2019 Review & 2020 Outlook - Hotel Market Update Colliers International
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2019 Review &
2020 Outlook
Hotel Market Update
Colliers International
Accelerating Success
Page 1
Summary Demand Visitor Arrivals Stats
2019 Overall
Amount 1 Yr Growth 5 Yr Growth
3.9m 2.66% 8.43%
The New Zealand hotel sector continues to prosper 2019 was another record year for international
as a result of robust growth in international AUCKLAND inbound arrivals, with 3.9 million visitors, noting the
visitation numbers and our domestic market. RevPAR: $162 annual increase moderated to be more in line with Australia
-6.1% long term averages. Amount 1 Yr Growth 5 Yr Growth
This has helped maintain high volumes of demand
1.53m 3.78% 5.88%
across the country resulting in the majority of Trends include;
key markets being at or near record performance
levels in 2019. ROTORUA • A decline in Chinese arrivals, however we have
RevPAR: $111 still seen strong compound annual growth over China
The exception was Auckland, which saw a decline 2.3% the past five years. Amount 1 Yr Growth 5 Yr Growth
despite maintaining a healthy occupancy rate.
413k -8.81% 12.50%
Fewer major events, the postponement to • Strong growth of the US market. This has
the opening of the New Zealand International largely offset the decline in Chinese guests.
Convention Centre (NZICC) and increasing levels Growth in this market looks set to continue
of new supply have precluded hotels from holding as Air New Zealand launches direct flights to USA
room rates at historic highs. New York in late 2020 and American Airlines Amount 1 Yr Growth 5 Yr Growth
establishes a direct route between LA and
369k 8.40% 13.01%
Christchurch.
• The hotel sector continues to be underpinned
by Australian visitors and domestic guests UK
WELLINGTON
which together represent more than 50% of Amount 1 Yr Growth 5 Yr Growth
RevPAR: $144
all rooms occupied in each of New Zealand’s
2.8% 234k 0.13% 5.13%
major hotel markets.
• Domestic demand represents close to 60%
of all room nights occupied across all short Germany
stay accommodation in New Zealand having Amount 1 Yr Growth 5 Yr Growth
increased by circa 4% in the past 12 months,
101k -0.57% 7.52%
the highest growth we have seen for some
time.
CHRISTCHURCH Source: Stats NZ
RevPAR: $122
-0.8%
QUEENSTOWN
RevPAR: $208
2.8%
Source: Tourism Industry Aotearoa
YE December 2019
Page 2 Page 3
Breakfree on Cashel - Adina Apartment Hotel -
Christchurch Auckland
Supply Investment
In 2019 most of the country’s major markets Despite the country’s buoyant trading conditions,
have experienced increasing new supply, with 11 there were no major hotels publicly offered and
hotels (1,057 rooms) added to the wider inventory sold in 2019.
representing an increase of circa 5.0%.
However, we note a significant transaction
New supply has generally been well absorbed with occurred in July 2019 with New Zealand’s $45
most markets continuing to enjoy buoyant trading billion sovereign wealth fund (New Zealand Super
conditions. Fund) entering the hotel sector by co-investing in
a portfolio of hotels owned by the Russell Group
Moving forward, Rotorua and Wellington have and Lockwood Property Group. This $300 million
limited new supply under construction and due for investment represents the single largest hotel
completion in the short term. transaction in New Zealand’s history.
However, Auckland (and to a lesser extent This phased investment included the recently
Queenstown and Christchurch) will see a growing completed 255 room Four Points by Sheraton
number of new hotels enter the market over the Auckland, the 160 unit Adina Auckland, and the 263
short/medium term. room BreakFree on Cashel in Christchurch, as well
as an intention to acquire and develop additional
A large number of proposed hotel projects are opportunities.
continuing to be evaluated, although high land and
construction costs present further challenges for In December, the Fund also announced it will
economically viable hotel developments. purchase the 203 room Holiday Inn Rotorua in
early 2020.
Despite increasing concerns with the growing level
of new supply in some regions, there remains Despite low volumes of transactions, investment
a robust level of demand, which together with yields have firmed on the back of lower cost of
the completion of major tourism infrastructure capital and a growing appetite from investors Four Points by Sheraton - Holiday Inn -
projects (such as the NZICC and Christchurch looking for the attractive returns this sector offers. Auckland Rotorua
Convention Centre) will place the wider hotel
market in good stead for the future.
This will enable a positive outlook for most markets
moving forward.
Hotel Supply Market Yields
10.00%
Auckland
9.00%
Rotorua 10.00%
8.00%
9.00%
Wellington 7.00% 8.00%
Christchurch 6.00% 7.00%
6.00%
5.00%
Queenstown 5.00%
4.00% 4.00%
0 500 1000 1500 2000 2500 3000 3500 Auckland
Auckland Rotorua Wellington
Rotorua Wellington
Completed 2019 Under Construction Christchurch
Christchurch Queenstown
QueenstownRegional
Regional
Source: Colliers International Source: Colliers International
Page 4 Page 5
2020
Outlook
• 2020 looks set to be another strong year
for the hotel sector with international visitor
arrivals set to hit the 4 million milestone and
increasing domestic demand on the back of International visitors up 2.5% to
strong population growth, weaker NZ Dollar
making oversea travel less affordable and
robust economic growth driving corporate
4 Million
demand.
• Most key markets will continue to record New supply of
historically high occupancy and room rates,
with the exception of Auckland where growth is
forecast to moderate on the back of increasing
1,660 Rooms
across 13 hotels.
new supply.
• New Zealand will host an array of marquee
events including the commencement of the
36th Americas Cup, concerts by the likes 36th
of Elton John and Queen, and the much
anticipated Wales/All Black Series. Americas Cup
• The opening of the Christchurch Convention being hosted in Auckland
Centre (Te Pae) and new direct long haul routes
to the US will improve demand to this region.
Opening of Christchurch Convention Centre
• The delayed opening of the SkyCity NZICC
due to a fire in November 2019 will see the
postponement of a number of large global
conferences to Auckland which may impact the
Te Pae
wider performance of this market in the short
term.
• New supply will reach record levels with 1,660
rooms across 13 hotels opening across the
country, representing an increase of 7.2% to
current inventory levels. Auckland will lead the
way with 1,080 rooms opening across 7 hotels.
• Investment activity is forecast to increase
as some owners look to take advantage of
strong trading and pricing fundamentals and
increasing levels of offshore and domestic
capital looking for the attractive returns this
sector offers.
Page 6 Page 7
Demand
Auckland
2019 was a challenging year for the hotel sector
20% with RevPAR falling to $161.55, down 6.1% over the
preceding 12 months.
The largely unanticipated decline in ADR was
7% primarily a result of a softening in demand
52% (particularly across non-peak periods); new supply
6% together with a reduction in the annual event
calendar. Despite this, occupancy remained at a
very healthy 82.3%, with annual RevPAR still the
15% third highest on record.
As at the end of 2019, the City of Sails had over
Domestic Australian Chinese 2,600 rooms under construction which is leading
to increasing levels of caution, particularly around
USA Other
any further new development in the short/medium
Source: Tourism Industry Aotearoa term. The recent fire in the soon to be completed
YE December 2019 NZICC is also likely to impact any proposed
projects planned for the short/medium term.
Supply Approximately 1,100 new hotel rooms are due to
be completed in in 2020 including the 154 room
Current: 10,400 Travelodge, 150 room QT Auckland, 195 room
Under construction: 2,656 Park Hyatt, 104 room The Hotel Britomart and the
Proposed: 1,795 96 room Mercure. At this stage we are uncertain
Source: Colliers International whether the 303 room SkyCity Horizon hotel will
open due to the recent fire in the NZICC.
Despite a significant number of new rooms
Guest Nights in Hotels entering the market, cautious optimism remains
with hoteliers looking forward to an increasing
4.75m 2.41% number of marquee events throughout 2020/21
(such as 36th America’s Cup, APEC and a range of
YE Sep 2019 Growth
(CAGR over last 5 years) significant sporting and cultural events) to counter
Source: Stats NZ the new supply entering the market .
Total Passenger Movements
20.10m 5.42% Year Occupancy ADR RevPAR
YE Jun 2019 Growth
(CAGR over last 5 years) 2015 84.00% $164.21 $138.01
Source: Auckland Airport
2016 86.50% $183.34 $158.60
International Visitor Spend 2017 86.40% $209.92 $181.45
$4.62b 11.83% 2018 83.40% $206.36 $172.13
YE Oct 2019 Growth
(CAGR over last 5 years) 2019 82.30% $196.19 $161.55
Source: Stats NZ
Source: Tourism Industry Aotearoa
Page 8 Page 9
Demand
Rotorua
20%
21%
This market continued its strong performance in
2019, with RevPAR increasing 2.3% to $111.34, the
7%
5% seventh straight year of RevPAR growth.
50%
52%
This was primarily a result of strong international
6%
and domestic leisure demand coupled with
17% minimal new supply entering the market. Since
15% 2015, Rotorua’s RevPAR has increased $26.25
representing compounded annual growth of
7% 6.95%.
Domestic Australian Chinese The opening of the 130 room 5 star Pullman Hotel
Domestic Australian Chinese
USA Other in early 2020 is likely to provide a further boost
USA Other to the market, particularly for the higher yielding
Source: Tourism Industry Aotearoa FIT market. This is the first 5 star internationally
YE December 2019
branded hotel in the city and the first major hotel
completed since 2004. Other hotels due to be
Supply completed include a small extension to Regal
Palms and the re-opening of the 41 room Silver
Current: 1,864 Oaks Resort.
Under construction: 196
Proposed: 174 With no further new supply under construction,
the region is in a strong position to continue to
Source: Colliers International
achieve further growth in the short/medium term.
Guest Nights in Hotels Year Occupancy ADR RevPAR
965k 4.64% 2015 76.70% $110.89 $85.09
YE Sep 2019 Growth
(CAGR over last 5 years)
Source: Stats NZ 2016 79.50% $121.00 $96.17
2017 78.70% $130.72 $102.91
2018 78.90% $137.97 $108.83
International Visitor Spend
2019 79.10% $140.74 $111.34
$346m 8.50%
YE Oct 2019 Growth Source: Tourism Industry Aotearoa
(CAGR over last 5 years)
Source: Stats NZ
Page 10 Page 11
Demand
6%
20%
3%
10% 1%
7%
52% Wellington
6%
15% 79% New Zealand’s capital city was one of the best
performing markets over the past 12 months
in terms of RevPAR growth, primarily as a result
Domestic Australian Chinese of increased demand from the government and
Domestic Australian Chinese corporate sectors, and a stronger events calendar.
USA Other
USA Other That has allowed the city to achieve a higher
Source: Tourism Industry Aotearoa ratio of compression nights, particularly in the
YE December 2019 historically quiet weekend periods.
This strong level of demand has also helped the
Supply city absorb new supply with two new hotels (360
rooms) being completed over the past 12 months
Current: 4,165
these being the 226 room Oaks Hotel and the 134
Under construction: 60
room Rydges Wellington Airport.
Proposed: 285
Source: Colliers International With minimal new supply under construction or
proposed over the short/medium term, the region
is in a strong position to continue to achieve robust
growth into the foreseeable future.
Guest Nights in Hotels
1.66m 3.16%
YE Sep 2019 Growth
(CAGR over last 5 years)
Year Occupancy ADR RevPAR
Source: Stats NZ
2015 78.00% $157.26 $122.66
Total Passenger Movements 2016 78.50% $168.46 $132.24
6.43m 3.59% 2017 80.80% $176.64 $142.73
YE Jun 2019 Growth
(CAGR over last 5 years) 2018 78.60% $176.02 $138.35
Source: Wellington Airport
2019 78.90% $181.94 $143.60
International Visitor Spend Source: Tourism Industry Aotearoa
$850m 12.18%
YE Oct 2019 Growth
(CAGR over last 5 years)
Source: Stats NZ
Page 12 Page 13
Demand
20%
20% Christchurch
7%
7% The South Island’s international gateway city
52%
56% performed remarkably well in 2019 having
4%
6% successfully absorbed over 500 new hotel rooms
over the past 24 months (19% increase). RevPAR
remains stable at 2018 levels with both occupancy
14%
15%
and room rates holding at last years levels.
The city has seen a number of public and private
Domestic Australian Chinese sector key projects completed including the
Domestic Australian Chinese
USA Other central library (Tūranga), Avon Riverside Precinct
USA Other and the Riverside Farmers Market together with a
Source: Tourism Industry Aotearoa number of new hotels including the 5 star Sudima
YE December 2019
Christchurch CBD and the 200 room Novotel
Christchurch Airport.
Supply There are currently a further 222 rooms under
construction, including an 88 room modular hotel
Current: 2,909
(The Arden), an extension to the Rydges Latimer
Under construction: 222
and two small boutique hotels.
Proposed: 701
Source: Colliers International Expansion of international air routes have been
key in bringing additional visitors to Christchurch
and further demand is anticipated in 2020 with the
completion of the Christchurch Convention Centre
Guest Nights in Hotels (Te Pae) in October 2020.
1.33m 9.20%
YE Sep 2019 Growth
(CAGR over last 5 years)
Source: Stats NZ
Year Occupancy ADR RevPAR
2015 77.10% $156.37 $120.62
Total Passenger Movements
2016 76.10% $157.56 $119.95
6.93m 3.20%
YE Jun 2019 Growth 2017 75.80% $158.73 $120.24
(CAGR over last 5 years)
Source: Christchurch Airport
2018 77.20% $159.95 $123.44
2019 76.60% $159.84 $122.44
International Visitor Spend
Source: Tourism Industry Aotearoa
$1.18b 13.89%
YE Oct 2019 Growth
(CAGR over last 5 years)
Source: Stats NZ
Page 14 Page 15
Demand
Queenstown
20%
23%
New Zealand’s adventure capital retained its crown
34% as the top performing market for 2019, growing a
7% further 2.8% to achieve RevPAR of $208.18 for the
52% 2019 calendar year. This is the eighth straight year
10% of growth, and whilst more subdued than previous
6%
years, we highlight that Queenstown has achieved
compounding annual growth in RevPAR of 12.3%
since 2015.
15%
11%
32% On the back of continued strong demand to the
region, Queenstown is finally welcoming some
Domestic Australian Chinese new hotel inventory with the opening of the 131
Domestic USA
Australian
Other Chinese room Ramada Frankton Road and 40 serviced
USA Other apartments at Nugget Point.
Source: Tourism Industry Aotearoa
YE December 2019
There are currently four hotels (466 rooms) under
construction although only one hotel is due to
Supply open in 2020, that being the 227 room Holiday Inn
Express on Stanley Street. Other projects include
Current: 3,573 the 182 room Holiday Inn and 87 room La Quinta
Under construction: 466 by Wyndham (both located in Remarkables Park)
Proposed: 1,257 anticipated to open in 2022 and the 63 room 5 star
Source: Colliers International Radisson Hotel on Man Street in the town centre.
Despite an increase in new inventory entering
the market over the short/medium term, strong
Guest Nights in Hotels trading conditions are forecast to remain with high
levels of latent demand from both international
1.84m 4.08% and domestic travellers still in force.
YE Sep 2019 Growth
(CAGR over last 5 years)
Source: Stats NZ
Year Occupancy ADR RevPAR
Total Passenger Movements
2015 78.80% $166.32 $131.06
2.32m 13.20%
YE Jun 2019 Growth 2016 82.70% $193.77 $160.25
(CAGR over last 5 years)
Source: Queenstown Airport
2017 82.50% $225.43 $185.98
2018 82.30% $246.14 $202.57
International Visitor Spend
2019 82.50% $252.32 $208.18
$1.55b 15.62%
Source: Tourism Industry Aotearoa
YE Oct 2019 Growth
(CAGR over last 5 years)
Source: Stats NZ
Page 16 Page 17
Provincial Hot off the Press -
New Zealand Holiday Inn Rotorua Sold
Hotels in other key tourism regions throughout
New Zealand generally performed well in
Buoyant trading conditions have led to a number
of new hotels being announced, however only
Tourism investment partnership
2019 benefitting from a continued increase in a small number of projects are currently under expands portfolio
international visitors, robust domestic demand and construction as detailed in the table below.
limited new inventory. This has boosted both ADR
and Occupancy in most regions throughout the There are also a number of projects recently
country. announced in areas such as Tekapo and A new investment partnership established to “Being only three hours’ drive from Auckland, and
Whangarei, however construction on these invest in domestic tourism assets is expanding located on the international tourism route, Rotorua
projects has yet to commence. its portfolio with the acquisition of the 203-room continues to be one of the most highly sought-after
Holiday Inn property in Rotorua in December 2019. destinations in the country by both international
and domestic travellers,” said Mr Russell.
NZ Hotel Holdings Asset LP was formed in July this
year as a partnership between NZ Super Fund, NZ Super Fund’s Head of Direct Investments
The Russell Group and Lockwood Property Group. Will Goodwin says the strategic acquisition into
Estimated
Project Location No.Rooms Star Rating The Rotorua hotel will be added to a portfolio that a key provincial tourism hub was in keeping with
Completion includes the Four Points by Sheraton in Auckland the fund’s strategic objectives of adding assets
Novotel Tainui and BreakFree Hotel in Christchurch. in provincial tourism centres to complement its
Hamilton 40 4+ 2020
Extension existing portfolio of properties in gateway cities like
Russell Group Managing Director Brett Russell Auckland and Christchurch.
DoubleTree by Hilton Napier 52 4+ 2020 says the Rotorua hotel property is an excellent
opportunity, and the partnership is pleased that “We’re pleased to be expanding our investment in
Sudima Kaikoura Kaikoura 120 4+ 2021 it is the next acquisition for its hotel investment New Zealand’s tourism sector.
partnership. Under the partnership, Russell
The Langlands Invercargill 80 4+ 2021 Property Group is responsible for identifying and “The most recent Stats NZ Tourism Satellite
scoping potential investment opportunities. Account says total annual tourism expenditure
reached $40.9 billion, an increase of 4.0 percent
The 4.5 star hotel includes large-scale function from the previous year.
and meeting facilities that can host up to 1,000
delegates, as well as the popular Chapmans “Rotorua is an attractive destination for
Holiday Inn - Restaurant, heated outdoor pool and spa facilities, international and local toursist alike. Total hotel
Rotorua gymnasium and parking for more than 120 guest nights for the year to September stood at
vehicles. The hotel is situated on more than one more than 965,000, making the Rotorua property a
hectare of land adjoining the Whakarewarewa high-value addition to the portfolio.”
Maori Village and geothermal park, one of the
region’s most popular tourist destinations. The hotel is managed by international hotel
operators IHG under its popular Holiday Inn
Mr Russell says the hotel had recently undergone brand. IHG will continue to manage the day to day
extensive renovation, including a range of new operation of the hotel. This is the first major hotel
plant and seismic upgrades, and refurbishment to to be sold in Rotorua since 2011 with hospitality
of many of the guest rooms and front of house assets in the region tightly held.
amenities.
The Colliers International hotel division were the
“The Rotorua market remains one of New Zealand’s exclusive agents for the sale of this asset.
leading tourism destinations, which in recent times
has seen hotel occupancy surpass 80 per cent. In
the past 24 months, Rotorua has been one of the
best performing tourism markets in the country,”
he said.
Page 18 Page 19Dean Humphries
National Director | Hotels
P: 021 408 156
E: dean.humphries@colliers.com
Chris Bennett
Director | Hotel Advisory and Valuation
P: 021 707 103
E: chris.bennett@colliers.com
Whilst all care has been taken to provide reasonably
accurate information within this report, Colliers
International cannot guarantee the validity of all data
and information utilised in preparing this research.
Accordingly Colliers International New Zealand Ltd, do
not make any representation of warranty, expressed
or implied, as to the accuracy or completeness of the
content contained herein and no legal liability is to be
assumed or implied with respect thereto. © All content
is Copyright Colliers International New Zealand Ltd
2019 and may not be reproduced without expressed
permission.
Licensed REAA 2008
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