According to recent New Zealand Tourism Industry Association statistics, New Zealand hotels enjoyed a record breaking year in 2015. Average occupancy, with statistics taken from the TIA’s 23 member hotels, was up three points on the 2014 figures to 79 per cent, the highest level in five years, and add to this an average room rate increase across all star grades of $12 to $157. Together these statistics improved the average Revenue Per Available Room (RevPar) by $14 (13 per cent) to $124.

Underpinning this positive performance has been an improvement in the New Zealand economy and a continuation of strong inbound visitor numbers reaching a record 3.02 million in the year ending August 2015, a 7.8 per cent increase over the previous 12 months. This is the first time tourism numbers, surpassed the three million threshold.

The Ministry of Business, Innovation and Employment (MBIE) has forecast annual international visitor numbers to reach 3.8 million by 2021. Figures at the end of 2015 show that tourism has once again surpassed earner, with an annual value now reaching 13.5 billion.

These positive trends are expected to continue through 2016 with several factors contributing to the ongoing growth trajectory. Jetstar’s new regional services, which started on 1 December 2015, will help distribute visitors to the regions with an increase in bed-nights and a boost to regional economies.

Regional events will continue to act as draw cards for both domestic and international visitors. The New Zealand dollar has softened considerably which provides greater value for international visitors and creates greater incentive to travel longer distances, particularly with New Zealand’s growing reputation as a safe holiday destination. Fuel prices are also low, minimising airfare increases and reducing ground based travel costs.

As a result of the renewed sector buoyancy, there is large scale reinvestment with a number of hotels undergoing refurbishment. Buyer demand is also at an all-time high with an increasing number of investors wanting to purchase hotel assets.

We’re soon likely to see more assets being brought to the market as vendors start to take advantage of higher property values based on long term sustainable growth in revenue and profitability from strengthening yields. Increased values have been highlighted by the recent record sale price achieved for the Novotel Ibis Auckland Ellerslie, the largest hotel to be sold in New Zealand since the Hilton Auckland in 2012.

With such favourable conditions and a very optimistic outlook for the accommodation sector in New Zealand, there couldn’t be a better time to get into the market. Contact your local LINK Business Broker for details on accommodation opportunities in your area. Written by Dave Morgan, general manager at LINK Wellington.

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