PLAY THE LONG GAME - Bayleys
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Photo credit: The Hotel Britomart
HOTELS
P L AY T H E
L ONG GA M E
———
WITH NEW ZEALAND’S USUALLY POROUS BORDERS CLOSED TO INTERNATIONAL
TOURISTS FOR NOW, THE HOTEL SECTOR IS FACING UNPARALLELED DISRUPTION
– BUT THE DOMESTIC MARKET IS STEPPING UP.
———
LESS THAN A YEAR AGO, TOURISM WAS was seen in the traditional tourist hotspot support business in the interim.
New Zealand’s number one export earner Queenstown – down 32 percent, while the Meanwhile, SkyCity's long-awaited
on the back of escalating visitor arrivals. lowest decline was for central New Zealand International Convention Centre in
It is sobering to look at those arrival including Taupo, Taumarunui, Ruapehu, Auckland is now expected to be
numbers now in the midst of a global Gisborne and Hawke’s Bay, down an completed by mid-2023, and its
pandemic, with our borders still closed average 10 percent. Likewise, revenue associated Horizon Hotel has deferred
to all but returning Kiwis and a handful per available room (RevPAR) has declined opening until mid-2022.
of others. most in Queenstown, and least in central Bayleys’ director hotels and tourism
For the month of August in the years New Zealand. Paul Dixon, says for the 30-plus hotels
2010-2019, overseas arrivals averaged After minimal investment in the hotel designated as Government-run managed
187,648, peaking in 2019 with 251,131 sector in the last decade, new-build isolation and quarantine facilities
arrivals. According to NZ Customs data, activity around the country had started to throughout the country, and used
this dropped to just 11,483 arrivals in pick-up prior to the COVID-19 outbreak – exclusively for returning residents,
September 2020. mainly focused on Auckland, Wellington, the associated guaranteed income
Naturally, this has translated into Christchurch, and Queenstown. has been welcome.
significant drops in hotel occupancy Despite the uncertainty 2020 has dished “Particularly as accommodation
with an average 24 percent decline in up, The Hotel Britomart, Park Hyatt providers were overlooked in the
average national occupancy for the year Auckland, Travelodge Wynyard Quarter and Government's $400 million Tourism
ending September 2020, according to QT Auckland opened recently in Auckland Recovery Package.
Hotel NZ data. – not exactly the optimal time to do so, “But while those isolation hotels
Unsurprisingly, the greatest drop off but with hopes that domestic tourism will have covered overheads and mitigated
164 Total Property
some of the losses other hotels are two countries, but Kiwis and Australians applying deferral periods until normal
absorbing, in the bigger picture, it’s a small are itching to travel again, and our hotel trading may resume.”
proportion of accommodation stock.” operators want to host them. Privately-owned New Zealand family
Dixon says pre-COVID-19, the domestic “Australians may not be able to visit business Safari Group, has been successfully
market made up around 55 percent of New Asia, the UK or Europe for quite some time developing and building mixed-use hotel/
Zealand hotel occupancy, and the push for yet, so New Zealand would be an appealing apartment complexes and stand-alone hotel
New Zealanders to support local and see and accessible option.” projects around New Zealand for 25 years.
more of their ‘backyard’ went some way Dixon says until a vaccine is available, Director of the Safari Group of
to providing business to hotels once the or border issues can be safely addressed, companies, Damien Taylor, says it currently
country went to level 1. it will be hard to sustain the value in has three hotel/mixed-use developments
“Hotels in Queenstown have certainly hotel property. under construction – Ramada Newmarket,
worn the brunt of the international tourist “However, New Zealand’s inherent Ramada Wellington and LQ Kawarau River
tap being turned off and Auckland’s return tourism credentials will endure, and Queenstown – and there has been minimal,
to level 3 lockdown didn’t help, having investors, hotel asset owners, and offshore if any, disruption to the delivery dates.
a major impact on the South Island ski funders recognise this.” “We were tracking ahead of programme
season trade.” Bayleys national director of before COVID-19 struck, so could absorb the
Australia and New Zealand remain valuations and advisory, Carl Waalkens, delays caused from the level 4 lockdown,”
committed to establishing travel bubbles. says a two-tiered market may emerge he says.
New Zealanders are now being welcomed post-COVID, with regional tourism “Since lockdown, we have gone
back to some Australian states, but the assets such as budget and motel unconditional on a site in Ellerslie for
arrangement is not being reciprocated accommodation being better positioned a $150 million hotel/apartment
by us, with the second wave of the to withstand value decline due to development and committed to a $35
virus centred on Melbourne followed stronger levels of domestic tourism. million existing heritage building in
by Auckland’s resurgence, turning the “In contrast, hotels positioned towards Wellington for conversion to a 5-star
potential wider bubble clock back. international tourism are receiving little Tryp by Wyndham hotel.
Dixon says the hotel sector needs the reprieve from reduced tourist numbers “We have parked the proposed Tryp
trans-Tasman bubble more than ever. resulting in challenging investment by Wyndham Queenstown for now
“The resumption of trans-Tasman parameters, hence valuers will be while the Queenstown market recovers,
sport has been a good morale boost and contemplating reduced cashflow forecasts but we’re still very much charging
demonstrates the inter-relationship of the and occupancy rates while perhaps ahead elsewhere.”
New Zealand's first
5 Green Star Hotel,
The Hotel Britomart
opened in Auckland
on October 1st.
Left and bottom right
Lobby Lane. Top right
Takutai View Room.
Photo credits: The
Hotel Britomart
Total Property 165
Artist's impression: LQ Hotel, Ellerslie - Safari Group
Artist's impression: Double Tree by Hilton
Wellington - Sarin Investments
Artist's impression: Ramada Queenstown Central - Safari Group The Muse Christchurch Art Hotel - Sarin Investments
Taylor says Safari Group has full “Secondly, do not be overexposed to as people try out new destinations.
confidence that the sector will bounce debt and thirdly, location remains crucial “We opened our new The Muse
back and its actively looking for more to success in the hotel sector.” Christchurch Art Hotel, a boutique 40-room
development opportunities across the With properties including Proximity hotel in a restored heritage building in
country believing that “out of adversity, Apartments Manukau, Double Tree Manchester Street in mid-September and we’re
comes opportunity”. by Hilton Wellington, Holiday Inn delighted with the way it’s been received.
Udai Sarin, chief executive officer for Queenstown and Ibis Styles by Accor in “It’s a good product with great service
the Sarin Hotel Group which represents Invercargill under its ownership and/ and is not in the cookie cutter-style, so there’s
a number of well-known global brands in or management, Sarin Investments niche appeal and that’s working well for us.”
the accommodation market nationwide, has survived the pandemic disruptions Sarin Group also has several new
says he’d describe the current pulse of without any Government-managed social development projects in the pipeline, with
the hotel sector as “still uncertain, yet housing or managed isolation contracts. those that had commenced prior to New
more positive”. The Queenstown Holiday Inn in Zealand going into full lockdown proceeding,
“It’s like we’re halfway up Everest – Frankton was the only facility Sarin Group and those not yet underway pushed back by
doing the very best we can with the hand temporarily shuttered when New Zealand at least 12 months.
we’ve been dealt and we’re seeing more went into complete lockdown and Sarin COVID-19 has had the upside of forcing
confidence from the market now that alert says that market is still suffering. hotel owners/managers to take a long, hard
levels have been relaxed nationwide. “There’s so much hotel and other look at their business models.
“There’s been an increase in activity accommodation stock in Queenstown so Sarin says its self-contained serviced
from domestic travellers, the government until the international tourism market apartment offerings proved the most
sector and the corporate market as life opens up again, it’s likely to be a slow adaptable throughout the pandemic
reboots after restrictions.” haul there.” environment, being easier to transfer
Sarin says the COVID-19 outbreak and Sarin says once domestic travellers into longer-stay accommodation
associated response crystallised three very have ticked off the hero destinations where required.
important fundamentals for the company. like Queenstown, the secondary “If COVID has taught us anything
“Firstly, always have a Plan B destinations like Hawke’s Bay, New at a base level, it’s everybody has to
and C for your business so as to Plymouth and Invercargill get airtime live somewhere, and everybody has to
pivot quickly in tough times. and there are regional trends emerging eat something.”
166 Total Property
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