australia at around 80 percent of pre-pandemic levels, and China at 53 percent, there’s still room for improvement but things are looking up.

Domestic travel movements have also been robust, with Air New Zealand saying that of the nearly 800,000 people set to fly with them over the April school holidays, around 65 percent were travelling within Aotearoa.

In the hotel sector, data from hospitality consultants Horwath HTL shows that while still below the peak seen in 2018, Revenue Per Available Room (RevPAR) for the main New Zealand hotels reached a five-year high in February.

Close to 800 new hotel rooms were added to Auckland’s hotel inventory last year, and Average Daily Rates (ADR) are hovering around 2019 levels. ADRs decreased in Wellington and rose in Queenstown and Christchurch.

Investor appetite for commercial HTL assets remains strong, however, finding the stock for them to purchase remains the challenge. The New Zealand market has demonstrated resilience, and consequently, there has not been distressed stock come to the market.

The country still has a shortage of quality motel rooms, and we’re unlikely to see new motel stock developed in the short-to-medium term given pressures on land and development costs.

However, with the government signalling changes to transitional housing models, and wanting to increase competition for building materials to address development affordability, let’s see how the motel sector – and the broader HTL sector – responds.

While there have been very few hotel sales in recent years, institutional and private capital is proactively circulating in the Asia-Pacific region and big brands have their eye on New Zealand.

New Zealand’s HTL sector is evolving, so connect with our nationwide team to uncover opportunities for investment – we look forward to talking with you.

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