A new regional hotel analysis released by New Zealand Trade & Enterprise (NZTE) should help attract investment in the hotel sector, the Tourism Industry Aotearoa (TIA) said.

It focuses on New Zealand’s five main visitor destinations, Auckland, Rotorua, Wellington, Christchurch and Queenstown.

The five centres currently have just over 20,000 hotel rooms. The report suggests that by 2025 they could absorb up to 9700 more. However, based on current plans, only an additional 5174 will be built.

TIA provided data for the analysis from its long-running survey of hotel members. TIA chief executive Chris Roberts said it identifies opportunities for new investors.

“Looking at the current expected growth rate in hotel rooms over the next decade, it is estimated that an additional 4500 rooms could be absorbed by the market across the five centres. The biggest opportunities are in Auckland, which has an estimated shortfall of up to 1782 rooms, and Queenstown, with an estimated shortfall of up to 1421 rooms.”

The report also notes the danger of over-supply if too many hotels enter the market at the same time.

Roberts said it will assist the right investments to be made.

“44% of those occupying hotel rooms are from overseas – the other 56% are New Zealand travellers. While markets like China and Australia are expected to grow strongly, the market that will have the biggest need for additional rooms over the next decade is actually the domestic market.”

With demand rising in the past two years, hotel room rates have increased.

However, it will remain challenging to attract investors.

“Sydney’s hotel occupancy rate across the year is 88% and the average room rate is NZ$254. Auckland’s hotel occupancy rate has risen from the 70’s to 84%, but the average room rate is still only $NZ152.”